Question 1

Figure 6-1
Panel (a) Panel (b)
    
-Refer to Figure 6-1. The price ceiling shown in panel (b)

Accepted Answer

A)  is not binding. 
B)  creates a surplus. 
C)  creates a shortage. 
D)  Both a) and b) are correct. 
A)  is not binding. 
B)  creates a surplus. 
C)  creates a shortage. 
D)  Both a) and b) are correct. C

Question 2

The minimum wage has its greatest impact on the market for teenage labor.

Accepted Answer

A) True 
 B)False  True

Question 3

If the government removes a tax on a good, then the quantity of the good sold will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change. 
D)  All of the above are possible. 
A)  increase. 
B)  decrease. 
C)  not change. 
D)  All of the above are possible. A

Question 4

A binding price floor will reduce a firm's total revenue

Accepted Answer

A)  always. 
B)  when demand is elastic. 
C)  when demand is inelastic. 
D)  never. 
A)  always. 
B)  when demand is elastic. 
C)  when demand is inelastic. 
D)  never.

Question 5

Rent-control laws dictate

Accepted Answer

A)  the exact rent that landlords must charge tenants. 
B)  a maximum rent that landlords may charge tenants. 
C)  a minimum rent that landlords may charge tenants. 
D)  both a minimum rent and a maximum rent that landlords may charge tenants. 
A)  the exact rent that landlords must charge tenants. 
B)  a maximum rent that landlords may charge tenants. 
C)  a minimum rent that landlords may charge tenants. 
D)  both a minimum rent and a maximum rent that landlords may charge tenants.

Question 6

Scenario 6-1
Suppose that demand in the market for good X is given by the equation   and that supply in the market for good X is given by the equation  
-Refer to Scenario 6-1. If the government set a price ceiling at $12, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $12 wou

Question 7

Figure 6-29
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-29. The buyers and sellers will bear an equal share of the tax burden if the demand is

Accepted Answer

A)  D1, and the supply is S1. 
B)  D2, and the supply is S1. 
C)  D1, and the supply is S2. 
D)  D2, and the supply is S2. 
A)  D1, and the supply is S1. 
B)  D2, and the supply is S1. 
C)  D1, and the supply is S2. 
D)  D2, and the supply is S2.

Question 8

If the demand curve is very inelastic and the supply curve is very elastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 9

A tax of $1 on sellers always increases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 10

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-9  
-Refer to Figure 6-9. At which price would a price ceiling be binding?

Accepted Answer

A)  $8 
B)  $5 
C)  $6 
D)  $7 
A)  $8 
B)  $5 
C)  $6 
D)  $7

Question 12

The price paid by buyers in a market will decrease if the government

Accepted Answer

A)  increases 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)  All of the above are correct. 
A)  increases 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)  All of the above are correct.

Question 13

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 14

Figure 6-30
Panel (a) Panel (b)
     Panel (c)  
-Refer to Figure 6-30. In which market will the majority of the tax burden fall on buyers?

Accepted Answer

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

Question 15

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

Accepted Answer

A binding price ceil

Question 16

A tax on sellers increases supply.

Accepted Answer

A) True 
 B)False

Question 17

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by

Accepted Answer

A)  less than $0.50. 
B)  $0.50. 
C)  between $0.50 and $1. 
D)  $1. 
A)  less than $0.50. 
B)  $0.50. 
C)  between $0.50 and $1. 
D)  $1.

Question 18

Figure 6-19  
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)  $3 
B)  between $3 and $5 
C)  between $5 and $7 
D)  $7 
A)  $3 
B)  between $3 and $5 
C)  between $5 and $7 
D)  $7

Question 19

The economy contains many labor markets for different types of workers.

Accepted Answer

A) True 
 B)False

Question 20

A tax imposed on the sellers of a good will lower the

Accepted Answer

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

Exam 6: Supply, Demand, and Government Policies

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. The price ceiling shown in panel (b)

The minimum wage has its greatest impact on the market for teenage labor.

If the government removes a tax on a good, then the quantity of the good sold will

A binding price floor will reduce a firm's total revenue

Rent-control laws dictate

Figure 6-29 Suppose the government imposes a $2 on this market. -Refer to Figure 6-29. The buyers and sellers will bear an equal share of the tax burden if the demand is

If the demand curve is very inelastic and the supply curve is very elastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

A tax of $1 on sellers always increases the equilibrium price by $1.

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Figure 6-9 -Refer to Figure 6-9. At which price would a price ceiling be binding?

The price paid by buyers in a market will decrease if the government

Minimum wage laws

Figure 6-30 Panel (a) Panel (b) Panel (c) -Refer to Figure 6-30. In which market will the majority of the tax burden fall on buyers?

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

A tax on sellers increases supply.

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

The economy contains many labor markets for different types of workers.

A tax imposed on the sellers of a good will lower the

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

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