Question 1

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Accepted Answer

A)  Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole. 
B)  Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
C)  Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
D)  Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling. 
A)  Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole. 
B)  Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
C)  Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
D)  Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling.

Question 2

Figure 6-26  
-Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

Accepted Answer

A)  $8. 
B)  $16. 
C)  $14. 
D)  $12. 
A)  $8. 
B)  $16. 
C)  $14. 
D)  $12.

Question 3

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A)  a surplus in the market. 
B)  a shortage in the market. 
C)  a nonbinding price control. 
D)  long lines of frustrated buyers. 
A)  a surplus in the market. 
B)  a shortage in the market. 
C)  a nonbinding price control. 
D)  long lines of frustrated buyers.

Question 4

Figure 6-8  
-Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

Accepted Answer

A)  a price ceiling of $3 is imposed. 
B)  a price ceiling of $5 is imposed. 
C)  a price floor of $5 is imposed. 
D)  All of the above are correct. 
A)  a price ceiling of $3 is imposed. 
B)  a price ceiling of $5 is imposed. 
C)  a price floor of $5 is imposed. 
D)  All of the above are correct.

Question 5

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

Accepted Answer

A) True 
 B)False

Question 6

If a binding price ceiling is imposed on the baby formula market, then

Accepted Answer

A)  the quantity of baby formula demanded will increase. 
B)  the quantity of baby formula supplied will decrease. 
C)  a shortage of baby formula will develop. 
D)  All of the above are correct. 
A)  the quantity of baby formula demanded will increase. 
B)  the quantity of baby formula supplied will decrease. 
C)  a shortage of baby formula will develop. 
D)  All of the above are correct.

Question 7

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

Accepted Answer

A) True 
 B)False

Question 8

A tax on sellers increases the quantity of the good sold in the market.

Accepted Answer

A) True 
 B)False

Question 9

If a nonbinding price ceiling is imposed on a market, then the

Accepted Answer

A)  quantity sold in the market will decrease. 
B)  quantity sold in the market will stay the same. 
C)  price in the market will increase. 
D)  price in the market will decrease. 
A)  quantity sold in the market will decrease. 
B)  quantity sold in the market will stay the same. 
C)  price in the market will increase. 
D)  price in the market will decrease.

Question 10

A binding minimum wage may not help all workers, but it does not hurt any workers.

Accepted Answer

A) True 
 B)False

Question 11

Long lines

Accepted Answer

A)  and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B)  and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C)  are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D)  are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time. 
A)  and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B)  and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C)  are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D)  are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.

Question 12

If the demand curve is more price elastic than the supply curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.

Accepted Answer

When the demand curve is more elastic th

Question 13

There are several criticisms of the minimum wage. Which of the following is not one of those criticisms? The minimum wage

Accepted Answer

A)  often hurts those people who it is intended to help. 
B)  results in an excess supply of low-skilled labor. 
C)  prevents some unskilled workers from getting needed on-the-job training. 
D)  fails to raise the wage of any employed person. 
A)  often hurts those people who it is intended to help. 
B)  results in an excess supply of low-skilled labor. 
C)  prevents some unskilled workers from getting needed on-the-job training. 
D)  fails to raise the wage of any employed person.

Question 14

Which of the following is not correct? In a 2006 survey of Ph.D. economists,

Accepted Answer

A)  47 percent favored eliminating the minimum wage. 
B)  14 percent would maintain the minimum wage at its current level. 
C)  38 percent would increase the minimum wage. 
D)  10 percent would decrease the minimum wage. 
A)  47 percent favored eliminating the minimum wage. 
B)  14 percent would maintain the minimum wage at its current level. 
C)  38 percent would increase the minimum wage. 
D)  10 percent would decrease the minimum wage.

Question 15

If a nonbinding price floor is imposed on a market, then the

Accepted Answer

A)  quantity sold in the market will decrease. 
B)  quantity sold in the market will stay the same. 
C)  price in the market will increase. 
D)  price in the market will decrease. 
A)  quantity sold in the market will decrease. 
B)  quantity sold in the market will stay the same. 
C)  price in the market will increase. 
D)  price in the market will decrease.

Question 16

A tax imposed on the sellers of a good will raise the

Accepted Answer

A)  price paid by buyers and lower the equilibrium quantity. 
B)  price paid by buyers and raise the equilibrium quantity. 
C)  effective price received by sellers and lower the equilibrium quantity. 
D)  effective price received by sellers and raise the equilibrium quantity. 
A)  price paid by buyers and lower the equilibrium quantity. 
B)  price paid by buyers and raise the equilibrium quantity. 
C)  effective price received by sellers and lower the equilibrium quantity. 
D)  effective price received by sellers and raise the equilibrium quantity.

Question 17

Which of the following statements is correct?

Accepted Answer

A)  A tax levied on buyers will never be partially paid by sellers. 
B)  Who actually pays a tax depends on the price elasticities of supply and demand. 
C)  Government can decide who actually pays a tax. 
D)  A tax levied on sellers always will be passed on completely to buyers. 
A)  A tax levied on buyers will never be partially paid by sellers. 
B)  Who actually pays a tax depends on the price elasticities of supply and demand. 
C)  Government can decide who actually pays a tax. 
D)  A tax levied on sellers always will be passed on completely to buyers.

Question 18

A tax on sellers will shift the

Accepted Answer

A)  demand curve upward by the amount of the tax. 
B)  demand curve downward by the amount of the tax. 
C)  supply curve upward by the amount of the tax. 
D)  supply curve downward by the amount of the tax. 
A)  demand curve upward by the amount of the tax. 
B)  demand curve downward by the amount of the tax. 
C)  supply curve upward by the amount of the tax. 
D)  supply curve downward by the amount of the tax.

Question 19

The minimum wage

Accepted Answer

A)  is an example of a price ceiling. 
B)  has its greatest impact on middle-aged and immigrant workers. 
C)  does not apply to unpaid internships. 
D)  does not affect the quantity of labor demanded; it only affects the quantity of labor supplied. 
A)  is an example of a price ceiling. 
B)  has its greatest impact on middle-aged and immigrant workers. 
C)  does not apply to unpaid internships. 
D)  does not affect the quantity of labor demanded; it only affects the quantity of labor supplied.

Question 20

If a price floor is not binding, then it will have no effect on the market.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Figure 6-26 -Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

An outcome that can result from either a price ceiling or a price floor is

Figure 6-8 -Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

If a binding price ceiling is imposed on the baby formula market, then

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

A tax on sellers increases the quantity of the good sold in the market.

If a nonbinding price ceiling is imposed on a market, then the

A binding minimum wage may not help all workers, but it does not hurt any workers.

Long lines

If the demand curve is more price elastic than the supply curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.

There are several criticisms of the minimum wage. Which of the following is not one of those criticisms? The minimum wage

Which of the following is not correct? In a 2006 survey of Ph.D. economists,

If a nonbinding price floor is imposed on a market, then the

A tax imposed on the sellers of a good will raise the

Which of the following statements is correct?

A tax on sellers will shift the

The minimum wage

If a price floor is not binding, then it will have no effect on the 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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