Question 1

A binding minimum wage creates a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 2

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A)  buyers will bear a greater burden of the tax than the sellers. 
B)  sellers will bear a greater burden of the tax than the buyers. 
C)  buyers and sellers are likely to share the burden of the tax equally. 
D)  buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information. 
A)  buyers will bear a greater burden of the tax than the sellers. 
B)  sellers will bear a greater burden of the tax than the buyers. 
C)  buyers and sellers are likely to share the burden of the tax equally. 
D)  buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

Question 3

Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because

Accepted Answer

A)  with rent control, the government guarantees landlords a minimum level of profit. 
B)  they become resigned to the fact that many of their apartments are going to be vacant at any given time. 
C)  with shortages and waiting lists, they have no incentive to maintain and improve their property. 
D)  with rent control, it becomes the government's responsibility to maintain rental housing. 
A)  with rent control, the government guarantees landlords a minimum level of profit. 
B)  they become resigned to the fact that many of their apartments are going to be vacant at any given time. 
C)  with shortages and waiting lists, they have no incentive to maintain and improve their property. 
D)  with rent control, it becomes the government's responsibility to maintain rental housing.

Question 4

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-18
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-18. The amount of the tax per unit is

Accepted Answer

A)  $6. 
B)  $8. 
C)  $14. 
D)  $18. 
A)  $6. 
B)  $8. 
C)  $14. 
D)  $18.

Question 6

The tax burden will fall most heavily on sellers of the good when the demand curve

Accepted Answer

A)  is relatively steep, and the supply curve is relatively flat. 
B)  is relatively flat, and the supply curve is relatively steep. 
C)  and the supply curve are both relatively flat. 
D)  and the supply curve are both relatively steep. 
A)  is relatively steep, and the supply curve is relatively flat. 
B)  is relatively flat, and the supply curve is relatively steep. 
C)  and the supply curve are both relatively flat. 
D)  and the supply curve are both relatively steep.

Question 7

Figure 6-32  
-Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at $55 would

Question 8

Figure 6-25  
-Refer to Figure 6-25. The effective price that sellers receive after the tax is imposed is

Accepted Answer

A)  $5. 
B)  $6. 
C)  $7. 
D)  $8. 
A)  $5. 
B)  $6. 
C)  $7. 
D)  $8.

Question 9

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Accepted Answer

A) True 
 B)False

Question 10

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

Accepted Answer

A)  U.S. government regulations pertaining to the price of gasoline. 
B)  the Organization of Petroleum Exporting Countries OPE
C) . 
C)  major oil companies operating in the U.S. 
D)  consumers who bought gasoline frequently, even when their cars' gasoline tanks were nearly full. 
A)  U.S. government regulations pertaining to the price of gasoline. 
B)  the Organization of Petroleum Exporting Countries OPE
C) . 
C)  major oil companies operating in the U.S. 
D)  consumers who bought gasoline frequently, even when their cars' gasoline tanks were nearly full.

Question 11

Which of the following is not a result of rent control?

Accepted Answer

A)  fewer new apartments offered for rent 
B)  less maintenance provided by landlords 
C)  bribery 
D)  higher quality housing 
A)  fewer new apartments offered for rent 
B)  less maintenance provided by landlords 
C)  bribery 
D)  higher quality housing

Question 12

The presence of a price control in a market for a good or service usually is an indication that

Accepted Answer

A)  an insufficient quantity of the good or service was being produced in that market to meet the public's need. 
B)  the usual forces of supply and demand were not able to establish an equilibrium price in that market. 
C)  policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. 
D)  policymakers correctly believed that price controls would generate no inequities of their own once imposed. 
A)  an insufficient quantity of the good or service was being produced in that market to meet the public's need. 
B)  the usual forces of supply and demand were not able to establish an equilibrium price in that market. 
C)  policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers. 
D)  policymakers correctly believed that price controls would generate no inequities of their own once imposed.

Question 13

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

Accepted Answer

With a $6 tax per unit, the bu

Question 14

If a tax is levied on the buyers of a product, then there will be an)

Accepted Answer

A)  upward shift of the demand curve. 
B)  downward shift of the demand curve. 
C)  movement up and to the left along the demand curve. 
D)  movement down and to the right along the demand curve. 
A)  upward shift of the demand curve. 
B)  downward shift of the demand curve. 
C)  movement up and to the left along the demand curve. 
D)  movement down and to the right along the demand curve.

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

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

Accepted Answer

A) True 
 B)False

Question 17

The United States is the only country in the world with minimum-wage laws.

Accepted Answer

A) True 
 B)False

Question 18

Will a binding price floor result in a shortage or a surplus in the market?

Accepted Answer

A binding price floo

Question 19

If a price ceiling is not binding, then

Accepted Answer

A)  there will be a surplus in the market. 
B)  there will be a shortage in the market. 
C)  the market will be less efficient than it would be without the price ceiling. 
D)  there will be no effect on the market price or quantity sold. 
A)  there will be a surplus in the market. 
B)  there will be a shortage in the market. 
C)  the market will be less efficient than it would be without the price ceiling. 
D)  there will be no effect on the market price or quantity sold.

Question 20

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

Exam 6: Supply, Demand, and Government Policies

A binding minimum wage creates a surplus of labor.

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The amount of the tax per unit is

The tax burden will fall most heavily on sellers of the good when the demand curve

Figure 6-32 -Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-25 -Refer to Figure 6-25. The effective price that sellers receive after the tax is imposed is

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

Which of the following is not a result of rent control?

The presence of a price control in a market for a good or service usually is an indication that

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

If a tax is levied on the buyers of a product, then there will be an)

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

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

The United States is the only country in the world with minimum-wage laws.

Will a binding price floor result in a shortage or a surplus in the market?

If a price ceiling is not binding, then

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.

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