Question 1

A legal minimum on the price at which a good can be sold is called a

Accepted Answer

A)  price subsidy. 
B)  price floor. 
C)  tax. 
D)  price ceiling. 
A)  price subsidy. 
B)  price floor. 
C)  tax. 
D)  price ceiling.

Question 2

The Federal Insurance Contribution Act FICA) tax is an example of an)

Accepted Answer

A)  payroll tax. 
B)  sales tax. 
C)  farm subsidy. 
D)  income subsidy. 
A)  payroll tax. 
B)  sales tax. 
C)  farm subsidy. 
D)  income subsidy.

Question 3

The quantity sold in a market will decrease if the government decreases a

Accepted Answer

A)  binding price floor in that market. 
B)  binding price ceiling in that market. 
C)  tax on the good sold in that market. 
D)  All of the above are correct. 
A)  binding price floor in that market. 
B)  binding price ceiling in that market. 
C)  tax on the good sold in that market. 
D)  All of the above are correct.

Question 4

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 5

The price received by sellers 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)  increases 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)  increases a tax on the good sold in that market. 
D)  imposes a binding price ceiling in that market.

Question 6

Which of the following is not correct?

Accepted Answer

A)  Taxes levied on sellers and taxes levied on buyers are not equivalent. 
B)  A tax places a wedge between the price that buyers pay and the price that sellers receive. 
C)  The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax levied on buyers or sellers. 
D)  In the new after-tax equilibrium, buyers and sellers share the burden of the tax. 
A)  Taxes levied on sellers and taxes levied on buyers are not equivalent. 
B)  A tax places a wedge between the price that buyers pay and the price that sellers receive. 
C)  The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax levied on buyers or sellers. 
D)  In the new after-tax equilibrium, buyers and sellers share the burden of the tax.

Question 7

Figure 6-9  
-Refer to Figure 6-9. At which price would a price ceiling be nonbinding?

Accepted Answer

A)  $4 
B)  $5 
C)  $3 
D)  $7 
A)  $4 
B)  $5 
C)  $3 
D)  $7

Question 8

A price floor is a legal minimum on the price at which a good or service can be sold.

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-28  
-Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)  Buyers and sellers will share the burden of the tax equally. 
B)  Buyers will bear more of the burden of the tax than sellers. 
C)  Sellers will bear more of the burden of the tax than buyers. 
D)  Any of the above is possible in this market. 
A)  Buyers and sellers will share the burden of the tax equally. 
B)  Buyers will bear more of the burden of the tax than sellers. 
C)  Sellers will bear more of the burden of the tax than buyers. 
D)  Any of the above is possible in this market.

Question 10

Figure 6-16  
-Refer to Figure 6-16. In this market, a minimum wage of $7.25 is

Accepted Answer

A)  binding and creates a labor shortage. 
B)  binding and creates unemployment. 
C)  nonbinding and creates a labor shortage. 
D)  nonbinding and creates neither a labor shortage nor unemployment. 
A)  binding and creates a labor shortage. 
B)  binding and creates unemployment. 
C)  nonbinding and creates a labor shortage. 
D)  nonbinding and creates neither a labor shortage nor unemployment.

Question 11

Rent control

Accepted Answer

A)  is an example of a price ceiling. 
B)  leads to a larger shortage of apartments in the long run than in the short run. 
C)  leads to lower rents and, in the long run, to lower-quality housing. 
D)  All of the above are correct. 
A)  is an example of a price ceiling. 
B)  leads to a larger shortage of apartments in the long run than in the short run. 
C)  leads to lower rents and, in the long run, to lower-quality housing. 
D)  All of the above are correct.

Question 12

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 13

Advocates of the minimum wage

Accepted Answer

A)  deny that the minimum wage produces any adverse effects. 
B)  emphasize the benefits to teenagers of increases in the minimum wage. 
C)  emphasize the low annual incomes of those who work for the minimum wage. 
D)  All of the above are correct. 
A)  deny that the minimum wage produces any adverse effects. 
B)  emphasize the benefits to teenagers of increases in the minimum wage. 
C)  emphasize the low annual incomes of those who work for the minimum wage. 
D)  All of the above are correct.

Question 14

A tax on the buyers of cereal will increase the price of cereal paid by buyers,

Accepted Answer

A)  decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. 
B)  decrease the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal. 
C)  increase the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. 
D)  increase the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal. 
A)  decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. 
B)  decrease the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal. 
C)  increase the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. 
D)  increase the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal.

Question 15

If the government removes a binding price ceiling from a market, then the price paid by buyers will

Accepted Answer

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

Question 16

Figure 6-16  
-Refer to Figure 6-16. In this market, a minimum wage of $7.25 creates a labor

Accepted Answer

A)  shortage of 2,250 workers. 
B)  shortage of 4,500 workers. 
C)  surplus of 2,250 workers. 
D)  surplus of 4,500 workers. 
A)  shortage of 2,250 workers. 
B)  shortage of 4,500 workers. 
C)  surplus of 2,250 workers. 
D)  surplus of 4,500 workers.

Question 17

In the United States, before OPEC increased the price of crude oil in 1973, there was

Accepted Answer

A)  no price ceiling on gasoline. 
B)  a nonbinding price ceiling on gasoline. 
C)  a binding price ceiling on gasoline. 
D)  a nonbinding price floor on gasoline. 
A)  no price ceiling on gasoline. 
B)  a nonbinding price ceiling on gasoline. 
C)  a binding price ceiling on gasoline. 
D)  a nonbinding price floor on gasoline.

Question 18

A tax of $1 on sellers always increases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 19

Table 6-6
  
-Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

Accepted Answer

A price floor must be set abov

Question 20

The burden of a luxury tax falls

Accepted Answer

A)  more on the rich than on the middle class. 
B)  more on the poor than on the rich. 
C)  more on the middle class than on the rich. 
D)  equally on the rich, the middle class, and the poor. 
A)  more on the rich than on the middle class. 
B)  more on the poor than on the rich. 
C)  more on the middle class than on the rich. 
D)  equally on the rich, the middle class, and the poor.

Exam 6: Supply, Demand, and Government Policies

A legal minimum on the price at which a good can be sold is called a

The Federal Insurance Contribution Act FICA) tax is an example of an)

The quantity sold in a market will decrease if the government decreases a

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

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

Which of the following is not correct?

Figure 6-9 -Refer to Figure 6-9. At which price would a price ceiling be nonbinding?

A price floor is a legal minimum on the price at which a good or service can be sold.

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $7.25 is

Rent control

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Advocates of the minimum wage

A tax on the buyers of cereal will increase the price of cereal paid by buyers,

If the government removes a binding price ceiling from a market, then the price paid by buyers will

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $7.25 creates a labor

In the United States, before OPEC increased the price of crude oil in 1973, there was

A tax of $1 on sellers always increases the equilibrium price by $1.

Table 6-6 -Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

The burden of a luxury tax falls

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