Question 1

Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars?

Accepted Answer

A)  frequent rental programs such as "Rent nine times and the tenth rental is free!" 
B)  enhanced maintenance programs to promote the high quality of the cars 
C)  free gasoline given to people as an incentive to a rent a car 
D)  slow replacement of old rental cars with newer ones 
A)  frequent rental programs such as "Rent nine times and the tenth rental is free!" 
B)  enhanced maintenance programs to promote the high quality of the cars 
C)  free gasoline given to people as an incentive to a rent a car 
D)  slow replacement of old rental cars with newer ones

Question 2

Scenario 6-2
Suppose demand for a product is given by the equation   and supply for the product is given by the equation  
-Refer to Scenario 6-2. Suppose the government sets a price ceiling at $17 for this product. Is this price ceiling binding, and what will be the size of the shortage/surplus in this market?

Accepted Answer

The price ceiling will not be

Question 3

Figure 6-25  
-Refer to Figure 6-25. The burden of the tax on buyers is

Accepted Answer

A)  $1 per unit. 
B)  $1.50 per unit. 
C)  $2 per unit. 
D)  $3 per unit. 
A)  $1 per unit. 
B)  $1.50 per unit. 
C)  $2 per unit. 
D)  $3 per unit.

Question 4

Figure 6-25  
-Refer to Figure 6-25. The effective price that sellers receive after the tax is imposed is

Accepted Answer

A)  $5. 
B)  $6. 
C)  $7. 
D)  $8. 
A)  $5. 
B)  $6. 
C)  $7. 
D)  $8.

Question 5

Figure 6-24  
-Refer to Figure 6-24. Which of the following statements is correct?

Accepted Answer

A)  The amount of the tax per unit is $6. 
B)  The tax leaves the size of the market unchanged. 
C)  The tax is levied on buyers of the good, rather than on sellers. 
D)  All of the above are correct. 
A)  The amount of the tax per unit is $6. 
B)  The tax leaves the size of the market unchanged. 
C)  The tax is levied on buyers of the good, rather than on sellers. 
D)  All of the above are correct.

Question 6

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Accepted Answer

A)  a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B)  the government's policy of maintaining a price ceiling on gasoline. 
C)  an indifference among U.S. consumers toward conservation. 
D)  the lack of substitutes for crude oil. 
A)  a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B)  the government's policy of maintaining a price ceiling on gasoline. 
C)  an indifference among U.S. consumers toward conservation. 
D)  the lack of substitutes for crude oil.

Question 7

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 8

If the supply curve is more price elastic than the demand 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 supply curve is more price elas

Question 9

A binding minimum wage creates unemployment.

Accepted Answer

A) True 
 B)False

Question 10

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. If the government set a price ceiling at $12, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $12 wou

Question 11

Table 6-2
  
-Refer to Table 6-2. A price ceiling set at $20 will

Accepted Answer

A)  be binding and will result in a shortage of 75 units. 
B)  be binding and will result in a shortage of 200 units. 
C)  be binding and will result in a shortage of 125 units. 
D)  not be binding. 
A)  be binding and will result in a shortage of 75 units. 
B)  be binding and will result in a shortage of 200 units. 
C)  be binding and will result in a shortage of 125 units. 
D)  not be binding.

Question 12

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

Accepted Answer

A)  is binding. 
B)  causes a shortage. 
C)  causes the quantity demanded to exceed the quantity supplied. 
D)  All of the above are correct. 
A)  is binding. 
B)  causes a shortage. 
C)  causes the quantity demanded to exceed the quantity supplied. 
D)  All of the above are correct.

Question 13

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

Accepted Answer

A)  increase by less than $5. 
B)  increase by exactly $5. 
C)  increase by more than $5. 
D)  decrease by an indeterminate amount. 
A)  increase by less than $5. 
B)  increase by exactly $5. 
C)  increase by more than $5. 
D)  decrease by an indeterminate amount.

Question 14

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 15

Figure 6-27
This figure shows the market demand and market supply curves for good Z.  
-Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)  $16 
B)  between $16 and $20 
C)  between $20 and $22 
D)  $22 
A)  $16 
B)  between $16 and $20 
C)  between $20 and $22 
D)  $22

Question 16

How is the burden of a tax divided? i) When the tax is levied on the sellers, the sellers bear a higher proportion of the tax burden.
Ii) When the tax is levied on the buyers, the buyers bear a higher proportion of the tax burden.
Iii) Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear an equal proportion of the tax burden.
Iv) Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear some proportion of the tax burden.

Accepted Answer

A)  i) and ii) only 
B)  iv) only 
C)  i), ii), and iii) only 
D)  i), ii), and iv) only 
A)  i) and ii) only 
B)  iv) only 
C)  i), ii), and iii) only 
D)  i), ii), and iv) only

Question 17

Figure 6-7  
-Refer to Figure 6-7. Suppose a price floor of $8 is imposed on this market. As a result,

Accepted Answer

A)  buyers' total expenditure on the good decreases by $20. 
B)  the supply curve shifts to the left; quantity sold is now 30 units and the price is $8. 
C)  the quantity of the good demanded decreases by 10 units. 
D)  the price of the good continues to serve as the rationing mechanism. 
A)  buyers' total expenditure on the good decreases by $20. 
B)  the supply curve shifts to the left; quantity sold is now 30 units and the price is $8. 
C)  the quantity of the good demanded decreases by 10 units. 
D)  the price of the good continues to serve as the rationing mechanism.

Question 18

All buyers benefit from a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 19

Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

Accepted Answer

A)  1 to 3 percent. 
B)  5 to 7 percent. 
C)  10 percent. 
D)  None of the above is correct because studies show no decrease in teenage employment. 
A)  1 to 3 percent. 
B)  5 to 7 percent. 
C)  10 percent. 
D)  None of the above is correct because studies show no decrease in teenage employment.

Question 20

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

Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars?

Figure 6-25 -Refer to Figure 6-25. The burden of the tax on buyers is

Figure 6-25 -Refer to Figure 6-25. The effective price that sellers receive after the tax is imposed is

Figure 6-24 -Refer to Figure 6-24. Which of the following statements is correct?

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

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

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

A binding minimum wage creates unemployment.

Table 6-2 -Refer to Table 6-2. A price ceiling set at $20 will

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

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

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

Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Figure 6-7 -Refer to Figure 6-7. Suppose a price floor of $8 is imposed on this market. As a result,

All buyers benefit from a binding price ceiling.

Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

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.

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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Exam 6: Supply, Demand, and Government Policies

Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars?

Figure 6-25 -Refer to Figure 6-25. The burden of the tax on buyers is

Figure 6-25 -Refer to Figure 6-25. The effective price that sellers receive after the tax is imposed is

Figure 6-24 -Refer to Figure 6-24. Which of the following statements is correct?

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

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

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

A binding minimum wage creates unemployment.

Table 6-2 -Refer to Table 6-2. A price ceiling set at $20 will

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

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

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

Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Figure 6-7 -Refer to Figure 6-7. Suppose a price floor of $8 is imposed on this market. As a result,

All buyers benefit from a binding price ceiling.

Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

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.

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

Filters