Question 1

Table 6-2
  
-Refer to Table 6-2. A price floor set at $5 will

Accepted Answer

A)  be binding and will result in a surplus of 50 units. 
B)  be binding and will result in a surplus of 250 units. 
C)  be binding and will result in a surplus of 300 units. 
D)  not be binding. 
A)  be binding and will result in a surplus of 50 units. 
B)  be binding and will result in a surplus of 250 units. 
C)  be binding and will result in a surplus of 300 units. 
D)  not be binding.

Question 2

Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

Accepted Answer

A) True 
 B)False

Question 3

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

Accepted Answer

A) True 
 B)False

Question 4

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. What are the equilibrium price and equilibrium quantity in the market for this product?

Accepted Answer

The equilibrium pric

Question 5

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 6

Figure 6-24  
-Refer to Figure 6-24. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

Accepted Answer

A)  $16 
B)  $18 
C)  $24 
D)  $26 
A)  $16 
B)  $18 
C)  $24 
D)  $26

Question 7

The price paid by buyers in a market will decrease if the government

Accepted Answer

A)  imposes 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)  decreases a binding price floor in that market. 
A)  imposes 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)  decreases a binding price floor in that market.

Question 8

Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy. Further, suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle. Which of the following statements is correct?

Accepted Answer

A)  This tax causes the demand curve for vodka to shift downward by $5.00 at each quantity of vodka. 
B)  The price paid by buyers is $2.00 per bottle more than it was before the tax. 
C)  Sixty percent of the burden of the tax falls on sellers. 
D)  All of the above are correct. 
A)  This tax causes the demand curve for vodka to shift downward by $5.00 at each quantity of vodka. 
B)  The price paid by buyers is $2.00 per bottle more than it was before the tax. 
C)  Sixty percent of the burden of the tax falls on sellers. 
D)  All of the above are correct.

Question 9

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 10

If the government removes a tax on a good, then the price paid by buyers will

Accepted Answer

A)  increase, and the price received by sellers will increase. 
B)  increase, and the price received by sellers will decrease. 
C)  decrease, and the price received by sellers will increase. 
D)  decrease, and the price received by sellers will decrease. 
A)  increase, and the price received by sellers will increase. 
B)  increase, and the price received by sellers will decrease. 
C)  decrease, and the price received by sellers will increase. 
D)  decrease, and the price received by sellers will decrease.

Question 11

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Accepted Answer

A)  upward by exactly $2.00. 
B)  upward by less than $2.00. 
C)  downward by exactly $2.00. 
D)  downward by less than $2.00. 
A)  upward by exactly $2.00. 
B)  upward by less than $2.00. 
C)  downward by exactly $2.00. 
D)  downward by less than $2.00.

Question 12

A large majority of economists favor eliminating the minimum wage.

Accepted Answer

A) True 
 B)False

Question 13

A price ceiling is

Accepted Answer

A)  often imposed on markets in which "cutthroat competition" would prevail without a price ceiling. 
B)  a legal maximum on the price at which a good can be sold. 
C)  often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling. 
D)  All of the above are correct. 
A)  often imposed on markets in which "cutthroat competition" would prevail without a price ceiling. 
B)  a legal maximum on the price at which a good can be sold. 
C)  often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling. 
D)  All of the above are correct.

Question 14

Figure 6-1
Panel a) Panel b)
    
-Refer to Figure 6-1. A binding price ceiling is shown in

Accepted Answer

A)  panel a) only. 
B)  panel b) only. 
C)  both panel a) and panel b). 
D)  neither panel a) nor panel b). 
A)  panel a) only. 
B)  panel b) only. 
C)  both panel a) and panel b). 
D)  neither panel a) nor panel b).

Question 15

A legal maximum on the price at which a good can be sold is called a price

Accepted Answer

A)  floor. 
B)  subsidy. 
C)  support. 
D)  ceiling. 
A)  floor. 
B)  subsidy. 
C)  support. 
D)  ceiling.

Question 16

Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

Accepted Answer

A) True 
 B)False

Question 17

Figure 6-15  
-Refer to Figure 6-15. Suppose a price ceiling of $2 is imposed on this market. As a result,

Accepted Answer

A)  the quantity of the good supplied decreases by 30 units. 
B)  the demand curve shifts to the left so as to now pass through the point quantity = 30, price = $2). 
C)  buyers' total expenditure on the good decreases by $75. 
D)  buyers' total expenditure on the good falls by $15. 
A)  the quantity of the good supplied decreases by 30 units. 
B)  the demand curve shifts to the left so as to now pass through the point quantity = 30, price = $2). 
C)  buyers' total expenditure on the good decreases by $75. 
D)  buyers' total expenditure on the good falls by $15.

Question 18

Which of the following statements about the effects of rent control is correct?

Accepted Answer

A)  The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments. 
B)  The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments. 
C)  In the long run, rent control leads to a shortage of apartments and an improvement in the quality of available apartments. 
D)  The effects of rent control are very noticeable to the public in the short run because the primary effects of rent control occur very quickly. 
A)  The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments. 
B)  The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments. 
C)  In the long run, rent control leads to a shortage of apartments and an improvement in the quality of available apartments. 
D)  The effects of rent control are very noticeable to the public in the short run because the primary effects of rent control occur very quickly.

Question 19

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Accepted Answer

A)  less than $0.50 
B)  $0.50. 
C)  between $0.50 and $1. 
D)  $1. 
A)  less than $0.50 
B)  $0.50. 
C)  between $0.50 and $1. 
D)  $1.

Question 20

The price paid by buyers in a market will decrease if the government

Accepted Answer

A)  increases a binding price floor in that market. 
B)  increases a binding price ceiling in that market. 
C)  decreases a tax on the good sold in that market. 
D)  All of the above are correct. 
A)  increases a binding price floor in that market. 
B)  increases a binding price ceiling in that market. 
C)  decreases a tax on the good sold in that market. 
D)  All of the above are correct.

Exam 6: Supply, Demand, and Government Policies

Table 6-2 -Refer to Table 6-2. A price floor set at $5 will

Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

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. What are the equilibrium price and equilibrium quantity in the market for this product?

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

Figure 6-24 -Refer to Figure 6-24. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

The price paid by buyers in a market will decrease if the government

Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy. Further, suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle. Which of the following statements is correct?

Price ceilings are typically imposed to benefit buyers.

If the government removes a tax on a good, then the price paid by buyers will

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

A large majority of economists favor eliminating the minimum wage.

A price ceiling is

Figure 6-1 Panel a) Panel b) -Refer to Figure 6-1. A binding price ceiling is shown in

A legal maximum on the price at which a good can be sold is called a price

Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

Figure 6-15 -Refer to Figure 6-15. Suppose a price ceiling of $2 is imposed on this market. As a result,

Which of the following statements about the effects of rent control is correct?

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

The price paid by buyers in a market will decrease if the government

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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