Question 1

A legal minimum on the price at which a good can be sold is called a

Accepted Answer

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

Question 2

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Accepted Answer

A) True 
 B)False

Question 3

A $5 tax levied on the buyers of pants will cause the

Accepted Answer

A)  supply curve for pants to shift down by $5. 
B)  supply curve for pants to shift up by $5. 
C)  demand curve for pants to shift down by $5. 
D)  demand curve for pants to shift up by $5. 
A)  supply curve for pants to shift down by $5. 
B)  supply curve for pants to shift up by $5. 
C)  demand curve for pants to shift down by $5. 
D)  demand curve for pants to shift up by $5.

Question 4

A price ceiling is always a binding price control, whereas a price floor may be either binding or not binding.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-16  
-Refer to Figure 6-16. In this market, a minimum wage of $2.75 is

Accepted Answer

A)  binding and creates a labor shortage. 
B)  binding and creates unemployment. 
C)  nonbinding and creates a labor shortage. 
D)  nonbinding and creates neither a labor shortage nor unemployment. 
A)  binding and creates a labor shortage. 
B)  binding and creates unemployment. 
C)  nonbinding and creates a labor shortage. 
D)  nonbinding and creates neither a labor shortage nor unemployment.

Question 6

Figure 6-20  
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)  Buyers and sellers will share the burden of the tax equally. 
B)  Buyers will bear more of the burden of the tax than sellers will. 
C)  Sellers will bear more of the burden of the tax than buyers will. 
D)  Any of the above is possible. 
A)  Buyers and sellers will share the burden of the tax equally. 
B)  Buyers will bear more of the burden of the tax than sellers will. 
C)  Sellers will bear more of the burden of the tax than buyers will. 
D)  Any of the above is possible.

Question 7

Figure 6-2  
-Refer to Figure 6-2. The price ceiling causes quantity

Accepted Answer

A)  supplied to exceed quantity demanded by 45 units. 
B)  supplied to exceed quantity demanded by 85 units. 
C)  demanded to exceed quantity supplied by 45 units. 
D)  demanded to exceed quantity supplied by 85 units. 
A)  supplied to exceed quantity demanded by 45 units. 
B)  supplied to exceed quantity demanded by 85 units. 
C)  demanded to exceed quantity supplied by 45 units. 
D)  demanded to exceed quantity supplied by 85 units.

Question 8

Figure 6-1
Panel (a) Panel (b)
    
-Refer to Figure 6-1. A binding price ceiling is shown in

Accepted Answer

A)  panel (a) only. 
B)  panel (b) only. 
C)  both panel (a) and panel (b). 
D)  neither panel (a) nor panel (b). 
A)  panel (a) only. 
B)  panel (b) only. 
C)  both panel (a) and panel (b). 
D)  neither panel (a) nor panel (b).

Question 9

A tax imposed on the sellers of a good will raise 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 10

Define a price ceiling.

Accepted Answer

A price ceiling is a

Question 11

A tax on buyers shifts the demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 12

Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

Accepted Answer

A)  An increase in the price of flour, which is used to make bread. 
B)  A decrease in the price of lunch meat. 
C)  A decease in the price of unsliced bread, which people consider as a substitute for sliced bread. 
D)  An decrease in the price of peanut butter and jelly. 
A)  An increase in the price of flour, which is used to make bread. 
B)  A decrease in the price of lunch meat. 
C)  A decease in the price of unsliced bread, which people consider as a substitute for sliced bread. 
D)  An decrease in the price of peanut butter and jelly.

Question 13

Figure 6-28  
-Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)  $4 
B)  between $4 and $7 
C)  between $7 and $10 
D)  $10 
A)  $4 
B)  between $4 and $7 
C)  between $7 and $10 
D)  $10

Question 14

A price ceiling caused the gasoline shortage of 1973 in the United States.

Accepted Answer

A) True 
 B)False

Question 15

Figure 6-31  
-Refer to Figure 6-31. If the government set a price ceiling at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $15 wou

Question 16

Economists generally believe that rent control is

Accepted Answer

A)  an efficient and fair way to help the poor. 
B)  inefficient but the best available means of solving a serious social problem. 
C)  a highly inefficient way to help the poor raise their standard of living. 
D)  an efficient way to allocate housing, but not a good way to help the poor. 
A)  an efficient and fair way to help the poor. 
B)  inefficient but the best available means of solving a serious social problem. 
C)  a highly inefficient way to help the poor raise their standard of living. 
D)  an efficient way to allocate housing, but not a good way to help the poor.

Question 17

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

Accepted Answer

A) True 
 B)False

Question 18

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 19

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Accepted Answer

A)  upward by exactly $2.00. 
B)  upward by less than $2.00. 
C)  downward by exactly $2.00. 
D)  downward by less than $2.00. 
A)  upward by exactly $2.00. 
B)  upward by less than $2.00. 
C)  downward by exactly $2.00. 
D)  downward by less than $2.00.

Question 20

A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

A legal minimum on the price at which a good can be sold is called a

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

A $5 tax levied on the buyers of pants will cause the

A price ceiling is always a binding price control, whereas a price floor may be either binding or not binding.

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $2.75 is

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

Figure 6-2 -Refer to Figure 6-2. The price ceiling causes quantity

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. A binding price ceiling is shown in

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

Define a price ceiling.

A tax on buyers shifts the demand curve to the right.

Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

A price ceiling caused the gasoline shortage of 1973 in the United States.

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Economists generally believe that rent control is

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

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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