Question 1

Most labor economists believe that the supply of labor is

Accepted Answer

A)  less elastic than the demand, and, therefore, firms bear most of the burden of the payroll tax. 
B)  less elastic than the demand, and, therefore, workers bear most of the burden of the payroll tax. 
C)  more elastic than the demand, and, therefore, workers bear most of the burden of the payroll tax. 
D)  more elastic than the demand, and, therefore, firms bear most of the burden of the payroll tax. 
A)  less elastic than the demand, and, therefore, firms bear most of the burden of the payroll tax. 
B)  less elastic than the demand, and, therefore, workers bear most of the burden of the payroll tax. 
C)  more elastic than the demand, and, therefore, workers bear most of the burden of the payroll tax. 
D)  more elastic than the demand, and, therefore, firms bear most of the burden of the payroll tax.

Question 2

Figure 6-10  
-Refer to Figure 6-10. A price floor set at

Accepted Answer

A)  $6 will be binding and will result in a surplus of 10 units. 
B)  $6 will be binding and will result in a surplus of 6 units. 
C)  $16 will be binding and will result in a surplus of 10 units. 
D)  $16 will be binding and will result in a surplus of 4 units. 
A)  $6 will be binding and will result in a surplus of 10 units. 
B)  $6 will be binding and will result in a surplus of 6 units. 
C)  $16 will be binding and will result in a surplus of 10 units. 
D)  $16 will be binding and will result in a surplus of 4 units.

Question 3

The long-run effects of rent controls are a good illustration of the principle that

Accepted Answer

A)  society faces a short-run tradeoff between unemployment and inflation. 
B)  the cost of something is what you give up to get it. 
C)  people respond to incentives. 
D)  government can sometimes improve on market outcomes. 
A)  society faces a short-run tradeoff between unemployment and inflation. 
B)  the cost of something is what you give up to get it. 
C)  people respond to incentives. 
D)  government can sometimes improve on market outcomes.

Question 4

If a tax is levied on the buyers of a product, then there will be a(n)

Accepted Answer

A)  upward shift of the demand curve. 
B)  downward shift of the demand curve. 
C)  movement up and to the left along the demand curve. 
D)  movement down and to the right along the demand curve. 
A)  upward shift of the demand curve. 
B)  downward shift of the demand curve. 
C)  movement up and to the left along the demand curve. 
D)  movement down and to the right along the demand curve.

Question 5

Table 6-2
  
-Refer to Table 6-2. A price ceiling set at $5 will

Accepted Answer

A)  be binding and will result in a shortage of 50 units. 
B)  be binding and will result in a shortage of 250 units. 
C)  be binding and will result in a shortage of 300 units. 
D)  not be binding. 
A)  be binding and will result in a shortage of 50 units. 
B)  be binding and will result in a shortage of 250 units. 
C)  be binding and will result in a shortage of 300 units. 
D)  not be binding.

Question 6

If the government levies a $5 tax per MP3 player on buyers of MP3 players, then the price paid by buyers of MP3 players would likely

Accepted Answer

A)  increase by more than $5. 
B)  increase by exactly $5. 
C)  increase by less than $5. 
D)  decrease. 
A)  increase by more than $5. 
B)  increase by exactly $5. 
C)  increase by less than $5. 
D)  decrease.

Question 7

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 8

Scenario 6-2
Suppose demand for a product is given by the equation   and supply for the product is given by the equation  
-Refer to Scenario 6-2. What are the equilibrium price and equilibrium quantity in the market for this product?

Accepted Answer

The equilibrium pric

Question 9

Rent control policies tend to cause

Accepted Answer

A)  relatively smaller shortages in the short run than in the long run because supply and demand tends to be more elastic in the short run than in the long run. 
B)  relatively larger shortages in the short run than in the long run because supply and demand tends to be more elastic in the short run than in the long run. 
C)  relatively larger shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run. 
D)  relatively smaller shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run. 
A)  relatively smaller shortages in the short run than in the long run because supply and demand tends to be more elastic in the short run than in the long run. 
B)  relatively larger shortages in the short run than in the long run because supply and demand tends to be more elastic in the short run than in the long run. 
C)  relatively larger shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run. 
D)  relatively smaller shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run.

Question 10

Rent control

Accepted Answer

A)  serves as an example of how a social problem can be alleviated or even solved by government policies. 
B)  serves as an example of a price ceiling. 
C)  is regarded by most economists as an efficient way of helping the poor. 
D)  is the most efficient way to allocate scarce housing resources. 
A)  serves as an example of how a social problem can be alleviated or even solved by government policies. 
B)  serves as an example of a price ceiling. 
C)  is regarded by most economists as an efficient way of helping the poor. 
D)  is the most efficient way to allocate scarce housing resources.

Question 11

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Accepted Answer

A)  Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole. 
B)  Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
C)  Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
D)  Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling. 
A)  Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole. 
B)  Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
C)  Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
D)  Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling.

Question 12

Figure 6-35  
-Refer to Figure 6-35. A price ceiling set at $30 would create a shortage of 20 units.

Accepted Answer

A) True 
 B)False

Question 13

Most labor economists believe that the supply of labor is much more elastic than the demand.

Accepted Answer

A) True 
 B)False

Question 14

If a nonbinding price ceiling is imposed on a market, then the

Accepted Answer

A)  quantity sold in the market will decrease. 
B)  quantity sold in the market will stay the same. 
C)  price in the market will increase. 
D)  price in the market will decrease. 
A)  quantity sold in the market will decrease. 
B)  quantity sold in the market will stay the same. 
C)  price in the market will increase. 
D)  price in the market will decrease.

Question 15

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. If the government imposes a price ceiling of $4 on this market, then there will be

Accepted Answer

A)  no shortage. 
B)  a shortage of 5 units. 
C)  a shortage of 10 units. 
D)  a shortage of 20 units. 
A)  no shortage. 
B)  a shortage of 5 units. 
C)  a shortage of 10 units. 
D)  a shortage of 20 units.

Question 16

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

Accepted Answer

A)  This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor. 
B)  The effective price received by sellers is $5.00 per bottle less than it was before the tax. 
C)  Forty percent of the burden of the tax falls on buyers. 
D)  All of the above are correct. 
A)  This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor. 
B)  The effective price received by sellers is $5.00 per bottle less than it was before the tax. 
C)  Forty percent of the burden of the tax falls on buyers. 
D)  All of the above are correct.

Question 17

Table 6-6
  
-Refer to Table 6-6. If the government set a price floor at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at $2 would

Question 18

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 19

Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

Accepted Answer

A) True 
 B)False

Question 20

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $12 in this market is an example of a

Accepted Answer

A)  binding price ceiling that creates a shortage. 
B)  non-binding price ceiling that creates a shortage. 
C)  binding price floor that creates a surplus. 
D)  non-binding price floor that creates a surplus. 
A)  binding price ceiling that creates a shortage. 
B)  non-binding price ceiling that creates a shortage. 
C)  binding price floor that creates a surplus. 
D)  non-binding price floor that creates a surplus.

Exam 6: Supply, Demand, and Government Policies

Most labor economists believe that the supply of labor is

Figure 6-10 -Refer to Figure 6-10. A price floor set at

The long-run effects of rent controls are a good illustration of the principle that

If a tax is levied on the buyers of a product, then there will be a(n)

Table 6-2 -Refer to Table 6-2. A price ceiling set at $5 will

If the government levies a $5 tax per MP3 player on buyers of MP3 players, then the price paid by buyers of MP3 players would likely

Over time, housing shortages caused by rent control

Scenario 6-2 Suppose demand for a product is given by the equation and supply for the product is given by the equation -Refer to Scenario 6-2. What are the equilibrium price and equilibrium quantity in the market for this product?

Rent control policies tend to cause

Rent control

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Figure 6-35 -Refer to Figure 6-35. A price ceiling set at $30 would create a shortage of 20 units.

Most labor economists believe that the supply of labor is much more elastic than the demand.

If a nonbinding price ceiling is imposed on a market, then the

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price ceiling of $4 on this market, then there will be

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

Table 6-6 -Refer to Table 6-6. If the government set a price floor at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.

Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $12 in this market is an example of a

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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