Question 1

A price ceiling is

Accepted Answer

A)  often imposed on markets in which "cutthroat competition" would prevail without a price ceiling. 
B)  a legal maximum on the price at which a good can be sold. 
C)  often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling. 
D)  All of the above are correct. 
A)  often imposed on markets in which "cutthroat competition" would prevail without a price ceiling. 
B)  a legal maximum on the price at which a good can be sold. 
C)  often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling. 
D)  All of the above are correct.

Question 2

Figure 6-35  
-Refer to Figure 6-35. A price floor set at $60 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 3

Table 6-1
  
-Refer to Table 6-1. Suppose the government imposes a price ceiling of $70 on this market. What will be the size of the shortage 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 4

Figure 6-10  
-Refer to Figure 6-10. A price floor set at

Accepted Answer

A)  $6 will be binding and will result in a surplus of 10 units. 
B)  $6 will be binding and will result in a surplus of 6 units. 
C)  $16 will be binding and will result in a surplus of 10 units. 
D)  $16 will be binding and will result in a surplus of 4 units. 
A)  $6 will be binding and will result in a surplus of 10 units. 
B)  $6 will be binding and will result in a surplus of 6 units. 
C)  $16 will be binding and will result in a surplus of 10 units. 
D)  $16 will be binding and will result in a surplus of 4 units.

Question 5

The incidence of a tax falls more heavily on

Accepted Answer

A)  consumers than producers if demand is more inelastic than supply. 
B)  producers than consumers if supply is more inelastic than demand. 
C)  consumers than producers if supply is more elastic than demand. 
D)  All of the above are correct. 
A)  consumers than producers if demand is more inelastic than supply. 
B)  producers than consumers if supply is more inelastic than demand. 
C)  consumers than producers if supply is more elastic than demand. 
D)  All of the above are correct.

Question 6

A price floor will be binding only if it is set

Accepted Answer

A)  equal to the equilibrium price. 
B)  above the equilibrium price. 
C)  below the equilibrium price. 
D)  either above or below the equilibrium price. 
A)  equal to the equilibrium price. 
B)  above the equilibrium price. 
C)  below the equilibrium price. 
D)  either above or below the equilibrium price.

Question 7

If the government removes a tax on a good, then the quantity of the good sold will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change. 
D)  All of the above are possible. 
A)  increase. 
B)  decrease. 
C)  not change. 
D)  All of the above are possible.

Question 8

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

Accepted Answer

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

Question 9

Figure 6-25  
-Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

Accepted Answer

A)  $150 
B)  $180 
C)  $250 
D)  $300 
A)  $150 
B)  $180 
C)  $250 
D)  $300

Question 10

If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would

Accepted Answer

A)  increase by more than $1,000. 
B)  increase by exactly $1,000. 
C)  increase by less than $1,000. 
D)  decrease by an indeterminate amount. 
A)  increase by more than $1,000. 
B)  increase by exactly $1,000. 
C)  increase by less than $1,000. 
D)  decrease by an indeterminate amount.

Question 11

A price ceiling will be binding only if it is set

Accepted Answer

A)  equal to the equilibrium price. 
B)  above the equilibrium price. 
C)  below the equilibrium price. 
D)  either above or below the equilibrium price. 
A)  equal to the equilibrium price. 
B)  above the equilibrium price. 
C)  below the equilibrium price. 
D)  either above or below the equilibrium price.

Question 12

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 13

When a tax is placed on the sellers 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)  supply of 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)  supply of the product decreases. 
D)  All of the above are correct.

Question 14

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

Accepted Answer

A)  binding price ceiling that creates a shortage. 
B)  non-binding price ceiling that creates a shortage. 
C)  binding price floor that creates a surplus. 
D)  non-binding price floor that creates a surplus. 
A)  binding price ceiling that creates a shortage. 
B)  non-binding price ceiling that creates a shortage. 
C)  binding price floor that creates a surplus. 
D)  non-binding price floor that creates a surplus.

Question 15

A tax on buyers decreases demand.

Accepted Answer

A) True 
 B)False

Question 16

A tax on buyers 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 17

A tax on sellers reduces the size of a market.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  75 units sold. 
B)  125 units sold. 
C)  200 units sold. 
D)  275 units sold. 
A)  75 units sold. 
B)  125 units sold. 
C)  200 units sold. 
D)  275 units sold.

Question 19

Which of the following is correct?

Accepted Answer

A)  Workers determine the supply of labor, and firms determine the demand for labor. 
B)  Workers determine the demand for labor, and firms determine the supply of labor. 
C)  The labor market is a single market for all different types of workers. 
D)  The price of the product produced by labor adjusts to balance the supply of labor and the demand for labor. 
A)  Workers determine the supply of labor, and firms determine the demand for labor. 
B)  Workers determine the demand for labor, and firms determine the supply of labor. 
C)  The labor market is a single market for all different types of workers. 
D)  The price of the product produced by labor adjusts to balance the supply of labor and the demand for labor.

Question 20

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

Accepted Answer

A)  the quantity of video games demanded will decrease. 
B)  the quantity of video games supplied will increase. 
C)  a surplus of video games will develop. 
D)  All of the above are correct. 
A)  the quantity of video games demanded will decrease. 
B)  the quantity of video games supplied will increase. 
C)  a surplus of video games will develop. 
D)  All of the above are correct.

Exam 6: Supply, Demand, and Government Policies

A price ceiling is

Figure 6-35 -Refer to Figure 6-35. A price floor set at $60 would create a surplus of 20 units.

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

Figure 6-10 -Refer to Figure 6-10. A price floor set at

The incidence of a tax falls more heavily on

A price floor will be binding only if it is set

If the government removes a tax on a good, then the quantity of the good sold will

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

Figure 6-25 -Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would

A price ceiling will be binding only if it is set

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

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

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

A tax on buyers decreases demand.

A tax on buyers will shift the

A tax on sellers reduces the size of a market.

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

Which of the following is correct?

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

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

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

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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