Question 1

The quantity sold in a market will decrease if the government

Accepted Answer

A)  decreases 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)  All of the above are correct. 
A)  decreases 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)  All of the above are correct.

Question 2

If a binding price floor is imposed on the video game market, then

Accepted Answer

A)  the demand for video games will decrease. 
B)  the supply of video games will increase. 
C)  a surplus of video games will develop. 
D)  All of the above are correct. 
A)  the demand for video games will decrease. 
B)  the supply of video games will increase. 
C)  a surplus of video games will develop. 
D)  All of the above are correct.

Question 3

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Accepted Answer

A) True 
 B)False

Question 4

Prices are inefficient rationing devices.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-33  
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the sellers in this market?

Accepted Answer

The burden

Question 6

Price controls are usually enacted

Accepted Answer

A)  as a means of raising revenue for public purposes. 
B)  when policymakers believe that the market price of a good or service is unfair to buyers or sellers. 
C)  when policymakers tax a good. 
D)  All of the above are correct. 
A)  as a means of raising revenue for public purposes. 
B)  when policymakers believe that the market price of a good or service is unfair to buyers or sellers. 
C)  when policymakers tax a good. 
D)  All of the above are correct.

Question 7

If a tax is levied on the sellers of a product, then there will be an)

Accepted Answer

A)  downward shift of the demand curve. 
B)  upward shift of the demand curve. 
C)  decrease in quantity demanded. 
D)  increase in quantity demanded. 
A)  downward shift of the demand curve. 
B)  upward shift of the demand curve. 
C)  decrease in quantity demanded. 
D)  increase in quantity demanded.

Question 8

Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

Accepted Answer

A)  Cellular phones become less popular. 
B)  Traditional land line phones become more expensive. 
C)  The components used to produce cellular phones become less expensive. 
D)  Firms expect the price of cellular phones to fall in the future. 
A)  Cellular phones become less popular. 
B)  Traditional land line phones become more expensive. 
C)  The components used to produce cellular phones become less expensive. 
D)  Firms expect the price of cellular phones to fall in the future.

Question 9

The rationing mechanisms that develop under binding price floors are usually efficient.

Accepted Answer

A) True 
 B)False

Question 10

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-19  
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)  One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. 
B)  One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. 
C)  One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers. 
D)  Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers. 
A)  One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. 
B)  One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. 
C)  One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers. 
D)  Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers.

Question 12

Figure 6-6  
-Refer to Figure 6-6. Which of the following price floors would be binding in this market?

Accepted Answer

A)  $6 
B)  $8 
C)  $10 
D)  $4 
A)  $6 
B)  $8 
C)  $10 
D)  $4

Question 13

In the short run, rent control causes the quantity supplied

Accepted Answer

A)  and quantity demanded to fall. 
B)  to fall and quantity demanded to rise. 
C)  to rise and quantity demanded to fall. 
D)  and quantity demanded to rise. 
A)  and quantity demanded to fall. 
B)  to fall and quantity demanded to rise. 
C)  to rise and quantity demanded to fall. 
D)  and quantity demanded to rise.

Question 14

Figure 6-6  
-Refer to Figure 6-6. Which of the following price ceilings would be binding in this market?

Accepted Answer

A)  $8 
B)  $6 
C)  $12 
D)  $10 
A)  $8 
B)  $6 
C)  $12 
D)  $10

Question 15

Figure 6-20  
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)  less than 25 units 
B)  25 units 
C)  between 25 units and 50 units 
D)  greater than 50 units 
A)  less than 25 units 
B)  25 units 
C)  between 25 units and 50 units 
D)  greater than 50 units

Question 16

Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift

Accepted Answer

A)  demand, raising both the equilibrium price and quantity in the market for artificially-sweetened beverages. 
B)  demand, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially- sweetened beverages. 
C)  supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially- sweetened beverages. 
D)  supply, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially- sweetened beverages. 
A)  demand, raising both the equilibrium price and quantity in the market for artificially-sweetened beverages. 
B)  demand, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially- sweetened beverages. 
C)  supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially- sweetened beverages. 
D)  supply, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially- sweetened beverages.

Question 17

If the government removes a binding price ceiling from a market, then the price received by sellers will

Accepted Answer

A)  decrease, and the quantity sold in the market will decrease. 
B)  decrease, and the quantity sold in the market will increase. 
C)  increase, and the quantity sold in the market will decrease. 
D)  increase, and the quantity sold in the market will increase. 
A)  decrease, and the quantity sold in the market will decrease. 
B)  decrease, and the quantity sold in the market will increase. 
C)  increase, and the quantity sold in the market will decrease. 
D)  increase, and the quantity sold in the market will increase.

Question 18

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

Accepted Answer

A)  imposes a binding price floor in that market. 
B)  decreases a binding price ceiling in that market. 
C)  decreases a tax on the good sold in that market. 
D)  increases a binding price floor in that market. 
A)  imposes a binding price floor in that market. 
B)  decreases a binding price ceiling in that market. 
C)  decreases a tax on the good sold in that market. 
D)  increases a binding price floor in that market.

Question 19

Figure 6-31  
-Refer to Figure 6-31. If the government set a price ceiling at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

There woul

Question 20

If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

The quantity sold in a market will decrease if the government

If a binding price floor is imposed on the video game market, then

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Prices are inefficient rationing devices.

Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the sellers in this market?

Price controls are usually enacted

If a tax is levied on the sellers of a product, then there will be an)

Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

The rationing mechanisms that develop under binding price floors are usually efficient.

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Figure 6-6 -Refer to Figure 6-6. Which of the following price floors would be binding in this market?

In the short run, rent control causes the quantity supplied

Figure 6-6 -Refer to Figure 6-6. Which of the following price ceilings would be binding in this market?

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift

If the government removes a binding price ceiling from a market, then the price received by sellers will

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

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers.

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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