Question 1

Price controls can generate inequities.

Accepted Answer

A) True 
 B)False

Question 2

If a price ceiling is a binding constraint on a market, then

Accepted Answer

A)  the equilibrium price must be below the price ceiling. 
B)  the quantity supplied must exceed the quantity demanded. 
C)  sellers cannot sell all they want to sell at the price ceiling. 
D)  buyers cannot buy all they want to buy at the price ceiling. 
A)  the equilibrium price must be below the price ceiling. 
B)  the quantity supplied must exceed the quantity demanded. 
C)  sellers cannot sell all they want to sell at the price ceiling. 
D)  buyers cannot buy all they want to buy at the price ceiling.

Question 3

Figure 6-29
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-29. The buyers and sellers will bear an equal share of the tax burden if the demand is

Accepted Answer

A)  D1, and the supply is S1. 
B)  D2, and the supply is S1. 
C)  D1, and the supply is S2. 
D)  D2, and the supply is S2. 
A)  D1, and the supply is S1. 
B)  D2, and the supply is S1. 
C)  D1, and the supply is S2. 
D)  D2, and the supply is S2.

Question 4

If a tax is levied on the sellers of flour, then

Accepted Answer

A)  buyers will bear the entire burden of the tax. 
B)  sellers will bear the entire burden of the tax. 
C)  buyers and sellers will share the burden of the tax. 
D)  the government will bear the entire burden of the tax. 
A)  buyers will bear the entire burden of the tax. 
B)  sellers will bear the entire burden of the tax. 
C)  buyers and sellers will share the burden of the tax. 
D)  the government will bear the entire burden of the tax.

Question 5

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 correct?

Accepted Answer

A)  A price ceiling set at $6 would be binding, but a price ceiling set at $4 would not be binding. 
B)  A price floor set at $4 would be binding, but a price ceiling 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 $6 would be binding, but a price ceiling set at $4 would not be binding. 
B)  A price floor set at $4 would be binding, but a price ceiling 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 6

Under rent control, bribery is a mechanism to

Accepted Answer

A)  bring the total price of an apartment including the bribe) closer to the equilibrium price. 
B)  allocate housing to the poorest individuals in the market. 
C)  force the total price of an apartment including the bribe) to be less than the market price. 
D)  allocate housing to the most deserving tenants. 
A)  bring the total price of an apartment including the bribe) closer to the equilibrium price. 
B)  allocate housing to the poorest individuals in the market. 
C)  force the total price of an apartment including the bribe) to be less than the market price. 
D)  allocate housing to the most deserving tenants.

Question 7

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

Accepted Answer

A)  is binding. 
B)  causes a shortage. 
C)  causes the quantity demanded to exceed the quantity supplied. 
D)  All of the above are correct. 
A)  is binding. 
B)  causes a shortage. 
C)  causes the quantity demanded to exceed the quantity supplied. 
D)  All of the above are correct.

Question 8

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-7  
-Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

Accepted Answer

A)  the quantity of the good supplied decreases by 20 units. 
B)  the demand curve shifts to the left; quantity sold is now 30 units and the price is $5. 
C)  buyers' total expenditure on the good decreases by $80. 
D)  the price of the good continues to serve as the rationing mechanism. 
A)  the quantity of the good supplied decreases by 20 units. 
B)  the demand curve shifts to the left; quantity sold is now 30 units and the price is $5. 
C)  buyers' total expenditure on the good decreases by $80. 
D)  the price of the good continues to serve as the rationing mechanism.

Question 10

When a binding price ceiling is imposed on a market to benefit buyers,

Accepted Answer

A)  every buyer in the market benefits. 
B)  every buyer and seller in the market benefits. 
C)  every buyer who wants to buy the good will be able to do so, but only if he waits in long lines. 
D)  some buyers will not be able to buy any amount of the good. 
A)  every buyer in the market benefits. 
B)  every buyer and seller in the market benefits. 
C)  every buyer who wants to buy the good will be able to do so, but only if he waits in long lines. 
D)  some buyers will not be able to buy any amount of the good.

Question 11

Table 6-1
  
-Refer to Table 6-1. Suppose the government imposes a price ceiling of $70 on this market. What will be the size of the shortage in this market?

Accepted Answer

A)  0 units 
B)  400 units 
C)  600 units 
D)  1000 units 
A)  0 units 
B)  400 units 
C)  600 units 
D)  1000 units

Question 12

Figure 6-24  
-Refer to Figure 6-24. The price paid by buyers after the tax is imposed is

Accepted Answer

A)  $24. 
B)  21. 
C)  $18. 
D)  $16. 
A)  $24. 
B)  21. 
C)  $18. 
D)  $16.

Question 13

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 14

If the government levies a $0.25 tax per MP3 music file downloaded on buyers of MP3 music files, then the price received by sellers of MP3 music files would

Accepted Answer

A)  decrease by more than $0.25. 
B)  decrease by exactly $0.25. 
C)  decrease by less than $0.25. 
D)  increase by an indeterminate amount. 
A)  decrease by more than $0.25. 
B)  decrease by exactly $0.25. 
C)  decrease by less than $0.25. 
D)  increase by an indeterminate amount.

Question 15

The U.S. Congress first instituted a minimum wage in

Accepted Answer

A)  1776. 
B)  1812. 
C)  1938. 
D)  1975. 
A)  1776. 
B)  1812. 
C)  1938. 
D)  1975.

Question 16

Figure 6-25  
-Refer to Figure 6-25. The burden of the tax on buyers is

Accepted Answer

A)  $1 per unit. 
B)  $1.50 per unit. 
C)  $2 per unit. 
D)  $3 per unit. 
A)  $1 per unit. 
B)  $1.50 per unit. 
C)  $2 per unit. 
D)  $3 per unit.

Question 17

The price received by sellers in a market will increase if the government

Accepted Answer

A)  decreases a binding price floor in that market. 
B)  increases a binding price ceiling in that market. 
C)  increases a tax on the good sold in that market. 
D)  imposes a binding price ceiling in that market. 
A)  decreases a binding price floor in that market. 
B)  increases a binding price ceiling in that market. 
C)  increases a tax on the good sold in that market. 
D)  imposes a binding price ceiling in that market.

Question 18

Figure 6-29
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-29. Suppose D1 represents the demand curve for paperback novels, D2 represents the demand curve for gasoline, and S1 represents the supply curve for paperback novels and gasoline. After the imposition of the $2 on paperback novels and on gasoline, the

Accepted Answer

A)  buyers of gasoline bear a higher burden of the $2 tax than buyers of paperback novels. 
B)  sellers of gasoline bear a higher burden of the $2 tax than sellers of paperback novels. 
C)  buyers of gasoline bear an equal burden of the $2 tax as buyers of paperback novels. 
D)  Both a) and b) are correct. 
A)  buyers of gasoline bear a higher burden of the $2 tax than buyers of paperback novels. 
B)  sellers of gasoline bear a higher burden of the $2 tax than sellers of paperback novels. 
C)  buyers of gasoline bear an equal burden of the $2 tax as buyers of paperback novels. 
D)  Both a) and b) are correct.

Question 19

Figure 6-31  
-Refer to Figure 6-31. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 20

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.

Exam 6: Supply, Demand, and Government Policies

Price controls can generate inequities.

If a price ceiling is a binding constraint on a market, then

Figure 6-29 Suppose the government imposes a $2 on this market. -Refer to Figure 6-29. The buyers and sellers will bear an equal share of the tax burden if the demand is

If a tax is levied on the sellers of flour, then

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 correct?

Under rent control, bribery is a mechanism to

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

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

Figure 6-7 -Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

When a binding price ceiling is imposed on a market to benefit buyers,

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price ceiling of $70 on this market. What will be the size of the shortage in this market?

Figure 6-24 -Refer to Figure 6-24. The price paid by buyers after the tax is imposed is

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?

If the government levies a $0.25 tax per MP3 music file downloaded on buyers of MP3 music files, then the price received by sellers of MP3 music files would

The U.S. Congress first instituted a minimum wage in

Figure 6-25 -Refer to Figure 6-25. The burden of the tax on buyers is

The price received by sellers in a market will increase if the government

Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

Which of the following is correct?

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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