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

A price floor set below the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 3

A price ceiling is binding when it is set

Accepted Answer

A)  above the equilibrium price, causing a shortage. 
B)  above the equilibrium price, causing a surplus. 
C)  below the equilibrium price, causing a shortage. 
D)  below the equilibrium price, causing a surplus. 
A)  above the equilibrium price, causing a shortage. 
B)  above the equilibrium price, causing a surplus. 
C)  below the equilibrium price, causing a shortage. 
D)  below the equilibrium price, causing a surplus.

Question 4

If a price floor is not binding, then

Accepted Answer

A)  the equilibrium price is above the price floor. 
B)  the equilibrium price is below the price floor. 
C)  there will be a surplus in the market. 
D)  there will be a shortage in the market. 
A)  the equilibrium price is above the price floor. 
B)  the equilibrium price is below the price floor. 
C)  there will be a surplus in the market. 
D)  there will be a shortage in the market.

Question 5

One common example of a price floor is the minimum wage.

Accepted Answer

A) True 
 B)False

Question 6

If the government wants to reduce smoking, it should impose a tax on

Accepted Answer

A)  buyers of cigarettes. 
B)  sellers of cigarettes. 
C)  either buyers or sellers of cigarettes. 
D)  whichever side of the market is less elastid. 
A)  buyers of cigarettes. 
B)  sellers of cigarettes. 
C)  either buyers or sellers of cigarettes. 
D)  whichever side of the market is less elastid.

Question 7

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i) supply is more elastic than the demand.
(ii) demand in more elastic than the supply.
(iii) tax is placed on the sellers of the product.
(iv) tax is placed on the buyers of the product.

Accepted Answer

A)  (i) only 
B)  (ii) only 
C)  (i) and (iv) only 
D)  (ii) and (iii) only 
A)  (i) only 
B)  (ii) only 
C)  (i) and (iv) only 
D)  (ii) and (iii) only

Question 8

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 because 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 because 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 9

Price floors are typically imposed to benefit sellers.

Accepted Answer

A) True 
 B)False

Question 10

A tax on the buyers of sofas

Accepted Answer

A)  increases the size of the sofa market. 
B)  decreases the size of the sofa market. 
C)  has no effect on the size of the sofa market. 
D)  may increase, decrease, or have no effect on the size of the sofa market. 
A)  increases the size of the sofa market. 
B)  decreases the size of the sofa market. 
C)  has no effect on the size of the sofa market. 
D)  may increase, decrease, or have no effect on the size of the sofa market.

Question 11

When a binding price ceiling is imposed on a market to benefit buyers,

Accepted Answer

A)  no buyers actually benefit. 
B)  some buyers benefit, but no buyers are harmed. 
C)  some buyers benefit, and some buyers are harmed. 
D)  all buyers benefit. 
A)  no buyers actually benefit. 
B)  some buyers benefit, but no buyers are harmed. 
C)  some buyers benefit, and some buyers are harmed. 
D)  all buyers benefit.

Question 12

A binding price ceiling may not help all consumers, but it does not hurt any consumers.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

Accepted Answer

A)  less than $10 
B)  $10. 
C)  between $10 and $20. 
D)  $20. 
A)  less than $10 
B)  $10. 
C)  between $10 and $20. 
D)  $20.

Question 14

Figure 6-24  
-Refer to Figure 6-24. What is the amount of the tax per unit?

Accepted Answer

A)  $8 
B)  $6 
C)  $4 
D)  $2 
A)  $8 
B)  $6 
C)  $4 
D)  $2

Question 15

Price controls are usually enacted

Accepted Answer

A)  as a means of raising revenue for public purposes. 
B)  when policymakers believe that the market price of a good or service is unfair to buyers or sellers. 
C)  when policymakers tax a good. 
D)  All of the above are correct. 
A)  as a means of raising revenue for public purposes. 
B)  when policymakers believe that the market price of a good or service is unfair to buyers or sellers. 
C)  when policymakers tax a good. 
D)  All of the above are correct.

Question 16

Figure 6-6  
-Refer to Figure 6-6. If the government imposes a price ceiling of $8 on this market, then there will be

Accepted Answer

A)  no shortage. 
B)  a shortage of 10 units. 
C)  a shortage of 20 units. 
D)  a shortage of 40 units. 
A)  no shortage. 
B)  a shortage of 10 units. 
C)  a shortage of 20 units. 
D)  a shortage of 40 units.

Question 17

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

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

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

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

A price floor set below the equilibrium price causes a surplus in the market.

A price ceiling is binding when it is set

If a price floor is not binding, then

One common example of a price floor is the minimum wage.

If the government wants to reduce smoking, it should impose a tax on

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i) supply is more elastic than the demand. (ii) demand in more elastic than the supply. (iii) tax is placed on the sellers of the product. (iv) tax is placed on the buyers of the product.

Price ceilings and price floors that are binding

Price floors are typically imposed to benefit sellers.

A tax on the buyers of sofas

When a binding price ceiling is imposed on a market to benefit buyers,

A binding price ceiling may not help all consumers, but it does not hurt any consumers.

Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

Figure 6-24 -Refer to Figure 6-24. What is the amount of the tax per unit?

Price controls are usually enacted

Figure 6-6 -Refer to Figure 6-6. If the government imposes a price ceiling of $8 on this market, then there will be

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

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

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

If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

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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