Question 1

Figure 6-5  
-Refer to Figure 6-5. If government imposes a price floor at $9, then the price floor causes

Accepted Answer

A)  quantity demanded to decrease by 40 units. 
B)  quantity supplied to increase by 20 units. 
C)  a surplus of 60 units. 
D)  All of the above are correct. 
A)  quantity demanded to decrease by 40 units. 
B)  quantity supplied to increase by 20 units. 
C)  a surplus of 60 units. 
D)  All of the above are correct.

Question 2

Table 6-6
  
-Refer to Table 6-6. In this market, over what range of prices would a price ceiling set by the government be binding?

Accepted Answer

A price ceiling must be set be

Question 3

In a particular market, market demand is given by the equation   and market supply is given by the equation   Suppose a per-unit tax is imposed that reduces the number of units bought and sold in the market to 25 units. What is the size of the tax, and who bears the greater burden of the tax, buyers or sellers?

Accepted Answer

If the number of transactions falls to 2

Question 4

Does a binding price ceiling result in a shortage or a surplus in the market?

Accepted Answer

A binding price ceil

Question 5

Buyers and sellers always share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?

Accepted Answer

A)  an accumulation of dirt in the interior of rental cars 
B)  poor engine maintenance in rental cars 
C)  free gasoline given to people as an incentive to a rent a car 
D)  slow replacement of old rental cars with newer ones 
A)  an accumulation of dirt in the interior of rental cars 
B)  poor engine maintenance in rental cars 
C)  free gasoline given to people as an incentive to a rent a car 
D)  slow replacement of old rental cars with newer ones

Question 7

The incidence of a tax falls more heavily on

Accepted Answer

A)  consumers than producers if demand is more inelastic than supply. 
B)  producers than consumers if supply is more inelastic than demand. 
C)  consumers than producers if supply is more elastic than demand. 
D)  All of the above are correct. 
A)  consumers than producers if demand is more inelastic than supply. 
B)  producers than consumers if supply is more inelastic than demand. 
C)  consumers than producers if supply is more elastic than demand. 
D)  All of the above are correct.

Question 8

Figure 6-26  
-Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

Accepted Answer

A)  $16. 
B)  $8. 
C)  $14. 
D)  $12. 
A)  $16. 
B)  $8. 
C)  $14. 
D)  $12.

Question 9

Figure 6-6  
-Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?

Accepted Answer

A)  a price ceiling set at $8 
B)  a price ceiling set at $6 
C)  a price floor set at $8 
D)  a price floor set at $6 
A)  a price ceiling set at $8 
B)  a price ceiling set at $6 
C)  a price floor set at $8 
D)  a price floor set at $6

Question 10

Figure 6-23
  
-Refer to Figure 6-23. Which of the following is correct?

Accepted Answer

A)  The entire burden of the tax falls on sellers, and none of the burden of the tax falls on buyers. 
B)  One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers. 
C)  One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers. 
D)  Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers. 
A)  The entire burden of the tax falls on sellers, and none of the burden of the tax falls on buyers. 
B)  One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers. 
C)  One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers. 
D)  Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers.

Question 11

Economic policies often have effects that their architects did not intend or anticipate.

Accepted Answer

A) True 
 B)False

Question 12

A tax imposed on the buyers 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.

Question 13

A binding minimum wage creates a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 14

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Accepted Answer

A)  Improvements in production technology reduce the costs of producing laptop computers. 
B)  The number of firms selling laptop computers decreases. 
C)  Consumers' income decreases, and laptop computers are a normal good. 
D)  The number of consumers buying laptop computers decreases. 
A)  Improvements in production technology reduce the costs of producing laptop computers. 
B)  The number of firms selling laptop computers decreases. 
C)  Consumers' income decreases, and laptop computers are a normal good. 
D)  The number of consumers buying laptop computers decreases.

Question 15

When OPEC raised the price of crude oil in the 1970s, it caused the

Accepted Answer

A)  supply of gasoline to decrease. 
B)  quantity of gasoline demanded to decrease. 
C)  equilibrium price of gasoline to increase. 
D)  All of the above are correct. 
A)  supply of gasoline to decrease. 
B)  quantity of gasoline demanded to decrease. 
C)  equilibrium price of gasoline to increase. 
D)  All of the above are correct.

Question 16

Figure 6-11  
-Refer to Figure 6-11. If the government imposes a price floor at $10, it would be

Accepted Answer

A)  binding if market demand is Demand A or Demand B. 
B)  non-binding if market demand is Demand A or Demand B. 
C)  binding if market demand is Demand A and non-binding if market demand is Demand c. 
D)  non-binding if market demand is Demand A and binding if market demand is Demand B. 
A)  binding if market demand is Demand A or Demand B. 
B)  non-binding if market demand is Demand A or Demand B. 
C)  binding if market demand is Demand A and non-binding if market demand is Demand c. 
D)  non-binding if market demand is Demand A and binding if market demand is Demand B.

Question 17

If the supply curve is more price elastic than the demand curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

Accepted Answer

The buyers will bear

Question 18

A price floor 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 19

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 floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 20

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Figure 6-5 -Refer to Figure 6-5. If government imposes a price floor at $9, then the price floor causes

Table 6-6 -Refer to Table 6-6. In this market, over what range of prices would a price ceiling set by the government be binding?

Does a binding price ceiling result in a shortage or a surplus in the market?

Buyers and sellers always share the burden of a tax equally.

Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?

The incidence of a tax falls more heavily on

Figure 6-26 -Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

Figure 6-6 -Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?

Figure 6-23 -Refer to Figure 6-23. Which of the following is correct?

Economic policies often have effects that their architects did not intend or anticipate.

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

A binding minimum wage creates a surplus of labor.

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

When OPEC raised the price of crude oil in the 1970s, it caused the

Figure 6-11 -Refer to Figure 6-11. If the government imposes a price floor at $10, it would be

If the supply curve is more price elastic than the demand curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

A price floor is binding when it is set

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 floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

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

Filters