Question 1

When OPEC raised the price of crude oil in the 1970s, it caused the

Accepted Answer

A)  demand for gasoline to increase. 
B)  demand for gasoline to decrease. 
C)  supply of gasoline to increase. 
D)  supply of gasoline to decrease. 
A)  demand for gasoline to increase. 
B)  demand for gasoline to decrease. 
C)  supply of gasoline to increase. 
D)  supply of gasoline to decrease.

Question 2

Advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Accepted Answer

A) True 
 B)False

Question 3

A price floor set below the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 4

Figure 6-7  
-Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?

Accepted Answer

A)  a price ceiling set at $6 
B)  a price ceiling set at $5 
C)  a price floor set at $9 
D)  a price floor set at $8 
A)  a price ceiling set at $6 
B)  a price ceiling set at $5 
C)  a price floor set at $9 
D)  a price floor set at $8

Question 5

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

Accepted Answer

A binding price ceil

Question 6

Minimum-wage laws benefit society by creating a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-2  
-Refer to Figure 6-2. The price ceiling

Accepted Answer

A)  causes a shortage of 40 units. 
B)  is not binding, because it is set above the equilibrium price. 
C)  causes a shortage of 45 units. 
D)  causes a shortage of 85 units. 
A)  causes a shortage of 40 units. 
B)  is not binding, because it is set above the equilibrium price. 
C)  causes a shortage of 45 units. 
D)  causes a shortage of 85 units.

Question 8

Figure 6-25  
-Refer to Figure 6-25. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. After the sellers are required to pay the tax, relative to the case depicted in the graph, the burden on buyers will be

Accepted Answer

A)  larger, and the burden on sellers will be smaller. 
B)  smaller, and the burden on sellers will be larger. 
C)  the same, and the burden on sellers will be the same. 
D)  The relative burdens in the two cases cannot be determined without further information. 
A)  larger, and the burden on sellers will be smaller. 
B)  smaller, and the burden on sellers will be larger. 
C)  the same, and the burden on sellers will be the same. 
D)  The relative burdens in the two cases cannot be determined without further information.

Question 9

A binding minimum wage

Accepted Answer

A)  alters both the quantity demanded and quantity supplied of labor. 
B)  affects only the quantity of labor demanded; it does not affect the quantity of labor supplied. 
C)  has no effect on the quantity of labor demanded or the quantity of labor supplied. 
D)  causes only temporary unemployment because the market will adjust and eliminate any temporary surplus of workers. 
A)  alters both the quantity demanded and quantity supplied of labor. 
B)  affects only the quantity of labor demanded; it does not affect the quantity of labor supplied. 
C)  has no effect on the quantity of labor demanded or the quantity of labor supplied. 
D)  causes only temporary unemployment because the market will adjust and eliminate any temporary surplus of workers.

Question 10

Figure 6-8  
-Refer to Figure 6-8. When a certain price control is imposed on this market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P1 dollars per unit for that quantity and sellers are willing and able to accept a minimum of P2 dollars per unit for that quantity. If P1 - P2 = $3, then the price control is

Accepted Answer

A)  a price ceiling of $2.00. 
B)  a price ceiling of $5.00. 
C)  a price floor of $5.00. 
D)  either a price ceiling of $2.00 or a price floor of $5.00. 
A)  a price ceiling of $2.00. 
B)  a price ceiling of $5.00. 
C)  a price floor of $5.00. 
D)  either a price ceiling of $2.00 or a price floor of $5.00.

Question 11

Which of the following is not correct?

Accepted Answer

A)  Economists have two roles: scientist and policy adviser. 
B)  As scientists, economists develop and test theories to explain the world around them. 
C)  Economic policies rarely have effects that their architects did not intend or anticipate. 
D)  As policy advisers, economists use their theories to help change the world for the better. 
A)  Economists have two roles: scientist and policy adviser. 
B)  As scientists, economists develop and test theories to explain the world around them. 
C)  Economic policies rarely have effects that their architects did not intend or anticipate. 
D)  As policy advisers, economists use their theories to help change the world for the better.

Question 12

Which of the following is not an example of a public policy?

Accepted Answer

A)  rent-control laws 
B)  minimum-wage laws 
C)  taxes 
D)  equilibrium laws 
A)  rent-control laws 
B)  minimum-wage laws 
C)  taxes 
D)  equilibrium laws

Question 13

Workers with high skills and much experience are not typically affected by the minimum wage.

Accepted Answer

A) True 
 B)False

Question 14

Table 6-1
  
-Refer to Table 6-1. Suppose the government imposes a price floor of $70 on this market. What will be the size of the surplus in this market?

Accepted Answer

A)  0 units 
B)  400 units 
C)  600 units 
D)  1000 units 
A)  0 units 
B)  400 units 
C)  600 units 
D)  1000 units

Question 15

Scenario 6-1
Suppose that demand in the market for good X is given by the equation   and that supply in the market for good X is given by the equation  
-Refer to Scenario 6-1. What are the equilibrium price and quantity in the market for good X?

Accepted Answer

The equilibrium pric

Question 16

Figure 6-19  
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)  $3 
B)  between $3 and $5 
C)  between $5 and $7 
D)  $7 
A)  $3 
B)  between $3 and $5 
C)  between $5 and $7 
D)  $7

Question 17

When a price floor is binding, is the price floor set above or below the market equilibrium price?

Accepted Answer

A binding price floo

Question 18

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

Accepted Answer

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

Question 19

Figure 6-4  
-Refer to Figure 6-4. Which of the following statements is not correct?

Accepted Answer

A)  When the price is $10, quantity supplied equals quantity demanded. 
B)  When the price is $6, there is a surplus of 8 units. 
C)  When the price is $12, there is a surplus of 4 units. 
D)  When the price is $16, quantity supplied exceeds quantity demanded by 12 units. 
A)  When the price is $10, quantity supplied equals quantity demanded. 
B)  When the price is $6, there is a surplus of 8 units. 
C)  When the price is $12, there is a surplus of 4 units. 
D)  When the price is $16, quantity supplied exceeds quantity demanded by 12 units.

Question 20

An example of a price floor is

Accepted Answer

A)  the regulation of gasoline prices in the U.S. in the 1970s. 
B)  rent control. 
C)  the minimum wage. 
D)  any restriction on price that leads to a shortage. 
A)  the regulation of gasoline prices in the U.S. in the 1970s. 
B)  rent control. 
C)  the minimum wage. 
D)  any restriction on price that leads to a shortage.

Exam 6: Supply, Demand, and Government Policies

When OPEC raised the price of crude oil in the 1970s, it caused the

Advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off.

A price floor set below the equilibrium price causes a surplus in the market.

Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

Minimum-wage laws benefit society by creating a surplus of labor.

Figure 6-2 -Refer to Figure 6-2. The price ceiling

A binding minimum wage

Which of the following is not correct?

Which of the following is not an example of a public policy?

Workers with high skills and much experience are not typically affected by the minimum wage.

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price floor of $70 on this market. What will be the size of the surplus in this market?

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. What are the equilibrium price and quantity in the market for good X?

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

When a price floor is binding, is the price floor set above or below the market equilibrium price?

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

Figure 6-4 -Refer to Figure 6-4. Which of the following statements is not correct?

An example of a price floor is

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