Question 1

When a price floor is binding, is the price floor set above or below the market equilibrium price?

Accepted Answer

A binding price floo

Question 2

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Accepted Answer

A) True 
 B)False

Question 3

When a tax is placed on the buyers of a product, buyers pay

Accepted Answer

A)  more and sellers receive more than they did before the tax. 
B)  more and sellers receive less than they did before the tax. 
C)  less and sellers receive more than they did before the tax. 
D)  less and sellers receive less than they did before the tax. 
A)  more and sellers receive more than they did before the tax. 
B)  more and sellers receive less than they did before the tax. 
C)  less and sellers receive more than they did before the tax. 
D)  less and sellers receive less than they did before the tax.

Question 4

Figure 6-30
Panel (a) Panel (b)
     Panel (c)  
-Refer to Figure 6-30. In which market will the tax burden be most equally divided between buyers and sellers?

Accepted Answer

A)  the market shown in panel (a). 
B)  the market shown in panel (b). 
C)  the market shown in panel (c). 
D)  All of the above are correct. 
A)  the market shown in panel (a). 
B)  the market shown in panel (b). 
C)  the market shown in panel (c). 
D)  All of the above are correct.

Question 5

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Accepted Answer

A)  both taxes would fall more heavily on the buyers than on the sellers. 
B)  the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C)  the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D)  both taxes would fall more heavily on the sellers than on the buyers. 
A)  both taxes would fall more heavily on the buyers than on the sellers. 
B)  the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C)  the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D)  both taxes would fall more heavily on the sellers than on the buyers.

Question 6

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, what price will buyers pay per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un

Question 7

The goal of rent control is to

Accepted Answer

A)  facilitate controlled economic experiments in urban areas. 
B)  help landlords by assuring them a low vacancy rate for their apartments. 
C)  help the poor by assuring them an adequate supply of apartments. 
D)  help the poor by making housing more affordable. 
A)  facilitate controlled economic experiments in urban areas. 
B)  help landlords by assuring them a low vacancy rate for their apartments. 
C)  help the poor by assuring them an adequate supply of apartments. 
D)  help the poor by making housing more affordable.

Question 8

Figure 6-18
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-18. The amount of the tax per unit is

Accepted Answer

A)  $6. 
B)  $8. 
C)  $14. 
D)  $18. 
A)  $6. 
B)  $8. 
C)  $14. 
D)  $18.

Question 9

Figure 6-27
This figure shows the market demand and market supply curves for good Z.  
-Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)  $16 
B)  between $16 and $20 
C)  between $20 and $22 
D)  $22 
A)  $16 
B)  between $16 and $20 
C)  between $20 and $22 
D)  $22

Question 10

Will a binding price floor result in a shortage or a surplus in the market?

Accepted Answer

A binding price floo

Question 11

Suppose the government imposes a $40 tax on the buyers of refrigerators. The tax would

Accepted Answer

A)  shift the demand curve downward by less than $40. 
B)  raise the equilibrium price by $40. 
C)  create a $20 tax burden each for buyers and sellers. 
D)  discourage market activity. 
A)  shift the demand curve downward by less than $40. 
B)  raise the equilibrium price by $40. 
C)  create a $20 tax burden each for buyers and sellers. 
D)  discourage market activity.

Question 12

Figure 6-22  
-Refer to Figure 6-22. The effective price sellers receive after the tax is imposed is

Accepted Answer

A)  $2.00. 
B)  $3.50. 
C)  $5.00. 
D)  $3.00. 
A)  $2.00. 
B)  $3.50. 
C)  $5.00. 
D)  $3.00.

Question 13

Long lines

Accepted Answer

A)  and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B)  and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C)  are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D)  are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time. 
A)  and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B)  and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C)  are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D)  are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.

Question 14

A binding price ceiling (i) causes a surplus.
(ii) causes a shortage.
(iii) is set at a price above the equilibrium price.
(iv) is set at a price below the equilibrium price.

Accepted Answer

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

Question 15

Figure 6-33  
-Refer to Figure 6-33. Suppose a $4 per-unit tax is imposed on the sellers of this good. How many units of this good will be sold after the tax is imposed?

Accepted Answer

With a $4 per-unit t

Question 16

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Accepted Answer

A)  the demand for treadmills will increase. 
B)  the supply of treadmills will decrease. 
C)  a shortage of treadmills will develop. 
D)  All of the above are correct. 
A)  the demand for treadmills will increase. 
B)  the supply of treadmills will decrease. 
C)  a shortage of treadmills will develop. 
D)  All of the above are correct.

Question 17

Figure 6-25  
-Refer to Figure 6-25. As the figure is drawn, who sends the tax payment to the government?

Accepted Answer

A)  The buyers send the tax payment. 
B)  The sellers send the tax payment. 
C)  A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers. 
D)  The question of who sends the tax payment cannot be determined from the figure. 
A)  The buyers send the tax payment. 
B)  The sellers send the tax payment. 
C)  A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers. 
D)  The question of who sends the tax payment cannot be determined from the figure.

Question 18

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

Accepted Answer

A)  nonbinding price floor on gasoline to become binding. 
B)  binding price floor on gasoline to become nonbinding. 
C)  nonbinding price ceiling on gasoline to become binding. 
D)  binding price ceiling on gasoline to become nonbinding. 
A)  nonbinding price floor on gasoline to become binding. 
B)  binding price floor on gasoline to become nonbinding. 
C)  nonbinding price ceiling on gasoline to become binding. 
D)  binding price ceiling on gasoline to become nonbinding.

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 ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set

Question 20

If a binding price floor is imposed on the market for eBooks, then

Accepted Answer

A)  the demand for eBooks will decrease. 
B)  the supply of eBooks will increase. 
C)  a surplus of eBooks will develop. 
D)  All of the above are correct. 
A)  the demand for eBooks will decrease. 
B)  the supply of eBooks will increase. 
C)  a surplus of eBooks will develop. 
D)  All of the above are correct.

Exam 6: Supply, Demand, and Government Policies

When a price floor is binding, is the price floor set above or below the market equilibrium price?

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

When a tax is placed on the buyers of a product, buyers pay

Figure 6-30 Panel (a) Panel (b) Panel (c) -Refer to Figure 6-30. In which market will the tax burden be most equally divided between buyers and sellers?

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, what price will buyers pay per unit after the tax is imposed?

The goal of rent control is to

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The amount of the tax per unit is

Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Will a binding price floor result in a shortage or a surplus in the market?

Suppose the government imposes a $40 tax on the buyers of refrigerators. The tax would

Figure 6-22 -Refer to Figure 6-22. The effective price sellers receive after the tax is imposed is

Long lines

A binding price ceiling (i) causes a surplus. (ii) causes a shortage. (iii) is set at a price above the equilibrium price. (iv) is set at a price below the equilibrium price.

Figure 6-33 -Refer to Figure 6-33. Suppose a $4 per-unit tax is imposed on the sellers of this good. How many units of this good will be sold after the tax is imposed?

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Figure 6-25 -Refer to Figure 6-25. As the figure is drawn, who sends the tax payment to the government?

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

If a binding price floor is imposed on the market for eBooks, then

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