Question 1

A price ceiling is a legal minimum on the price at which a good or service can be sold.

Accepted Answer

A) True 
 B)False

Question 2

The presence of a price control in a market for a good or service usually is an indication that

Accepted Answer

A)  an insufficient quantity of the good or service was being produced in that market to meet the public's need. 
B)  the usual forces of supply and demand were not able to establish an equilibrium price in that market. 
C)  policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. 
D)  policymakers correctly believed that,in that market,price controls would generate no inequities of their own. 
A)  an insufficient quantity of the good or service was being produced in that market to meet the public's need. 
B)  the usual forces of supply and demand were not able to establish an equilibrium price in that market. 
C)  policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. 
D)  policymakers correctly believed that,in that market,price controls would generate no inequities of their own.

Question 3

A price ceiling caused the gasoline shortage of 1973 in the United States.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Which of the following is correct?

Accepted Answer

A)  A tax burden falls more heavily on the side of the market that is more elastic. 
B)  A tax burden falls more heavily on the side of the market that is less elastic. 
C)  A tax burden falls more heavily on the side of the market that is closer to unit elastic. 
D)  A tax burden is distributed independently of the relative elasticities of supply and demand. 
A)  A tax burden falls more heavily on the side of the market that is more elastic. 
B)  A tax burden falls more heavily on the side of the market that is less elastic. 
C)  A tax burden falls more heavily on the side of the market that is closer to unit elastic. 
D)  A tax burden is distributed independently of the relative elasticities of supply and demand.

Question 6

When the government imposes a binding price ceiling on a competitive market,a surplus of the good arises,and sellers must ration the scarce goods among the large number of potential buyers.

Accepted Answer

A) True 
 B)False

Question 7

As a rationing mechanism,discrimination according to seller bias is

Accepted Answer

A)  efficient and fair. 
B)  efficient,but potentially unfair. 
C)  inefficient,but fair. 
D)  inefficient and potentially unfair. 
A)  efficient and fair. 
B)  efficient,but potentially unfair. 
C)  inefficient,but fair. 
D)  inefficient and potentially unfair.

Question 8

Most economists are in favor of price controls as a way of allocating resources in the economy.

Accepted Answer

A) True 
 B)False

Question 9

The goal of rent control is to help the poor by making housing more affordable.

Accepted Answer

A) True 
 B)False

Question 10

If a tax is levied on the buyers of a product,then the supply curve

Accepted Answer

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

Question 11

Figure 6-13
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-13.The price that buyers pay after the tax is imposed is

Accepted Answer

A)  $8. 
B)  $10. 
C)  $16. 
D)  $24. 
A)  $8. 
B)  $10. 
C)  $16. 
D)  $24.

Question 12

A legal maximum on the price at which a good can be sold is called a price

Accepted Answer

A)  floor. 
B)  subsidy. 
C)  support. 
D)  ceiling. 
A)  floor. 
B)  subsidy. 
C)  support. 
D)  ceiling.

Question 13

Price ceilings and price floors that are binding

Accepted Answer

A)  are desirable because they make markets more efficient and more fair. 
B)  cause surpluses and shortages to persist since price cannot adjust to the market equilibrium price. 
C)  can have the effect of restoring a market to equilibrium. 
D)  are imposed because they can make the poor in the economy better off without causing adverse effects. 
A)  are desirable because they make markets more efficient and more fair. 
B)  cause surpluses and shortages to persist since price cannot adjust to the market equilibrium price. 
C)  can have the effect of restoring a market to equilibrium. 
D)  are imposed because they can make the poor in the economy better off without causing adverse effects.

Question 14

There are several criticisms of the minimum wage.Which of the following is not one of those criticisms?

Accepted Answer

A)  The minimum wage often hurts those people who it is intended to help. 
B)  The minimum wage results in an excess supply of low-skilled labor. 
C)  The minimum wage prevents some unskilled workers from getting needed on-the-job training. 
D)  The minimum wage fails to raise the wage of any employed person. 
A)  The minimum wage often hurts those people who it is intended to help. 
B)  The minimum wage results in an excess supply of low-skilled labor. 
C)  The minimum wage prevents some unskilled workers from getting needed on-the-job training. 
D)  The minimum wage fails to raise the wage of any employed person.

Question 15

A minimum wage that is set below a market's equilibrium wage will result in

Accepted Answer

A)  an excess demand for labor,that is,unemployment. 
B)  an excess demand for labor,that is,a shortage of workers. 
C)  an excess supply of labor,that is,unemployment. 
D)  None of the above is correct. 
A)  an excess demand for labor,that is,unemployment. 
B)  an excess demand for labor,that is,a shortage of workers. 
C)  an excess supply of labor,that is,unemployment. 
D)  None of the above is correct.

Question 16

As rationing mechanisms,prices

Accepted Answer

A)  and long lines are efficient. 
B)  are efficient,but long lines are inefficient. 
C)  are inefficient,but long lines are efficient. 
D)  and long lines are inefficient. 
A)  and long lines are efficient. 
B)  are efficient,but long lines are inefficient. 
C)  are inefficient,but long lines are efficient. 
D)  and long lines are inefficient.

Question 17

Which of the following observations would be consistent with the imposition of a binding price floor on a market?

Accepted Answer

A)  A smaller quantity of the good is bought and sold after the price floor becomes effective. 
B)  A larger quantity of the good is demanded after the price floor becomes effective. 
C)  A smaller quantity of the good is supplied after the price floor becomes effective. 
D)  All of the above are correct. 
A)  A smaller quantity of the good is bought and sold after the price floor becomes effective. 
B)  A larger quantity of the good is demanded after the price floor becomes effective. 
C)  A smaller quantity of the good is supplied after the price floor becomes effective. 
D)  All of the above are correct.

Question 18

A minimum wage that is set above a market's equilibrium wage will result in

Accepted Answer

A)  an excess demand for labor,that is,unemployment. 
B)  an excess demand for labor,that is,a shortage of workers. 
C)  an excess supply of labor,that is,unemployment. 
D)  an excess supply of labor,that is,a shortage of workers. 
A)  an excess demand for labor,that is,unemployment. 
B)  an excess demand for labor,that is,a shortage of workers. 
C)  an excess supply of labor,that is,unemployment. 
D)  an excess supply of labor,that is,a shortage of workers.

Question 19

If a binding price ceiling is imposed on the computer market,then

Accepted Answer

A)  the demand for computers will increase. 
B)  the supply of computers will decrease. 
C)  a shortage of computers will develop. 
D)  All of the above are correct. 
A)  the demand for computers will increase. 
B)  the supply of computers will decrease. 
C)  a shortage of computers will develop. 
D)  All of the above are correct.

Question 20

A tax on buyers shifts the demand curve and the supply curve.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

A price ceiling is a legal minimum on the price at which a good or service can be sold.

The presence of a price control in a market for a good or service usually is an indication that

A price ceiling caused the gasoline shortage of 1973 in the United States.

The quantity sold in a market will increase if the government

Which of the following is correct?

When the government imposes a binding price ceiling on a competitive market,a surplus of the good arises,and sellers must ration the scarce goods among the large number of potential buyers.

As a rationing mechanism,discrimination according to seller bias is

Most economists are in favor of price controls as a way of allocating resources in the economy.

The goal of rent control is to help the poor by making housing more affordable.

If a tax is levied on the buyers of a product,then the supply curve

Figure 6-13 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-13.The price that buyers pay after the tax is imposed is

A legal maximum on the price at which a good can be sold is called a price

Price ceilings and price floors that are binding

There are several criticisms of the minimum wage.Which of the following is not one of those criticisms?

A minimum wage that is set below a market's equilibrium wage will result in

As rationing mechanisms,prices

Which of the following observations would be consistent with the imposition of a binding price floor on a market?

A minimum wage that is set above a market's equilibrium wage will result in

If a binding price ceiling is imposed on the computer market,then

A tax on buyers shifts the demand curve and the supply curve.

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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