Question 1

When a binding price floor is imposed on a market,

Accepted Answer

A)  price no longer serves as a rationing device. 
B)  the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor. 
C)  all sellers benefit. 
D)  All of the above are correct. 
A)  price no longer serves as a rationing device. 
B)  the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor. 
C)  all sellers benefit. 
D)  All of the above are correct.

Question 2

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a 
i) binding price ceiling.
Ii) non-binding price ceiling.
Iii) binding price floor.
Iv) non-binding price floor.

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 3

Figure 6-22  
-Refer to Figure 6-22. The price paid by buyers after the tax is imposed is

Accepted Answer

A)  $3.00. 
B)  $3.50. 
C)  $5.00. 
D)  $6.00. 
A)  $3.00. 
B)  $3.50. 
C)  $5.00. 
D)  $6.00.

Question 4

When a tax is placed on the buyers of a product, the

Accepted Answer

A)  size of the market decreases. 
B)  effective price received by sellers decreases, and the price paid by buyers increases. 
C)  demand for the product decreases. 
D)  All of the above are correct. 
A)  size of the market decreases. 
B)  effective price received by sellers decreases, and the price paid by buyers increases. 
C)  demand for the product decreases. 
D)  All of the above are correct.

Question 5

When a tax is levied on sellers of tea,

Accepted Answer

A)  the well-being of both sellers and buyers of tea is unaffected. 
B)  sellers of tea are made worse off, and the well-being of buyers is unaffected. 
C)  sellers of tea are made worse off, and buyers of tea are made better off. 
D)  both sellers and buyers of tea are made worse off. 
A)  the well-being of both sellers and buyers of tea is unaffected. 
B)  sellers of tea are made worse off, and the well-being of buyers is unaffected. 
C)  sellers of tea are made worse off, and buyers of tea are made better off. 
D)  both sellers and buyers of tea are made worse off.

Question 6

The primary effect of rent control in the short run is to reduce rents.

Accepted Answer

A) True 
 B)False

Question 7

In response to a shortage caused by the imposition of a binding price ceiling on a market,

Accepted Answer

A)  price will no longer be the mechanism that rations scarce resources. 
B)  long lines of buyers may develop. 
C)  sellers could ration the good or service according to their own personal biases. 
D)  All of the above are correct. 
A)  price will no longer be the mechanism that rations scarce resources. 
B)  long lines of buyers may develop. 
C)  sellers could ration the good or service according to their own personal biases. 
D)  All of the above are correct.

Question 8

A tax on sellers increases supply.

Accepted Answer

A) True 
 B)False

Question 9

To be binding, a price ceiling must be set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 10

Figure 6-35  
-Refer to Figure 6-35. A price floor set at $40 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 11

A price ceiling set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 12

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. If the government imposes a price ceiling of $6 on this market, then there will be

Accepted Answer

A)  no shortage. 
B)  a shortage of 5 units. 
C)  a shortage of 10 units. 
D)  a shortage of 20 units. 
A)  no shortage. 
B)  a shortage of 5 units. 
C)  a shortage of 10 units. 
D)  a shortage of 20 units.

Question 13

A binding price ceiling may not help all consumers, but it does not hurt any consumers.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price ceiling of $6 in this market results in

Accepted Answer

A)  a shortage of 8 units. 
B)  a shortage of 4 units. 
C)  14 units sold. 
D)  10 units sold. 
A)  a shortage of 8 units. 
B)  a shortage of 4 units. 
C)  14 units sold. 
D)  10 units sold.

Question 15

Minimum-wage laws dictate the

Accepted Answer

A)  average price employers must pay for labor. 
B)  highest price employers may pay for labor. 
C)  lowest price employers may pay for labor. 
D)  the highest and lowest prices employers may pay for labor. 
A)  average price employers must pay for labor. 
B)  highest price employers may pay for labor. 
C)  lowest price employers may pay for labor. 
D)  the highest and lowest prices employers may pay for labor.

Question 16

In a particular market, market demand is given by the equation   and market supply is given by the equation   Suppose a per-unit tax is imposed that reduces the number of units bought and sold in the market to 25 units. What is the size of the tax, and who bears the greater burden of the tax, buyers or sellers?

Accepted Answer

If the number of transactions falls to 2

Question 17

When a payroll tax is enacted, the wage received by workers

Accepted Answer

A)  falls, and the wage paid by firms rises. 
B)  falls, and the wage paid by firms falls. 
C)  rises, and the wage paid by firms falls. 
D)  rises, and the wage paid by firms rises. 
A)  falls, and the wage paid by firms rises. 
B)  falls, and the wage paid by firms falls. 
C)  rises, and the wage paid by firms falls. 
D)  rises, and the wage paid by firms rises.

Question 18

Figure 6-23
  
-Refer to Figure 6-23. Which of the following is correct?

Accepted Answer

A)  The entire burden of the tax falls on sellers, and none of the burden of the tax falls on buyers. 
B)  One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers. 
C)  One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers. 
D)  Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers. 
A)  The entire burden of the tax falls on sellers, and none of the burden of the tax falls on buyers. 
B)  One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers. 
C)  One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers. 
D)  Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers.

Question 19

When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market

Accepted Answer

A)  and the price paid by buyers both decrease. 
B)  decreases, but the price paid by buyers increases. 
C)  increases, but the price paid by buyers decreases. 
D)  and the price paid by buyers both increase. 
A)  and the price paid by buyers both decrease. 
B)  decreases, but the price paid by buyers increases. 
C)  increases, but the price paid by buyers decreases. 
D)  and the price paid by buyers both increase.

Question 20

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. If the government imposes a price floor of $3 on this market, then there will be

Accepted Answer

A)  no surplus. 
B)  a surplus of 10 units. 
C)  a surplus of 15 units. 
D)  a surplus of 20 units. 
A)  no surplus. 
B)  a surplus of 10 units. 
C)  a surplus of 15 units. 
D)  a surplus of 20 units.

Exam 6: Supply, Demand, and Government Policies

When a binding price floor is imposed on a market,

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a i) binding price ceiling. Ii) non-binding price ceiling. Iii) binding price floor. Iv) non-binding price floor.

Figure 6-22 -Refer to Figure 6-22. The price paid by buyers after the tax is imposed is

When a tax is placed on the buyers of a product, the

When a tax is levied on sellers of tea,

The primary effect of rent control in the short run is to reduce rents.

In response to a shortage caused by the imposition of a binding price ceiling on a market,

A tax on sellers increases supply.

To be binding, a price ceiling must be set above the equilibrium price.

Figure 6-35 -Refer to Figure 6-35. A price floor set at $40 would create a surplus of 20 units.

A price ceiling set above the equilibrium price is not binding.

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price ceiling of $6 on this market, then there will be

A binding price ceiling may not help all consumers, but it does not hurt any consumers.

Figure 6-4 -Refer to Figure 6-4. A government-imposed price ceiling of $6 in this market results in

Minimum-wage laws dictate the

When a payroll tax is enacted, the wage received by workers

Figure 6-23 -Refer to Figure 6-23. Which of the following is correct?

When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price floor of $3 on this market, then there will be

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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