Question 1

Which of the following causes a surplus of a good?

Accepted Answer

A) a binding price floor 
B) a binding price ceiling 
C) a tax on the good 
D) More than one of the above is correct. 
A) a binding price floor 
B) a binding price ceiling 
C) a tax on the good 
D) More than one of the above is correct.

Question 2

A $3 tax levied on the buyers of shoes will cause the

Accepted Answer

A) supply curve for shoes to shift down by $3. 
B) supply curve for shoes to shift up by $3. 
C) demand curve for shoes to shift down by $3. 
D) demand curve for shoes to shift up by $3. 
A) supply curve for shoes to shift down by $3. 
B) supply curve for shoes to shift up by $3. 
C) demand curve for shoes to shift down by $3. 
D) demand curve for shoes to shift up by $3.

Question 3

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

Accepted Answer

A) demand curve for physicals shifts to the right. 
B) supply curve for physicals shifts to the left. 
C) quantity demanded of physicals increases, and the quantity supplied of physicals decreases. 
D) number of physicals performed stays the same. 
A) demand curve for physicals shifts to the right. 
B) supply curve for physicals shifts to the left. 
C) quantity demanded of physicals increases, and the quantity supplied of physicals decreases. 
D) number of physicals performed stays the same.

Question 4

When a tax is placed on the sellers 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) supply of 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) supply of the product decreases. 
D) All of the above are correct.

Question 5

Minimum wage laws

Accepted Answer

A) may encourage some teenagers to drop out and take jobs. 
B) create labor shortages. 
C) have the greatest impact in the market for skilled labor. 
D) All of the above are correct. 
A) may encourage some teenagers to drop out and take jobs. 
B) create labor shortages. 
C) have the greatest impact in the market for skilled labor. 
D) All of the above are correct.

Question 6

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Accepted Answer

A) Improvements in production technology reduce the costs of producing laptop computers. 
B) The number of firms selling laptop computers decreases. 
C) Consumers' income decreases, and laptop computers are a normal good. 
D) The number of consumers buying laptop computers decreases. 
A) Improvements in production technology reduce the costs of producing laptop computers. 
B) The number of firms selling laptop computers decreases. 
C) Consumers' income decreases, and laptop computers are a normal good. 
D) The number of consumers buying laptop computers decreases.

Question 7

If the government removes a binding price ceiling from a market, then the price received by sellers will

Accepted Answer

A) decrease, and the quantity sold in the market will decrease. 
B) decrease, and the quantity sold in the market will increase. 
C) increase, and the quantity sold in the market will decrease. 
D) increase, and the quantity sold in the market will increase. 
A) decrease, and the quantity sold in the market will decrease. 
B) decrease, and the quantity sold in the market will increase. 
C) increase, and the quantity sold in the market will decrease. 
D) increase, and the quantity sold in the market will increase.

Question 8

Which of the following is correct? Price controls

Accepted Answer

A) always help those they are designed to help. 
B) never help those they are designed to help. 
C) often hurt those they are designed to help. 
D) always hurt those they are designed to help. 
A) always help those they are designed to help. 
B) never help those they are designed to help. 
C) often hurt those they are designed to help. 
D) always hurt those they are designed to help.

Question 9

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

Accepted Answer

A) True 
 B)False

Question 10

A binding price ceiling causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-24
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-24. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2, the price paid by buyers will be

Accepted Answer

A) higher in the long run than in the short run. 
B) higher in the short run than in the long run. 
C) equivalent in the short run and the long run. 
D) unable to be determined without additional information. 
A) higher in the long run than in the short run. 
B) higher in the short run than in the long run. 
C) equivalent in the short run and the long run. 
D) unable to be determined without additional information.

Question 12

The minimum wage

Accepted Answer

A) is an example of a price ceiling. 
B) has its greatest impact on middle-aged and immigrant workers. 
C) does not apply to unpaid internships. 
D) does not affect the quantity of labor demanded; it only affects the quantity of labor supplied. 
A) is an example of a price ceiling. 
B) has its greatest impact on middle-aged and immigrant workers. 
C) does not apply to unpaid internships. 
D) does not affect the quantity of labor demanded; it only affects the quantity of labor supplied.

Question 13

The quantity sold in a market will increase if the government

Accepted Answer

A) decreases a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) decreases a tax on the good sold in that market. 
D) More than one of the above is correct. 
A) decreases a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) decreases a tax on the good sold in that market. 
D) More than one of the above is correct.

Question 14

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Accepted Answer

A) a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B) the government's policy of maintaining a price ceiling on gasoline. 
C) an indifference among U.S. consumers toward conservation. 
D) the lack of substitutes for crude oil. 
A) a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B) the government's policy of maintaining a price ceiling on gasoline. 
C) an indifference among U.S. consumers toward conservation. 
D) the lack of substitutes for crude oil.

Question 15

A shortage results when a

Accepted Answer

A) nonbinding price ceiling is imposed on a market. 
B) nonbinding price ceiling is removed from a market. 
C) binding price ceiling is imposed on a market. 
D) binding price ceiling is removed from a market. 
A) nonbinding price ceiling is imposed on a market. 
B) nonbinding price ceiling is removed from a market. 
C) binding price ceiling is imposed on a market. 
D) binding price ceiling is removed from a market.

Question 16

Workers determine the supply of labor, and firms determine the demand for labor.

Accepted Answer

A) True 
 B)False

Question 17

Table 6-1
 $$\begin{array} { | c | c | c | } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Sugplied }
\end{array} \
\hline \$ [ 12 & 12 & 0 \
\hline \$ 1 & 10 & 2 \
\hline \$ 2 & 8 & 4 \
\hline \$ 3 & 6 & 6 \
\hline \$ 4 & 4 & 8 \
\hline \$ 5 & 2 & 10 \
\hline \$ 6 & 0 & 12 \
\hline
\end{array}$$
-Refer to Table 6-1. Suppose the government imposes a price ceiling of $5 on this market. What will be the size of the shortage in this market?

Accepted Answer

A) 0 units 
B) 2 units 
C) 8 units 
D) 10 units 
A) 0 units 
B) 2 units 
C) 8 units 
D) 10 units

Question 18

Economic policies often have effects that their architects did not intend or anticipate.

Accepted Answer

A) True 
 B)False

Question 19

Over time, housing shortages caused by rent control

Accepted Answer

A) increase, because the demand for and supply of housing are less elastic in the long run. 
B) increase, because the demand for and supply of housing are more elastic in the long run. 
C) decrease, because the demand for and supply of housing are less elastic in the long run. 
D) decrease, because the demand for and supply of housing are more elastic in the long run. 
A) increase, because the demand for and supply of housing are less elastic in the long run. 
B) increase, because the demand for and supply of housing are more elastic in the long run. 
C) decrease, because the demand for and supply of housing are less elastic in the long run. 
D) decrease, because the demand for and supply of housing are more elastic in the long run.

Question 20

Figure 6-6  
-Refer to Figure 6-6. Which of the following statements is not correct?

Accepted Answer

A) A price ceiling set at $8 would be binding, but a price ceiling set at $12 would not be binding. 
B) A price floor set at $14 would be binding, but a price floor set at $8 would not be binding. 
C) A price ceiling set at $9 would result in a surplus. 
D) A price floor set at $11 would result in a surplus. 
A) A price ceiling set at $8 would be binding, but a price ceiling set at $12 would not be binding. 
B) A price floor set at $14 would be binding, but a price floor set at $8 would not be binding. 
C) A price ceiling set at $9 would result in a surplus. 
D) A price floor set at $11 would result in a surplus.

Exam 6: Supply, Demand, and Government Policies

Which of the following causes a surplus of a good?

A $3 tax levied on the buyers of shoes will cause the

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

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

Minimum wage laws

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

If the government removes a binding price ceiling from a market, then the price received by sellers will

Which of the following is correct? Price controls

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

A binding price ceiling causes a shortage in the market.

The minimum wage

The quantity sold in a market will increase if the government

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

A shortage results when a

Workers determine the supply of labor, and firms determine the demand for labor.

Table 6-1 Price Quantity Denanded Quantity Sugplied \ [12 12 0 \ 1 10 2 \ 2 8 4 \ 3 6 6 \ 4 4 8 \ 5 2 10 \ 6 0 12 -Refer to Table 6-1. Suppose the government imposes a price ceiling of $5 on this market. What will be the size of the shortage in this market?

Economic policies often have effects that their architects did not intend or anticipate.

Over time, housing shortages caused by rent control

Figure 6-6 -Refer to Figure 6-6. Which of the following statements is not correct?

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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