Question 1

Long gas lines after OPEC raised the price of crude oil in world markets were caused by the higher prices of oil and gas.

Accepted Answer

A) True 
 B)False

Question 2

A binding price floor causes:

Accepted Answer

A)  excess demand 
B)  a shortage 
C)  a surplus 
D)  equilibrium price to fall 
A)  excess demand 
B)  a shortage 
C)  a surplus 
D)  equilibrium price to fall

Question 3

Common rationing mechanisms under price ceilings include waiting in long lines and biases of the sellers.

Accepted Answer

A) True 
 B)False

Question 4

Graph 6-5
  
-According to Graph 6-5, a binding price floor would exist at a price of:

Accepted Answer

A)  $6.00 
B)  $5.00 
C)  $2.00 
D)  none of the above 
A)  $6.00 
B)  $5.00 
C)  $2.00 
D)  none of the above

Question 5

Graph 6-10
  
-In Graph 6-10, the per-unit burden of the tax on the sellers is:

Accepted Answer

A)  P2 minus P0 
B)  P2 minus P1 
C)  P1 minus P0 
D)  Q1 minus Q0 
A)  P2 minus P0 
B)  P2 minus P1 
C)  P1 minus P0 
D)  Q1 minus Q0

Question 6

If a tax is imposed on the buyer of a product, the tax incidence will fall entirely on the buyer.

Accepted Answer

A) True 
 B)False

Question 7

What is the goal of rent control and what do economists think of rent control as a mechanism for achieving the goal?

Accepted Answer

The goal of rent control is to

Question 8

Graph 6-3
  
-According to Graph 6-3, which panel(s) best represent(s) a binding rent control in the long run?

Accepted Answer

A)  panel a 
B)  panel b 
C)  neither panel 
D)  both panels 
A)  panel a 
B)  panel b 
C)  neither panel 
D)  both panels

Question 9

If the government sets the minimum price a good can be traded at, this is defined as a price floor.

Accepted Answer

A) True 
 B)False

Question 10

Graph 6-4
  
-According to Graph 6-4, when the supply curve for gasoline shifts from S1 to S2:

Accepted Answer

A)  the price will increase to P3 
B)  a surplus will occur at the new market price of P2 
C)  the market price will stay at P1 due to the price ceiling 
D)  a shortage will occur at the price ceiling of P2 
A)  the price will increase to P3 
B)  a surplus will occur at the new market price of P2 
C)  the market price will stay at P1 due to the price ceiling 
D)  a shortage will occur at the price ceiling of P2

Question 11

Graph 6-11
  
-Using Graph 6-11, answer the following questions.
a. What was the equilibrium price in this market before the tax?
b. What is the amount of the tax?
c. How much of the tax will the buyers pay?
f. How much of the tax will the sellers pay?
e. How much will the buyer pay for the product after the tax is imposed?
f. How much will the seller receive after the tax is imposed?
g. As a result of the tax, what has happened to the level of market activity?

Accepted Answer

a. $10
b. $3
c. $1
d. $2
e. $1

Question 12

Graph 6-7
  
-According to Graph 6-7, the equilibrium price in the market before the tax is imposed is:

Accepted Answer

A)  $8.00 
B)  $6.00 
C)  $5.00 
D)  $3.50 
A)  $8.00 
B)  $6.00 
C)  $5.00 
D)  $3.50

Question 13

A tax on the sellers of coffee will cause the price the buyer pays:

Accepted Answer

A)  and the price the seller receives to rise 
B)  and the price the seller receives to fall 
C)  to rise and the price the seller receives to fall 
D)  to fall and the price the seller receives to rise 
A)  and the price the seller receives to rise 
B)  and the price the seller receives to fall 
C)  to rise and the price the seller receives to fall 
D)  to fall and the price the seller receives to rise

Question 14

Graph 6-5
  
-According to Graph 6-5, if the government imposes a binding price floor of $6.00 in this market, the result will be a:

Accepted Answer

A)  surplus of 15 
B)  surplus of 35 
C)  shortage of 30 
D)  shortage of 50 
A)  surplus of 15 
B)  surplus of 35 
C)  shortage of 30 
D)  shortage of 50

Question 15

Most of the burden of a luxury tax falls on the middle-class workers who supply luxury goods, rather than on the rich who buy them.

Accepted Answer

A) True 
 B)False

Question 16

Using a demand-supply diagram, show how OPEC's raising of oil prices in the 1970s combined with a government-imposed price ceiling on gasoline created a shortage of gasoline.

Accepted Answer

The graph

Question 17

Which of the following is an example of a price-ceiling?

Accepted Answer

A)  a minimum wage 
B)  a sales tax 
C)  none of the above 
D)  a rent control 
A)  a minimum wage 
B)  a sales tax 
C)  none of the above 
D)  a rent control

Question 18

Rent controls lead to:

Accepted Answer

A)  a shortage of housing in the short run and a surplus of housing in the long run 
B)  a surplus of housing in the short run and a surplus of housing in the long run 
C)  a small shortage of housing in the short run and a large shortage of housing in the long run 
D)  a large shortage of housing in the short run and a small shortage of housing in the long run 
A)  a shortage of housing in the short run and a surplus of housing in the long run 
B)  a surplus of housing in the short run and a surplus of housing in the long run 
C)  a small shortage of housing in the short run and a large shortage of housing in the long run 
D)  a large shortage of housing in the short run and a small shortage of housing in the long run

Question 19

If a tax is imposed on a market, buyers will pay more for their purchases and sellers will receive less for their sales.

Accepted Answer

A) True 
 B)False

Question 20

Graph 6-7
  
-According to Graph 6-7, the amount of the tax that buyers would pay would be:

Accepted Answer

A)  $1.00 
B)  $1.50 
C)  $2.00 
D)  $3.00 
A)  $1.00 
B)  $1.50 
C)  $2.00 
D)  $3.00

Exam 6: Supply, Demand and Government Policies

Long gas lines after OPEC raised the price of crude oil in world markets were caused by the higher prices of oil and gas.

A binding price floor causes:

Common rationing mechanisms under price ceilings include waiting in long lines and biases of the sellers.

Graph 6-5 -According to Graph 6-5, a binding price floor would exist at a price of:

Graph 6-10 -In Graph 6-10, the per-unit burden of the tax on the sellers is:

If a tax is imposed on the buyer of a product, the tax incidence will fall entirely on the buyer.

What is the goal of rent control and what do economists think of rent control as a mechanism for achieving the goal?

Graph 6-3 -According to Graph 6-3, which panel(s) best represent(s) a binding rent control in the long run?

If the government sets the minimum price a good can be traded at, this is defined as a price floor.

Graph 6-4 -According to Graph 6-4, when the supply curve for gasoline shifts from S1 to S2:

Graph 6-7 -According to Graph 6-7, the equilibrium price in the market before the tax is imposed is:

A tax on the sellers of coffee will cause the price the buyer pays:

Graph 6-5 -According to Graph 6-5, if the government imposes a binding price floor of $6.00 in this market, the result will be a:

Most of the burden of a luxury tax falls on the middle-class workers who supply luxury goods, rather than on the rich who buy them.

Using a demand-supply diagram, show how OPEC's raising of oil prices in the 1970s combined with a government-imposed price ceiling on gasoline created a shortage of gasoline.

Which of the following is an example of a price-ceiling?

Rent controls lead to:

If a tax is imposed on a market, buyers will pay more for their purchases and sellers will receive less for their sales.

Graph 6-7 -According to Graph 6-7, the amount of the tax that buyers would pay would be:

Ten Lessons From 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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

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

Five Debates Over Macroeconomic Policy

Filters

Graph 6-4 -According to Graph 6-4, when the supply curve for gasoline shifts from S₁ to S₂: