Question 1

Figure 6-16  
-Refer to Figure 6-16. In this market, a minimum wage of $2.75 creates a labor

Accepted Answer

A)  shortage of 2,250 workers. 
B)  shortage of 4,500 workers. 
C)  surplus of 2,250 workers. 
D)  neither a labor shortage nor surplus. 
A)  shortage of 2,250 workers. 
B)  shortage of 4,500 workers. 
C)  surplus of 2,250 workers. 
D)  neither a labor shortage nor surplus.

Question 2

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 3

A large majority of economists favor eliminating the minimum wage.

Accepted Answer

A) True 
 B)False

Question 4

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 5

A tax on sellers increases the quantity of the good sold in the market.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Policymakers use taxes

Accepted Answer

A)  to raise revenue for public purposes but not to influence market outcomes. 
B)  both to raise revenue for public purposes and to influence market outcomes. 
C)  when they realize that price controls alone are insufficient to correct market inequities. 
D)  only in those markets in which the burden of the tax falls clearly on the sellers. 
A)  to raise revenue for public purposes but not to influence market outcomes. 
B)  both to raise revenue for public purposes and to influence market outcomes. 
C)  when they realize that price controls alone are insufficient to correct market inequities. 
D)  only in those markets in which the burden of the tax falls clearly on the sellers.

Question 8

Figure 6-9  
-Refer to Figure 6-9. A price ceiling set at

Accepted Answer

A)  $4 will be binding and will result in a shortage of 8 units. 
B)  $4 will be binding and will result in a shortage of 16 units. 
C)  $7 will be binding and will result in a surplus of 4 units. 
D)  $7 will be binding and will result in a surplus of 8 units. 
A)  $4 will be binding and will result in a shortage of 8 units. 
B)  $4 will be binding and will result in a shortage of 16 units. 
C)  $7 will be binding and will result in a surplus of 4 units. 
D)  $7 will be binding and will result in a surplus of 8 units.

Question 9

Minimum wage laws

Accepted Answer

A)  may encourage some teenagers to drop out and take jobs. 
B)  create labor shortages. 
C)  have the greatest impact in the market for skilled labor. 
D)  All of the above are correct. 
A)  may encourage some teenagers to drop out and take jobs. 
B)  create labor shortages. 
C)  have the greatest impact in the market for skilled labor. 
D)  All of the above are correct.

Question 10

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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

Accepted Answer

A)  an accumulation of dirt in the interior of rental cars 
B)  poor engine maintenance in rental 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)  an accumulation of dirt in the interior of rental cars 
B)  poor engine maintenance in rental 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 13

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. Which of the following statements is not correct?

Accepted Answer

A)  A price ceiling set at $4 would be binding, but a price ceiling set at $6 would not be binding. 
B)  A price floor set at $7 would be binding, but a price floor set at $4 would not be binding. 
C)  A price ceiling set at $3.50 would result in a surplus. 
D)  A price floor set at $6.50 would result in a surplus. 
A)  A price ceiling set at $4 would be binding, but a price ceiling set at $6 would not be binding. 
B)  A price floor set at $7 would be binding, but a price floor set at $4 would not be binding. 
C)  A price ceiling set at $3.50 would result in a surplus. 
D)  A price floor set at $6.50 would result in a surplus.

Question 14

A tax burden falls more heavily on the side of the market that is less elastic.

Accepted Answer

A) True 
 B)False

Question 15

Figure 6-25  
-Refer to Figure 6-25. The burden of the tax on sellers 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 16

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. Which of the following statements is correct?

Accepted Answer

A)  A price ceiling set at $6 would be binding, but a price ceiling set at $4 would not be binding. 
B)  A price floor set at $4 would be binding, but a price ceiling set at $4 would not be binding. 
C)  A price ceiling set at $3.50 would result in a surplus. 
D)  A price floor set at $6.50 would result in a surplus. 
A)  A price ceiling set at $6 would be binding, but a price ceiling set at $4 would not be binding. 
B)  A price floor set at $4 would be binding, but a price ceiling set at $4 would not be binding. 
C)  A price ceiling set at $3.50 would result in a surplus. 
D)  A price floor set at $6.50 would result in a surplus.

Question 17

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

Accepted Answer

A) True 
 B)False

Question 18

One common example of a price floor is the minimum wage.

Accepted Answer

A) True 
 B)False

Question 19

A binding price floor will reduce a firm's total revenue

Accepted Answer

A)  always. 
B)  when demand is elastic. 
C)  when demand is inelastic. 
D)  never. 
A)  always. 
B)  when demand is elastic. 
C)  when demand is inelastic. 
D)  never.

Question 20

The minimum wage, if it is binding, raises the incomes of

Accepted Answer

A)  no workers. 
B)  only those workers who cannot find jobs. 
C)  only those workers whose jobs would pay less than the minimum wage if it didn't exist. 
D)  all workers. 
A)  no workers. 
B)  only those workers who cannot find jobs. 
C)  only those workers whose jobs would pay less than the minimum wage if it didn't exist. 
D)  all workers.

Exam 6: Supply, Demand, and Government Policies

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $2.75 creates a labor

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

A large majority of economists favor eliminating the minimum wage.

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?

A tax on sellers increases the quantity of the good sold in the market.

Which of the following is not correct?

Policymakers use taxes

Figure 6-9 -Refer to Figure 6-9. A price ceiling set at

Minimum wage laws

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

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

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

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following statements is not correct?

A tax burden falls more heavily on the side of the market that is less elastic.

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

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following statements is correct?

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

One common example of a price floor is the minimum wage.

A binding price floor will reduce a firm's total revenue

The minimum wage, if it is binding, raises the incomes of

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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