Question 1

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

Accepted Answer

A) Policymakers have studied the effects of the price floor carefully, and they recognize that the price floor is advantageous for society as a whole. 
B) Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into imposing the price floor. 
C) Buyers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor. 
D) Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor. 
A) Policymakers have studied the effects of the price floor carefully, and they recognize that the price floor is advantageous for society as a whole. 
B) Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into imposing the price floor. 
C) Buyers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor. 
D) Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor.

Question 2

When a tax is placed on the buyers of a product, the

Accepted Answer

A) size of the market decreases. 
B) effective price received by sellers decreases, and the price paid by buyers increases. 
C) demand for the product decreases. 
D) All of the above are correct. 
A) size of the market decreases. 
B) effective price received by sellers decreases, and the price paid by buyers increases. 
C) demand for the product decreases. 
D) All of the above are correct.

Question 3

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

Accepted Answer

A) increase by less than $5. 
B) increase by exactly $5. 
C) increase by more than $5. 
D) decrease by an indeterminate amount. 
A) increase by less than $5. 
B) increase by exactly $5. 
C) increase by more than $5. 
D) decrease by an indeterminate amount.

Question 4

Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

Accepted Answer

A) True 
 B)False

Question 5

The minimum wage, if it is binding, lowers the incomes of

Accepted Answer

A) no workers. 
B) only those workers who become unemployed. 
C) only those workers who have jobs. 
D) all workers. 
A) no workers. 
B) only those workers who become unemployed. 
C) only those workers who have jobs. 
D) all workers.

Question 6

When a payroll tax is enacted, the wage received by workers

Accepted Answer

A) falls, and the wage paid by firms rises. 
B) falls, and the wage paid by firms falls. 
C) rises, and the wage paid by firms falls. 
D) rises, and the wage paid by firms rises. 
A) falls, and the wage paid by firms rises. 
B) falls, and the wage paid by firms falls. 
C) rises, and the wage paid by firms falls. 
D) rises, and the wage paid by firms rises.

Question 7

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market. $$\begin{array} { | c | c | c } 
\hline \text { price } & \begin{array} { c } 
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Suppplied }
\end{array} \
\hline \$ 0 & 15 & 0 \
\hline \$ 1 & 13 & 3 \
\hline \$ 2 & 11 & 6 \
\hline \$ 3 & 9 & 9 \
\hline \$ 4 & 7 & 12 \
\hline \$ 5 & 5 & 15 \
\hline \$ 6 & 3 & 18 \
\hline
\end{array}$$
-Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting shortage is

Accepted Answer

A) 0 units. 
B) 4 units. 
C) 5 units. 
D) 10 units. 
A) 0 units. 
B) 4 units. 
C) 5 units. 
D) 10 units.

Question 8

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Accepted Answer

A) a binding price floor 
B) a binding price ceiling 
C) a tax on the good 
D) All of the above are correct. 
A) a binding price floor 
B) a binding price ceiling 
C) a tax on the good 
D) All of the above are correct.

Question 9

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

Accepted Answer

A) U.S. government regulations pertaining to the price of gasoline. 
B) the Organization of Petroleum Exporting Countries (OPE
C) . 
C) major oil companies operating in the U.S. 
D) consumers who bought gasoline frequently, even when their cars' gasoline tanks were nearly full. 
A) U.S. government regulations pertaining to the price of gasoline. 
B) the Organization of Petroleum Exporting Countries (OPE
C) . 
C) major oil companies operating in the U.S. 
D) consumers who bought gasoline frequently, even when their cars' gasoline tanks were nearly full.

Question 10

All buyers benefit from a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 11

A tax on sellers reduces the size of a market.

Accepted Answer

A) True 
 B)False

Question 12

If the government levies a $2 tax per DVD on buyers of DVDs, then the price received by sellers of DVDs would

Accepted Answer

A) decrease by more than $2. 
B) decrease by exactly $2. 
C) decrease by less than $2. 
D) increase by an indeterminate amount. 
A) decrease by more than $2. 
B) decrease by exactly $2. 
C) decrease by less than $2. 
D) increase by an indeterminate amount.

Question 13

Figure 6-21  
-Refer to Figure 6-21. The burden of the tax on sellers is

Accepted Answer

A) $1 per unit. 
B) $1.50 per unit. 
C) $2 per unit. 
D) $3 per unit. 
A) $1 per unit. 
B) $1.50 per unit. 
C) $2 per unit. 
D) $3 per unit.

Question 14

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $12 in this market is an example of a

Accepted Answer

A) binding price ceiling that creates a shortage. 
B) non-binding price ceiling that creates a shortage. 
C) binding price floor that creates a surplus. 
D) non-binding price floor that creates a surplus. 
A) binding price ceiling that creates a shortage. 
B) non-binding price ceiling that creates a shortage. 
C) binding price floor that creates a surplus. 
D) non-binding price floor that creates a surplus.

Question 15

Figure 6-19  
-Refer to Figure 6-19. How much tax revenue does this tax produce for the government?

Accepted Answer

A) $24 
B) $30 
C) $32 
D) $56 
A) $24 
B) $30 
C) $32 
D) $56

Question 16

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is correct?

Accepted Answer

A) A tax levied on buyers will never be partially paid by sellers. 
B) Who actually pays a tax depends on the price elasticities of supply and demand. 
C) Government can decide who actually pays a tax. 
D) A tax levied on sellers always will be passed on completely to buyers. 
A) A tax levied on buyers will never be partially paid by sellers. 
B) Who actually pays a tax depends on the price elasticities of supply and demand. 
C) Government can decide who actually pays a tax. 
D) A tax levied on sellers always will be passed on completely to buyers.

Question 18

A tax on sellers increases the quantity of the good sold in the market.

Accepted Answer

A) True 
 B)False

Question 19

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Accepted Answer

A) True 
 B)False

Question 20

Figure 6-11  
-Refer to Figure 6-11. If the government imposes a price floor at $9, it would be

Accepted Answer

A) binding if market demand is Demand A or Demand B. 
B) non-binding if market demand is Demand A or Demand B. 
C) binding if market demand is Demand A and non-binding if market demand is Demand B. 
D) non-binding if market demand is Demand A and binding if market demand is Demand B. 
A) binding if market demand is Demand A or Demand B. 
B) non-binding if market demand is Demand A or Demand B. 
C) binding if market demand is Demand A and non-binding if market demand is Demand B. 
D) non-binding if market demand is Demand A and binding if market demand is Demand B.

Exam 6: Supply, Demand, and Government Policies

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

When a tax is placed on the buyers of a product, the

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

The minimum wage, if it is binding, lowers the incomes of

When a payroll tax is enacted, the wage received by workers

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

All buyers benefit from a binding price ceiling.

A tax on sellers reduces the size of a market.

If the government levies a $2 tax per DVD on buyers of DVDs, then the price received by sellers of DVDs would

Figure 6-21 -Refer to Figure 6-21. The burden of the tax on sellers is

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $12 in this market is an example of a

Figure 6-19 -Refer to Figure 6-19. How much tax revenue does this tax produce for the government?

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Which of the following statements is correct?

A tax on sellers increases the quantity of the good sold in the market.

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Figure 6-11 -Refer to Figure 6-11. If the government imposes a price floor at $9, it would be

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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