Question 1

Figure 6-9  
-Refer to Figure 6-9. A price ceiling 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 2

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,

Accepted Answer

A)  a smaller quantity of the good is bought and sold. 
B)  a smaller quantity of the good is demanded. 
C)  a larger quantity of the good is supplied. 
D)  the price rises above the previous equilibrium. 
A)  a smaller quantity of the good is bought and sold. 
B)  a smaller quantity of the good is demanded. 
C)  a larger quantity of the good is supplied. 
D)  the price rises above the previous equilibrium.

Question 3

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

Accepted Answer

A) True 
 B)False

Question 4

A tax burden falls more heavily on the side of the market that is less elastic.

Accepted Answer

A) True 
 B)False

Question 5

Table 6-2
  
-Refer to Table 6-2. A price floor set at $20 will

Accepted Answer

A)  be binding and will result in a surplus of 75 units. 
B)  be binding and will result in a surplus of 125 units. 
C)  be binding and will result in a surplus of 200 units. 
D)  not be binding. 
A)  be binding and will result in a surplus of 75 units. 
B)  be binding and will result in a surplus of 125 units. 
C)  be binding and will result in a surplus of 200 units. 
D)  not be binding.

Question 6

Figure 6-16  
-Refer to Figure 6-16. In this market, a minimum wage of $7.25 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 7

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Accepted Answer

A) True 
 B)False

Question 8

The imposition of a binding price ceiling on a market causes

Accepted Answer

A)  quantity demanded to be greater than quantity supplied. 
B)  quantity demanded to be less than quantity supplied. 
C)  quantity demanded to be equal to quantity supplied. 
D)  the price of the good to be greater than its equilibrium price. 
A)  quantity demanded to be greater than quantity supplied. 
B)  quantity demanded to be less than quantity supplied. 
C)  quantity demanded to be equal to quantity supplied. 
D)  the price of the good to be greater than its equilibrium price.

Question 9

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the 
i) supply is more elastic than the demand.
Ii) demand in more elastic than the supply.
Iii) tax is placed on the sellers of the product.
Iv) tax is placed on the buyers of the product.

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 10

The minimum wage does not apply to

Accepted Answer

A)  jobs for teenagers. 
B)  jobs for members of minority groups. 
C)  unpaid internships. 
D)  jobs that include on-the-job training. 
A)  jobs for teenagers. 
B)  jobs for members of minority groups. 
C)  unpaid internships. 
D)  jobs that include on-the-job training.

Question 11

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

Accepted Answer

A) True 
 B)False

Question 12

If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

Accepted Answer

A) True 
 B)False

Question 13

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

Accepted Answer

A) True 
 B)False

Question 14

Opponents of the minimum wage point out that the minimum wage

Accepted Answer

A)  encourages teenagers to drop out of school. 
B)  prevents some workers from getting needed on-the-job training. 
C)  contributes to the problem of unemployment. 
D)  All of the above are correct. 
A)  encourages teenagers to drop out of school. 
B)  prevents some workers from getting needed on-the-job training. 
C)  contributes to the problem of unemployment. 
D)  All of the above are correct.

Question 15

Figure 6-24  
-Refer to Figure 6-24. Suppose sellers, rather than buyers, were required to pay this tax in the same amount per unit as shown in the graph). Relative to the tax on buyers, the tax on sellers would result in

Accepted Answer

A)  buyers bearing the same share of the tax burden. 
B)  sellers bearing the same share of the tax burden. 
C)  the same amount of tax revenue for the government. 
D)  All of the above are correct. 
A)  buyers bearing the same share of the tax burden. 
B)  sellers bearing the same share of the tax burden. 
C)  the same amount of tax revenue for the government. 
D)  All of the above are correct.

Question 16

When a tax is imposed on the buyers of a good, the demand curve shifts

Accepted Answer

A)  upward by the amount of the tax. 
B)  downward by the amount of the tax. 
C)  upward by less than the amount of the tax. 
D)  downward by less than the amount of the tax. 
A)  upward by the amount of the tax. 
B)  downward by the amount of the tax. 
C)  upward by less than the amount of the tax. 
D)  downward by less than the amount of the tax.

Question 17

Figure 6-27
This figure shows the market demand and market supply curves for good Z.  
-Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)  $16 
B)  between $16 and $20 
C)  between $20 and $22 
D)  $22 
A)  $16 
B)  between $16 and $20 
C)  between $20 and $22 
D)  $22

Question 18

The price received by sellers 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)  None of the above is 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)  None of the above is correct.

Question 19

Figure 6-29
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-29. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2,

Accepted Answer

A)  buyers bear a higher burden of the tax in the short run than in the long run. 
B)  sellers bear a higher burden of the tax in the short run than in the long run. 
C)  buyers and sellers bear an equal burden of the tax in both the short run and long run. 
D)  buyers and sellers bear an equal burden of the tax in the short run, but buyers bear a higher burden of the tax in the long run. 
A)  buyers bear a higher burden of the tax in the short run than in the long run. 
B)  sellers bear a higher burden of the tax in the short run than in the long run. 
C)  buyers and sellers bear an equal burden of the tax in both the short run and long run. 
D)  buyers and sellers bear an equal burden of the tax in the short run, but buyers bear a higher burden of the tax in the long run.

Question 20

Table 6-1
  
-Refer to Table 6-1. Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?

Accepted Answer

A)  0 units 
B)  400 units 
C)  1200 units 
D)  1600 units 
A)  0 units 
B)  400 units 
C)  1200 units 
D)  1600 units

Exam 6: Supply, Demand, and Government Policies

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

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

A tax burden falls more heavily on the side of the market that is less elastic.

Table 6-2 -Refer to Table 6-2. A price floor set at $20 will

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $7.25 is

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

The imposition of a binding price ceiling on a market causes

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the i) supply is more elastic than the demand. Ii) demand in more elastic than the supply. Iii) tax is placed on the sellers of the product. Iv) tax is placed on the buyers of the product.

The minimum wage does not apply to

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

Opponents of the minimum wage point out that the minimum wage

Figure 6-24 -Refer to Figure 6-24. Suppose sellers, rather than buyers, were required to pay this tax in the same amount per unit as shown in the graph). Relative to the tax on buyers, the tax on sellers would result in

When a tax is imposed on the buyers of a good, the demand curve shifts

Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

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

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?

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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