Question 1

A price ceiling set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 2

Advocates of the minimum wage

Accepted Answer

A)  deny that the minimum wage produces any adverse effects. 
B)  emphasize the benefits to teenagers of increases in the minimum wage. 
C)  emphasize the low annual incomes of those who work for the minimum wage. 
D)  All of the above are correct. 
A)  deny that the minimum wage produces any adverse effects. 
B)  emphasize the benefits to teenagers of increases in the minimum wage. 
C)  emphasize the low annual incomes of those who work for the minimum wage. 
D)  All of the above are correct.

Question 3

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

Accepted Answer

A)  lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. 
B)  the tax raises too little revenue for the government, so it should be eliminated. 
C)  firms bear most of the burden of the tax. 
D)  workers bear most of the burden of the tax. 
A)  lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. 
B)  the tax raises too little revenue for the government, so it should be eliminated. 
C)  firms bear most of the burden of the tax. 
D)  workers bear most of the burden of the tax.

Question 4

Figure 6-17
This figure shows the market demand and market supply curves for good Y  
-Refer to Figure 6-17. A government-imposed price of $24 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.

Question 5

The U.S. Congress first instituted a minimum wage in

Accepted Answer

A)  1776. 
B)  1812. 
C)  1938. 
D)  1975. 
A)  1776. 
B)  1812. 
C)  1938. 
D)  1975.

Question 6

A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-32  
-Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at $55 would

Question 8

The minimum wage is an example of a

Accepted Answer

A)  price ceiling. 
B)  price floor. 
C)  wage subsidy. 
D)  tax. 
A)  price ceiling. 
B)  price floor. 
C)  wage subsidy. 
D)  tax.

Question 9

Figure 6-5  
-Refer to Figure 6-5. If the horizontal line on the graph represents a price floor, then the price floor is

Accepted Answer

A)  binding and creates a surplus of 60 units of the good. 
B)  binding and creates a surplus of 20 units of the good. 
C)  binding and creates a surplus of 40 units of the good. 
D)  not binding, and there will be no surplus or shortage of the good. 
A)  binding and creates a surplus of 60 units of the good. 
B)  binding and creates a surplus of 20 units of the good. 
C)  binding and creates a surplus of 40 units of the good. 
D)  not binding, and there will be no surplus or shortage of the good.

Question 10

Figure 6-21  
-Refer to Figure 6-21. What is the amount of the tax per unit?

Accepted Answer

A)  $1 
B)  $2 
C)  $3 
D)  $4 
A)  $1 
B)  $2 
C)  $3 
D)  $4

Question 11

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

Accepted Answer

A)  no surplus. 
B)  a surplus of 20 units. 
C)  a surplus of 30 units. 
D)  a surplus of 40 units. 
A)  no surplus. 
B)  a surplus of 20 units. 
C)  a surplus of 30 units. 
D)  a surplus of 40 units.

Question 12

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

Accepted Answer

A)  decrease by less than $500. 
B)  decrease by exactly $500. 
C)  decrease by more than $500. 
D)  increase by an indeterminate amount. 
A)  decrease by less than $500. 
B)  decrease by exactly $500. 
C)  decrease by more than $500. 
D)  increase by an indeterminate amount.

Question 13

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

Accepted Answer

A)  Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans. 
B)  The number of farmers selling soybeans decreases. 
C)  Consumers' income increases, and soybeans are a normal good. 
D)  The number of consumers buying soybeans increases. 
A)  Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans. 
B)  The number of farmers selling soybeans decreases. 
C)  Consumers' income increases, and soybeans are a normal good. 
D)  The number of consumers buying soybeans increases.

Question 14

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

Accepted Answer

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

Question 15

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 16

When a tax is imposed on a good, the result is always a shortage of the good.

Accepted Answer

A) True 
 B)False

Question 17

Price is the rationing mechanism in a free, competitive market.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Accepted Answer

A) True 
 B)False

Question 20

The tax burden will fall most heavily on sellers of the good when the demand curve

Accepted Answer

A)  is relatively steep, and the supply curve is relatively flat. 
B)  is relatively flat, and the supply curve is relatively steep. 
C)  and the supply curve are both relatively flat. 
D)  and the supply curve are both relatively steep. 
A)  is relatively steep, and the supply curve is relatively flat. 
B)  is relatively flat, and the supply curve is relatively steep. 
C)  and the supply curve are both relatively flat. 
D)  and the supply curve are both relatively steep.

Exam 6: Supply, Demand, and Government Policies

A price ceiling set above the equilibrium price causes a surplus in the market.

Advocates of the minimum wage

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

Figure 6-17 This figure shows the market demand and market supply curves for good Y -Refer to Figure 6-17. A government-imposed price of $24 in this market is an example of a

The U.S. Congress first instituted a minimum wage in

A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

Figure 6-32 -Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

The minimum wage is an example of a

Figure 6-5 -Refer to Figure 6-5. If the horizontal line on the graph represents a price floor, then the price floor is

Figure 6-21 -Refer to Figure 6-21. What is the amount of the tax per unit?

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

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

Price ceilings are typically imposed to benefit buyers.

When a tax is imposed on a good, the result is always a shortage of the good.

Price is the rationing mechanism in a free, competitive market.

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

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

The tax burden will fall most heavily on sellers of the good when the demand 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

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