Question 1

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 2

A price floor set above the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 3

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a 
i) binding price ceiling.
Ii) non-binding price ceiling.
Iii) binding price floor.
Iv) non-binding price floor.

Accepted Answer

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

Question 4

Figure 6-33  
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

Accepted Answer

The burden

Question 5

Using the graph shown, answer the following questions.
a. What was the equilibrium price in this market before the tax?
b. What is the amount of the tax?
c. How much of the tax will the buyers pay?
d. How much of the tax will the sellers pay?
e. How much will the buyer pay for the product after the tax is imposed?
f. How much will the seller receive after the tax is imposed?
g. As a result of the tax, what has happened to the level of market activity?

Accepted Answer

a. $5
b. $3
c. $2
d. $1
e. $7

Question 6

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 7

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

Accepted Answer

A)  binding price ceiling that creates a shortage. 
B)  non-binding price ceiling that creates a shortage. 
C)  binding price floor that creates a surplus. 
D)  non-binding price floor that creates a surplus. 
A)  binding price ceiling that creates a shortage. 
B)  non-binding price ceiling that creates a shortage. 
C)  binding price floor that creates a surplus. 
D)  non-binding price floor that creates a surplus.

Question 8

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 9

When a binding price ceiling is imposed on a market,

Accepted Answer

A)  price no longer serves as a rationing device. 
B)  the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling. 
C)  all buyers benefit. 
D)  All of the above are correct. 
A)  price no longer serves as a rationing device. 
B)  the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling. 
C)  all buyers benefit. 
D)  All of the above are correct.

Question 10

Scenario 6-2
Suppose demand for a product is given by the equation   and supply for the product is given by the equation  
-Refer to Scenario 6-2. Suppose the government sets a price ceiling at $17 for this product. Is this price ceiling binding, and what will be the size of the shortage/surplus in this market?

Accepted Answer

The price ceiling will not be

Question 11

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Accepted Answer

A) True 
 B)False

Question 12

Price controls

Accepted Answer

A)  always produce a fair outcome. 
B)  always produce an efficient outcome. 
C)  can generate inequities of their own. 
D)  All of the above are correct. 
A)  always produce a fair outcome. 
B)  always produce an efficient outcome. 
C)  can generate inequities of their own. 
D)  All of the above are correct.

Question 13

Table 6-5
  
-Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus or shortage) in this market?

Accepted Answer

A)  0 units 
B)  30 units 
C)  45 units 
D)  75 units 
A)  0 units 
B)  30 units 
C)  45 units 
D)  75 units

Question 14

Not all sellers benefit from a binding price floor.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Accepted Answer

A)  the actual tax incidence is unaffected by the legislated tax incidence. 
B)  the employer now is required by law to pay more than 50 percent of the tax. 
C)  the employee now is required by law to pay more than 50 percent of the tax. 
D)  employers are no longer required by law to pay any portion of the tax. 
A)  the actual tax incidence is unaffected by the legislated tax incidence. 
B)  the employer now is required by law to pay more than 50 percent of the tax. 
C)  the employee now is required by law to pay more than 50 percent of the tax. 
D)  employers are no longer required by law to pay any portion of the tax.

Question 17

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 18

Scenario 6-2
Suppose demand for a product is given by the equation   and supply for the product is given by the equation  
-Refer to Scenario 6-2. Suppose the government sets a price floor at $13 for this product. Is this price floor binding, and what will be the size of the shortage/surplus in this market?

Accepted Answer

The price floor will not be bi

Question 19

The demand for salt is inelastic, and the supply of salt is elastic. The demand for caviar is elastic, and the supply of caviar is inelastic. Suppose that a tax of $1 per pound is levied on the sellers of salt, and a tax of $1 per pound is levied on the buyers of caviar. We would expect that most of the burden of these taxes will fall on

Accepted Answer

A)  sellers of salt and the buyers of caviar. 
B)  sellers of salt and the sellers of caviar. 
C)  buyers of salt and the sellers of caviar. 
D)  buyers of salt and the buyers of caviar. 
A)  sellers of salt and the buyers of caviar. 
B)  sellers of salt and the sellers of caviar. 
C)  buyers of salt and the sellers of caviar. 
D)  buyers of salt and the buyers of caviar.

Question 20

If a tax is levied on the buyers of a product, then the supply curve will

Accepted Answer

A)  not shift. 
B)  shift up. 
C)  shift down. 
D)  become flatter. 
A)  not shift. 
B)  shift up. 
C)  shift down. 
D)  become flatter.

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

A price floor set above the equilibrium price is binding.

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a i) binding price ceiling. Ii) non-binding price ceiling. Iii) binding price floor. Iv) non-binding price floor.

Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

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 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

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

When a binding price ceiling is imposed on a market,

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Price controls

Table 6-5 -Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus or shortage) in this market?

Not all sellers benefit from a binding price floor.

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

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Rent control

If a tax is levied on the buyers of a product, then the supply curve will

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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Exam 6: Supply, Demand, and Government Policies

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

A price floor set above the equilibrium price is binding.

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a i) binding price ceiling. Ii) non-binding price ceiling. Iii) binding price floor. Iv) non-binding price floor.

Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

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 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

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

When a binding price ceiling is imposed on a market,

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Price controls

Table 6-5 -Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus or shortage) in this market?

Not all sellers benefit from a binding price floor.

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

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Rent control

If a tax is levied on the buyers of a product, then the supply curve will

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

Filters