Question 1

Figure 6-21  
-Refer to Figure 6-21. How is the burden of the tax shared between buyers and sellers? Buyers bear

Accepted Answer

A)  three-fourths of the burden, and sellers bear one-fourth of the burden. 
B)  two-thirds of the burden, and sellers bear one-third of the burden. 
C)  one-half of the burden, and sellers bear one-half of the burden. 
D)  one-fourth of the burden, and sellers bear three-fourths of the burden. 
A)  three-fourths of the burden, and sellers bear one-fourth of the burden. 
B)  two-thirds of the burden, and sellers bear one-third of the burden. 
C)  one-half of the burden, and sellers bear one-half of the burden. 
D)  one-fourth of the burden, and sellers bear three-fourths of the burden.

Question 2

The minimum wage does not apply to

Accepted Answer

A)  jobs for teenagers. 
B)  jobs for members of minority groups. 
C)  unpaid internships. 
D)  jobs that include on-the-job training. 
A)  jobs for teenagers. 
B)  jobs for members of minority groups. 
C)  unpaid internships. 
D)  jobs that include on-the-job training.

Question 3

A price ceiling set below the equilibrium price is nonbinding.

Accepted Answer

A) True 
 B)False

Question 4

Table 6-1
  
-Refer to Table 6-1. Suppose the government imposes a price floor of $30 on this market. What will be the size of the surplus in this market?

Accepted Answer

A)  0 units 
B)  200 units 
C)  1800 units 
D)  2000 units 
A)  0 units 
B)  200 units 
C)  1800 units 
D)  2000 units

Question 5

Table 6-2
  
-Refer to Table 6-2. A price floor set at $20 will

Accepted Answer

A)  be binding and will result in a surplus of 75 units. 
B)  be binding and will result in a surplus of 125 units. 
C)  be binding and will result in a surplus of 200 units. 
D)  not be binding. 
A)  be binding and will result in a surplus of 75 units. 
B)  be binding and will result in a surplus of 125 units. 
C)  be binding and will result in a surplus of 200 units. 
D)  not be binding.

Question 6

If the government removes a binding price ceiling from a market, then the price received by sellers will

Accepted Answer

A)  decrease, and the quantity sold in the market will decrease. 
B)  decrease, and the quantity sold in the market will increase. 
C)  increase, and the quantity sold in the market will decrease. 
D)  increase, and the quantity sold in the market will increase. 
A)  decrease, and the quantity sold in the market will decrease. 
B)  decrease, and the quantity sold in the market will increase. 
C)  increase, and the quantity sold in the market will decrease. 
D)  increase, and the quantity sold in the market will increase.

Question 7

A binding price ceiling causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 8

The Federal Insurance Contribution Act (FICA) tax is an example of a(n)

Accepted Answer

A)  payroll tax. 
B)  sales tax. 
C)  farm subsidy. 
D)  income subsidy. 
A)  payroll tax. 
B)  sales tax. 
C)  farm subsidy. 
D)  income subsidy.

Question 9

Figure 6-8  
-Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Accepted Answer

A)  no surplus of the good. 
B)  a surplus of 5 units of the good. 
C)  a surplus of 10 units of the good. 
D)  a surplus of 15 units of the good. 
A)  no surplus of the good. 
B)  a surplus of 5 units of the good. 
C)  a surplus of 10 units of the good. 
D)  a surplus of 15 units of the good.

Question 10

Figure 6-21  
-Refer to Figure 6-21. In the after-tax equilibrium, how much revenue does the government collect from the tax on this good?

Accepted Answer

A)  $210 
B)  $345 
C)  $420 
D)  $480 
A)  $210 
B)  $345 
C)  $420 
D)  $480

Question 11

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Accepted Answer

A) True 
 B)False

Question 12

Define a price floor.

Accepted Answer

A price floor is a l

Question 13

Figure 6-7  
-Refer to Figure 6-7. For a price floor to be binding in this market, it would have to be set at

Accepted Answer

A)  any price below $7. 
B)  any price below $3. 
C)  any price below $9. 
D)  any price above $7. 
A)  any price below $7. 
B)  any price below $3. 
C)  any price below $9. 
D)  any price above $7.

Question 14

If a price ceiling is not binding, then it will have no effect on the market.

Accepted Answer

A) True 
 B)False

Question 15

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Accepted Answer

A) True 
 B)False

Question 16

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the

Accepted Answer

A)  demand curve for toothpaste shifts to the left. 
B)  supply curve for toothpaste shifts to the right. 
C)  quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases. 
D)  quantity supplied of toothpaste stays the same. 
A)  demand curve for toothpaste shifts to the left. 
B)  supply curve for toothpaste shifts to the right. 
C)  quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases. 
D)  quantity supplied of toothpaste stays the same.

Question 17

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. Which of the following statements is not correct?

Accepted Answer

A)  A price ceiling set at $4 would be binding, but a price ceiling set at $6 would not be binding. 
B)  A price floor set at $7 would be binding, but a price floor set at $4 would not be binding. 
C)  A price ceiling set at $3.50 would result in a surplus. 
D)  A price floor set at $6.50 would result in a surplus. 
A)  A price ceiling set at $4 would be binding, but a price ceiling set at $6 would not be binding. 
B)  A price floor set at $7 would be binding, but a price floor set at $4 would not be binding. 
C)  A price ceiling set at $3.50 would result in a surplus. 
D)  A price floor set at $6.50 would result in a surplus.

Question 18

Which of the following is not a function of prices in a market system?

Accepted Answer

A)  Prices have the crucial job of balancing supply and demand. 
B)  Prices send signals to buyers and sellers to help them make rational economic decisions. 
C)  Prices coordinate economic activity. 
D)  Prices ensure an equal distribution of goods and services among consumers. 
A)  Prices have the crucial job of balancing supply and demand. 
B)  Prices send signals to buyers and sellers to help them make rational economic decisions. 
C)  Prices coordinate economic activity. 
D)  Prices ensure an equal distribution of goods and services among consumers.

Question 19

To say that a price ceiling is binding is to say that the price ceiling

Accepted Answer

A)  results in a shortage. 
B)  is set below the equilibrium price. 
C)  causes quantity demanded to exceed quantity supplied. 
D)  All of the above are correct. 
A)  results in a shortage. 
B)  is set below the equilibrium price. 
C)  causes quantity demanded to exceed quantity supplied. 
D)  All of the above are correct.

Question 20

Figure 6-31  
-Refer to Figure 6-31. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Exam 6: Supply, Demand, and Government Policies

Figure 6-21 -Refer to Figure 6-21. How is the burden of the tax shared between buyers and sellers? Buyers bear

The minimum wage does not apply to

A price ceiling set below the equilibrium price is nonbinding.

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price floor of $30 on this market. What will be the size of the surplus in this market?

Table 6-2 -Refer to Table 6-2. A price floor set at $20 will

If the government removes a binding price ceiling from a market, then the price received by sellers will

A binding price ceiling causes a shortage in the market.

The Federal Insurance Contribution Act (FICA) tax is an example of a(n)

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Figure 6-21 -Refer to Figure 6-21. In the after-tax equilibrium, how much revenue does the government collect from the tax on this good?

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Define a price floor.

Figure 6-7 -Refer to Figure 6-7. For a price floor to be binding in this market, it would have to be set at

If a price ceiling is not binding, then it will have no effect on the market.

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following statements is not correct?

Which of the following is not a function of prices in a market system?

To say that a price ceiling is binding is to say that the price ceiling

Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

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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