Question 1

In an unregulated labor market,the wage adjusts to balance labor supply and labor demand.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-8  
-Refer to Figure 6-8.Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

Accepted Answer

A)  Buyers of gasoline paid a price of P1 before 1973;they paid a price of P2 after OPEC increased the price of crude oil in 1973,and there was a shortage of gasoline at that price. 
B)  Buyers of gasoline paid a price of P1 before 1973;they paid a price of P3 after OPEC increased the price of crude oil in 1973,and there was a shortage of gasoline at that price. 
C)  Buyers of gasoline paid a price of P2 before 1973;they paid a price of P3 after OPEC increased the price of crude oil in 1973,with no shortage of gasoline at that price. 
D)  The price ceiling was binding before 1973;the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973. 
A)  Buyers of gasoline paid a price of P1 before 1973;they paid a price of P2 after OPEC increased the price of crude oil in 1973,and there was a shortage of gasoline at that price. 
B)  Buyers of gasoline paid a price of P1 before 1973;they paid a price of P3 after OPEC increased the price of crude oil in 1973,and there was a shortage of gasoline at that price. 
C)  Buyers of gasoline paid a price of P2 before 1973;they paid a price of P3 after OPEC increased the price of crude oil in 1973,with no shortage of gasoline at that price. 
D)  The price ceiling was binding before 1973;the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973.

Question 3

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 4

If a price floor is a binding constraint on a market,then

Accepted Answer

A)  the equilibrium price must be above the price floor. 
B)  the quantity demanded must exceed the quantity supplied. 
C)  sellers cannot sell all they want to sell at the price floor. 
D)  buyers cannot buy all they want to buy at the price floor. 
A)  the equilibrium price must be above the price floor. 
B)  the quantity demanded must exceed the quantity supplied. 
C)  sellers cannot sell all they want to sell at the price floor. 
D)  buyers cannot buy all they want to buy at the price floor.

Question 5

Figure 6-16
Panel (a)Panel (b)     Panel (c)  
-Refer to Figure 6-16.In which market will the majority of the tax burden fall on buyers?

Accepted Answer

A)  market (a) 
B)  market (b) 
C)  market (c) 
D)  All of the above are correct. 
A)  market (a) 
B)  market (b) 
C)  market (c) 
D)  All of the above are correct.

Question 6

Figure 6-7  
-Refer to Figure 6-7.Which of the following statements is correct?

Accepted Answer

A)  A price ceiling set at $6 will be binding and will result in a shortage of 8 units. 
B)  A price ceiling set at $6 will be binding and will result in a shortage of 4 units. 
C)  A price ceiling set at $16 will be binding and will result in a shortage of 12 units. 
D)  A price ceiling set at $16 will be binding and will result in a shortage of 6 units. 
A)  A price ceiling set at $6 will be binding and will result in a shortage of 8 units. 
B)  A price ceiling set at $6 will be binding and will result in a shortage of 4 units. 
C)  A price ceiling set at $16 will be binding and will result in a shortage of 12 units. 
D)  A price ceiling set at $16 will be binding and will result in a shortage of 6 units.

Question 7

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Accepted Answer

A) True 
 B)False

Question 8

If the equilibrium price of an airline ticket is $500 and the government imposes a price floor of $400 on airline tickets,then fewer airline tickets will be sold than at the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not a rationing mechanism used by landlords in cities with rent control?

Accepted Answer

A)  waiting lists 
B)  race 
C)  price 
D)  bribes 
A)  waiting lists 
B)  race 
C)  price 
D)  bribes

Question 10

Using the graph shown,answer the following questions.
What was the equilibrium price in this market before the tax?
What is the amount of the tax?
How much of the tax will the buyers pay?
How much of the tax will the sellers pay?
How much will the buyer pay for the product after the tax is imposed?
How much will the seller receive after the tax is imposed?
As a result of the tax,what has happened to the level of market activity?

Accepted Answer

a.
$6
b.
$4
c.
$1
d.
$3
e.
$7

Question 11

If a tax is levied on the sellers of sugar,then

Accepted Answer

A)  buyers will bear the entire burden of the tax. 
B)  sellers will bear the entire burden of the tax. 
C)  buyers and sellers will share the burden of the tax. 
D)  the government will bear the entire burden of the tax. 
A)  buyers will bear the entire burden of the tax. 
B)  sellers will bear the entire burden of the tax. 
C)  buyers and sellers will share the burden of the tax. 
D)  the government will bear the entire burden of the tax.

Question 12

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 13

A tax imposed on the sellers of a good will

Accepted Answer

A)  lower the price paid by buyers and lower the equilibrium quantity. 
B)  lower the price paid by buyers and raise the equilibrium quantity. 
C)  lower the effective price received by sellers and lower the equilibrium quantity. 
D)  lower the effective price received by sellers and raise the equilibrium quantity. 
A)  lower the price paid by buyers and lower the equilibrium quantity. 
B)  lower the price paid by buyers and raise the equilibrium quantity. 
C)  lower the effective price received by sellers and lower the equilibrium quantity. 
D)  lower the effective price received by sellers and raise the equilibrium quantity.

Question 14

Figure 6-13
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-13.The amount of the tax per unit is

Accepted Answer

A)  $6. 
B)  $8. 
C)  $14. 
D)  $18. 
A)  $6. 
B)  $8. 
C)  $14. 
D)  $18.

Question 15

If a tax is levied on the sellers of a product,then the demand curve

Accepted Answer

A)  will shift down. 
B)  will shift up. 
C)  will become flatter. 
D)  will not shift. 
A)  will shift down. 
B)  will shift up. 
C)  will become flatter. 
D)  will not shift.

Question 16

States in the U.S.may mandate minimum wages above the federal level.

Accepted Answer

A) True 
 B)False

Question 17

A binding minimum wage may not help all workers,but it does not hurt any workers.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a function of prices in a market system?

Accepted Answer

A)  Prices have the crucial job of balancing supply and demand. 
B)  Prices send signals to buyers and sellers to help them make rational economic decisions. 
C)  Prices coordinate economic activity. 
D)  Prices ensure an equal distribution of goods and services among consumers. 
A)  Prices have the crucial job of balancing supply and demand. 
B)  Prices send signals to buyers and sellers to help them make rational economic decisions. 
C)  Prices coordinate economic activity. 
D)  Prices ensure an equal distribution of goods and services among consumers.

Question 19

One disadvantage of government subsidies over price controls is that subsidies

Accepted Answer

A)  prevent the attainment of equilibrium in the markets in which they are imposed. 
B)  make higher taxes necessary. 
C)  are always unfair to those with low incomes. 
D)  cause unemployment. 
A)  prevent the attainment of equilibrium in the markets in which they are imposed. 
B)  make higher taxes necessary. 
C)  are always unfair to those with low incomes. 
D)  cause unemployment.

Question 20

Table 6-1
  
-Refer to Table 6-1.Which of the following price ceilings would be binding in this market?

Accepted Answer

A)  $2 
B)  $3 
C)  $4 
D)  $5 
A)  $2 
B)  $3 
C)  $4 
D)  $5

Exam 6: Supply, Demand, and Government Policies

In an unregulated labor market,the wage adjusts to balance labor supply and labor demand.

Figure 6-8 -Refer to Figure 6-8.Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

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

If a price floor is a binding constraint on a market,then

Figure 6-16 Panel (a)Panel (b) Panel (c) -Refer to Figure 6-16.In which market will the majority of the tax burden fall on buyers?

Figure 6-7 -Refer to Figure 6-7.Which of the following statements is correct?

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

If the equilibrium price of an airline ticket is $500 and the government imposes a price floor of $400 on airline tickets,then fewer airline tickets will be sold than at the market equilibrium.

Which of the following is not a rationing mechanism used by landlords in cities with rent control?

If a tax is levied on the sellers of sugar,then

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

A tax imposed on the sellers of a good will

Figure 6-13 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-13.The amount of the tax per unit is

If a tax is levied on the sellers of a product,then the demand curve

States in the U.S.may mandate minimum wages above the federal level.

A binding minimum wage may not help all workers,but it does not hurt any workers.

Which of the following is not a function of prices in a market system?

One disadvantage of government subsidies over price controls is that subsidies

Table 6-1 -Refer to Table 6-1.Which of the following price ceilings would be binding in this market?

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

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

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