Question 1

The minimum wage,if it is binding,raises the incomes of

Accepted Answer

A) no workers. 
B) only those workers who cannot find jobs. 
C) only those workers whose jobs would pay less than the minimum wage if it didn't exist. 
D) all workers. 
A) no workers. 
B) only those workers who cannot find jobs. 
C) only those workers whose jobs would pay less than the minimum wage if it didn't exist. 
D) all workers.

Question 2

If the government removes a binding price floor 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 3

The Earned Income Tax Credit is an example of a

Accepted Answer

A) minimum-wage law. 
B) price ceiling. 
C) wage subsidy. 
D) rent subsidy. 
A) minimum-wage law. 
B) price ceiling. 
C) wage subsidy. 
D) rent subsidy.

Question 4

Figure 6-8  
-Refer to Figure 6-8.If the government imposes a price ceiling of $2 on this market,then there will be

Accepted Answer

A) no shortage of the good. 
B) a shortage of 10 units of the good. 
C) a shortage of 20 units of the good. 
D) a shortage of 30 units of the good. 
A) no shortage of the good. 
B) a shortage of 10 units of the good. 
C) a shortage of 20 units of the good. 
D) a shortage of 30 units of the good.

Question 5

A price ceiling will be binding only if it is set

Accepted Answer

A) equal to the equilibrium price. 
B) above the equilibrium price. 
C) below the equilibrium price. 
D) either above or below the equilibrium price. 
A) equal to the equilibrium price. 
B) above the equilibrium price. 
C) below the equilibrium price. 
D) either above or below the equilibrium price.

Question 6

A binding minimum wage tends to

Accepted Answer

A) cause a labor surplus. 
B) cause unemployment. 
C) have the greatest impact in the market for teenage labor. 
D) All of the above are correct. 
A) cause a labor surplus. 
B) cause unemployment. 
C) have the greatest impact in the market for teenage labor. 
D) All of the above are correct.

Question 7

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 8

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

Question 9

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 decrease in the price of unsliced bread,which people consider 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 decrease in the price of unsliced bread,which people consider a substitute for sliced bread. 
D) An decrease in the price of peanut butter and jelly.

Question 10

Which of the following is correct?

Accepted Answer

A) Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage raises the average wage of teenagers by 10 percent. 
B) The drop in teenage employment caused by a 10 percent increase in the minimum wage is not significant. 
C) The minimum wage is more often binding for teenagers than for other members of the labor force. 
D) All firms consistently enforce minimum-wage laws. 
A) Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage raises the average wage of teenagers by 10 percent. 
B) The drop in teenage employment caused by a 10 percent increase in the minimum wage is not significant. 
C) The minimum wage is more often binding for teenagers than for other members of the labor force. 
D) All firms consistently enforce minimum-wage laws.

Question 11

A price ceiling 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 12

Rent control

Accepted Answer

A) serves as an example of how a social problem can be alleviated or even solved by government policies. 
B) serves as an example of a price ceiling. 
C) is regarded by most economists as an efficient way of helping the poor. 
D) is the most efficient way to allocate scarce housing resources. 
A) serves as an example of how a social problem can be alleviated or even solved by government policies. 
B) serves as an example of a price ceiling. 
C) is regarded by most economists as an efficient way of helping the poor. 
D) is the most efficient way to allocate scarce housing resources.

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

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

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A) every seller in the market benefits. 
B) all buyers and sellers benefit. 
C) every seller who wants to sell the good will be able to do so,but only if he appeals to the personal biases of the buyers. 
D) some sellers will not be able to sell any amount of the good. 
A) every seller in the market benefits. 
B) all buyers and sellers benefit. 
C) every seller who wants to sell the good will be able to do so,but only if he appeals to the personal biases of the buyers. 
D) some sellers will not be able to sell any amount of the good.

Question 16

Figure 6-15  
-Refer to Figure 6-15.Suppose a price floor of $4 is imposed on this market.As a result,

Accepted Answer

A) buyers' total expenditure on the good decreases by $15. 
B) the supply curve shifts to the left so as to now pass through the point (quantity = 30,price = $4). 
C) the quantity demanded of the good decreases by 30 units. 
D) the number of units sold in the market will increase by 15 units. 
A) buyers' total expenditure on the good decreases by $15. 
B) the supply curve shifts to the left so as to now pass through the point (quantity = 30,price = $4). 
C) the quantity demanded of the good decreases by 30 units. 
D) the number of units sold in the market will increase by 15 units.

Question 17

Rent control policies tend to cause

Accepted Answer

A) relatively smaller shortages in the short run than in the long run because supply and demand tends to be more elastic in the short run than in the long run. 
B) relatively larger shortages in the short run than in the long run because supply and demand tends to be more elastic in the short run than in the long run. 
C) relatively larger shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run. 
D) relatively smaller shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run. 
A) relatively smaller shortages in the short run than in the long run because supply and demand tends to be more elastic in the short run than in the long run. 
B) relatively larger shortages in the short run than in the long run because supply and demand tends to be more elastic in the short run than in the long run. 
C) relatively larger shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run. 
D) relatively smaller shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run.

Question 18

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 19

Price ceilings and price floors that are binding

Accepted Answer

A) are desirable because they make markets more efficient and more fair. 
B) cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price. 
C) can have the effect of restoring a market to equilibrium. 
D) are imposed because they can make the poor in the economy better off without causing adverse effects. 
A) are desirable because they make markets more efficient and more fair. 
B) cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price. 
C) can have the effect of restoring a market to equilibrium. 
D) are imposed because they can make the poor in the economy better off without causing adverse effects.

Question 20

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13.If the government imposes a price floor of $7 on this market,then there will be

Accepted Answer

A) no surplus. 
B) a surplus of 10 units. 
C) a surplus of 15 units. 
D) a surplus of 20 units. 
A) no surplus. 
B) a surplus of 10 units. 
C) a surplus of 15 units. 
D) a surplus of 20 units.

Exam 6: Supply Demand and Government Policies: Controls on Prices

The minimum wage,if it is binding,raises the incomes of

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

The Earned Income Tax Credit is an example of a

Figure 6-8 -Refer to Figure 6-8.If the government imposes a price ceiling of $2 on this market,then there will be

A price ceiling will be binding only if it is set

A binding minimum wage tends to

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

A nonbinding price floor (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.

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?

Which of the following is correct?

A price ceiling is binding when it is set

Rent control

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?

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.

When a binding price floor is imposed on a market to benefit sellers,

Figure 6-15 -Refer to Figure 6-15.Suppose a price floor of $4 is imposed on this market.As a result,

Rent control policies tend to cause

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

Price ceilings and price floors that are binding

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13.If the government imposes a price floor of $7 on this market,then there will be

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A