Question 1

Figure 6-23
  
-Refer to Figure 6-23. For every unit of the good that is sold, sellers are required to send

Accepted Answer

A)  one dollar to the government, and buyers are required to send two dollars to the government. 
B)  two dollars to the government, and buyers are required to send one dollar to the government. 
C)  three dollars to the government, and buyers are required to send nothing to the government. 
D)  nothing to the government, and buyers are required to send two dollars to the government. 
A)  one dollar to the government, and buyers are required to send two dollars to the government. 
B)  two dollars to the government, and buyers are required to send one dollar to the government. 
C)  three dollars to the government, and buyers are required to send nothing to the government. 
D)  nothing to the government, and buyers are required to send two dollars to the government.

Question 2

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

Question 3

Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.

Accepted Answer

A) True 
 B)False

Question 4

One disadvantage of government subsidies over price controls is that subsidies

Accepted Answer

A)  prevent the attainment of equilibrium in the markets in which they are imposed. 
B)  make higher taxes necessary. 
C)  are always unfair to those with low incomes. 
D)  cause unemployment. 
A)  prevent the attainment of equilibrium in the markets in which they are imposed. 
B)  make higher taxes necessary. 
C)  are always unfair to those with low incomes. 
D)  cause unemployment.

Question 5

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 6

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 7

A tax on the buyers of personal computer external hard drives encourages

Accepted Answer

A)  sellers to supply a smaller quantity at every price. 
B)  buyers to demand a smaller quantity at every price. 
C)  buyers to demand a larger quantity at every price. 
D)  Both a) and b) are correct. 
A)  sellers to supply a smaller quantity at every price. 
B)  buyers to demand a smaller quantity at every price. 
C)  buyers to demand a larger quantity at every price. 
D)  Both a) and b) are correct.

Question 8

A tax on the buyers of cameras encourages

Accepted Answer

A)  sellers to supply a smaller quantity at every price. 
B)  buyers to demand a smaller quantity at every price. 
C)  sellers to supply a larger quantity at every price. 
D)  Both a) and b) are correct. 
A)  sellers to supply a smaller quantity at every price. 
B)  buyers to demand a smaller quantity at every price. 
C)  sellers to supply a larger quantity at every price. 
D)  Both a) and b) are correct.

Question 9

Which of the following is not a short-run effect of rent control on the housing market?

Accepted Answer

A)  reduced rents 
B)  a large shortage 
C)  a small increase in quantity demanded 
D)  a small decrease in quantity supplied 
A)  reduced rents 
B)  a large shortage 
C)  a small increase in quantity demanded 
D)  a small decrease in quantity supplied

Question 10

Figure 6-26  
-Refer to Figure 6-26. The amount of the tax per unit is

Accepted Answer

A)  $4. 
B)  $8. 
C)  $14. 
D)  $10. 
A)  $4. 
B)  $8. 
C)  $14. 
D)  $10.

Question 11

Table 6-3
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $2 above the equilibrium price in this market.
  
-Refer to Table 6-3. How many units of the good are sold after the imposition of the price floor?

Accepted Answer

A)  5 
B)  9 
C)  10 
D)  15 
A)  5 
B)  9 
C)  10 
D)  15

Question 12

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

Accepted Answer

A)  shortage of 2,250 workers. 
B)  shortage of 4,500 workers. 
C)  surplus of 2,250 workers. 
D)  neither a labor shortage nor surplus. 
A)  shortage of 2,250 workers. 
B)  shortage of 4,500 workers. 
C)  surplus of 2,250 workers. 
D)  neither a labor shortage nor surplus.

Question 13

When a tax is placed on the buyers of cell phones, the size of the cell phone market

Accepted Answer

A)  and the effective price received by sellers both decrease. 
B)  decreases, but the effective price received by sellers increases. 
C)  increases, but the effective price received by sellers decreases. 
D)  and the effective price received by sellers both increase. 
A)  and the effective price received by sellers both decrease. 
B)  decreases, but the effective price received by sellers increases. 
C)  increases, but the effective price received by sellers decreases. 
D)  and the effective price received by sellers both increase.

Question 14

Which of the following is not correct?

Accepted Answer

A)  Taxes levied on sellers and taxes levied on buyers are not equivalent. 
B)  A tax places a wedge between the price that buyers pay and the price that sellers receive. 
C)  The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax levied on buyers or sellers. 
D)  In the new after-tax equilibrium, buyers and sellers share the burden of the tax. 
A)  Taxes levied on sellers and taxes levied on buyers are not equivalent. 
B)  A tax places a wedge between the price that buyers pay and the price that sellers receive. 
C)  The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax levied on buyers or sellers. 
D)  In the new after-tax equilibrium, buyers and sellers share the burden of the tax.

Question 15

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 16

Figure 6-9  
-Refer to Figure 6-9. A price floor set at

Accepted Answer

A)  $4 will be binding and will result in a shortage of 8 units. 
B)  $4 will be binding and will result in a shortage of 16 units. 
C)  $7 will be binding and will result in a surplus of 4 units. 
D)  $7 will be binding and will result in a surplus of 8 units. 
A)  $4 will be binding and will result in a shortage of 8 units. 
B)  $4 will be binding and will result in a shortage of 16 units. 
C)  $7 will be binding and will result in a surplus of 4 units. 
D)  $7 will be binding and will result in a surplus of 8 units.

Question 17

Figure 6-6  
-Refer to Figure 6-6. If the government imposes a price floor of $10 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 10 units. 
A)  no surplus. 
B)  a surplus of 20 units. 
C)  a surplus of 30 units. 
D)  a surplus of 10 units.

Question 18

Figure 6-1
Panel a) Panel b)
    
-Refer to Figure 6-1. The price ceiling shown in panel b)

Accepted Answer

A)  is not binding. 
B)  creates a surplus. 
C)  creates a shortage. 
D)  Both a) and b) are correct. 
A)  is not binding. 
B)  creates a surplus. 
C)  creates a shortage. 
D)  Both a) and b) are correct.

Question 19

The tax incidence depends on whether the tax is levied on buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 20

Figure 6-15  
-Refer to Figure 6-15. For a price ceiling to be binding in this market, it would have to be set at

Accepted Answer

A)  any price below $3. 
B)  a price between $2 and $3. 
C)  a price between $3 and $4. 
D)  any price above $3. 
A)  any price below $3. 
B)  a price between $2 and $3. 
C)  a price between $3 and $4. 
D)  any price above $3.

Exam 6: Supply, Demand, and Government Policies

Figure 6-23 -Refer to Figure 6-23. For every unit of the good that is sold, sellers are required to send

A binding 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.

Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.

One disadvantage of government subsidies over price controls is that subsidies

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

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

A tax on the buyers of personal computer external hard drives encourages

A tax on the buyers of cameras encourages

Which of the following is not a short-run effect of rent control on the housing market?

Figure 6-26 -Refer to Figure 6-26. The amount of the tax per unit is

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

When a tax is placed on the buyers of cell phones, the size of the cell phone market

Which of the following is not correct?

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?

Figure 6-9 -Refer to Figure 6-9. A price floor set at

Figure 6-6 -Refer to Figure 6-6. If the government imposes a price floor of $10 on this market, then there will be

Figure 6-1 Panel a) Panel b) -Refer to Figure 6-1. The price ceiling shown in panel b)

The tax incidence depends on whether the tax is levied on buyers or sellers.

Figure 6-15 -Refer to Figure 6-15. For a price ceiling to be binding in this market, it would have to be set at

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 Costs of Production

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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