Question 1

The economy contains many labor markets for different types of workers.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un

Question 3

Figure 6-8  
-Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

Accepted Answer

A)  a price ceiling of $3 is imposed. 
B)  a price ceiling of $5 is imposed. 
C)  a price floor of $5 is imposed. 
D)  All of the above are correct. 
A)  a price ceiling of $3 is imposed. 
B)  a price ceiling of $5 is imposed. 
C)  a price floor of $5 is imposed. 
D)  All of the above are correct.

Question 4

Using a supply and demand diagram, show a labor market with a binding minimum wage. Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

Accepted Answer

For this example, a $300 price ceiling w

Question 5

A minimum wage that is set below a market's equilibrium wage will

Accepted Answer

A)  result in an excess demand for labor, that is, unemployment. 
B)  result in an excess demand for labor, that is, a shortage of workers. 
C)  result in an excess supply of labor, that is, unemployment. 
D)  have no impact on employment. 
A)  result in an excess demand for labor, that is, unemployment. 
B)  result in an excess demand for labor, that is, a shortage of workers. 
C)  result in an excess supply of labor, that is, unemployment. 
D)  have no impact on employment.

Question 6

Figure 6-7  
-Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

Accepted Answer

A)  the quantity of the good supplied decreases by 20 units. 
B)  the demand curve shifts to the left; quantity sold is now 30 units and the price is $5. 
C)  buyers' total expenditure on the good decreases by $80. 
D)  the price of the good continues to serve as the rationing mechanism. 
A)  the quantity of the good supplied decreases by 20 units. 
B)  the demand curve shifts to the left; quantity sold is now 30 units and the price is $5. 
C)  buyers' total expenditure on the good decreases by $80. 
D)  the price of the good continues to serve as the rationing mechanism.

Question 7

Which of the following is not correct?

Accepted Answer

A)  The economy contains many labor markets for different types of workers. 
B)  The impact of the minimum wage depends on the skill and experience of the worker. 
C)  The minimum wage is binding for workers with high skills and much experience. 
D)  The minimum wage is not binding when the equilibrium wage is above the minimum wage. 
A)  The economy contains many labor markets for different types of workers. 
B)  The impact of the minimum wage depends on the skill and experience of the worker. 
C)  The minimum wage is binding for workers with high skills and much experience. 
D)  The minimum wage is not binding when the equilibrium wage is above the minimum wage.

Question 8

In a free market, the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

Accepted Answer

A) True 
 B)False

Question 9

Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect

Accepted Answer

A)  most of the burden of the tax to fall on sellers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
B)  most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
C)  the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government. 
D)  a large percentage of smokers to quit smoking in response to the tax. 
A)  most of the burden of the tax to fall on sellers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
B)  most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
C)  the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government. 
D)  a large percentage of smokers to quit smoking in response to the tax.

Question 10

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Figure 6-3
Panel a) Panel b)
    
-Refer to Figure 6-3. A nonbinding price floor is shown in

Accepted Answer

A)  both panel a) and panel b). 
B)  panel a) only. 
C)  panel b) only. 
D)  neither panel a) nor panel b). 
A)  both panel a) and panel b). 
B)  panel a) only. 
C)  panel b) only. 
D)  neither panel a) nor panel b).

Question 13

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-18
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-18. The per-unit burden of the tax on buyers is

Accepted Answer

A)  $6. 
B)  $8. 
C)  $14. 
D)  $24. 
A)  $6. 
B)  $8. 
C)  $14. 
D)  $24.

Question 15

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Accepted Answer

A)  the actual tax incidence is unaffected by the legislated tax incidence. 
B)  the employer now is required by law to pay more than 50 percent of the tax. 
C)  the employee now is required by law to pay more than 50 percent of the tax. 
D)  employers are no longer required by law to pay any portion of the tax. 
A)  the actual tax incidence is unaffected by the legislated tax incidence. 
B)  the employer now is required by law to pay more than 50 percent of the tax. 
C)  the employee now is required by law to pay more than 50 percent of the tax. 
D)  employers are no longer required by law to pay any portion of the tax.

Question 16

Suppose the government imposes a 30-cent tax on the sellers of soft drinks. Which of the following is not correct? The tax would

Accepted Answer

A)  shift the supply curve upward by 30 cents. 
B)  raise the equilibrium price by 30 cents. 
C)  reduce the equilibrium quantity. 
D)  discourage market activity. 
A)  shift the supply curve upward by 30 cents. 
B)  raise the equilibrium price by 30 cents. 
C)  reduce the equilibrium quantity. 
D)  discourage market activity.

Question 17

Table 6-5
  
-Refer to Table 6-5. Suppose the government imposes a price ceiling of $3 on this market. What will be the size of the shortage in this market?

Accepted Answer

A)  0 units 
B)  30 units 
C)  45 units 
D)  75 units 
A)  0 units 
B)  30 units 
C)  45 units 
D)  75 units

Question 18

The minimum wage was instituted to ensure workers

Accepted Answer

A)  a middle-class standard of living. 
B)  employment. 
C)  a minimally adequate standard of living. 
D)  unemployment compensation. 
A)  a middle-class standard of living. 
B)  employment. 
C)  a minimally adequate standard of living. 
D)  unemployment compensation.

Question 19

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 $6 per unit is imposed on this market. How much will buyers pay 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 20

Figure 6-17
This figure shows the market demand and market supply curves for good Y  
-Refer to Figure 6-17. A government-imposed price of $24 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.

Exam 6: Supply, Demand, and Government Policies

The economy contains many labor markets for different types of workers.

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Figure 6-8 -Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

Using a supply and demand diagram, show a labor market with a binding minimum wage. Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

A minimum wage that is set below a market's equilibrium wage will

Figure 6-7 -Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

Which of the following is not correct?

In a free market, the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

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

Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. A nonbinding price floor is shown in

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The per-unit burden of the tax on buyers is

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Suppose the government imposes a 30-cent tax on the sellers of soft drinks. Which of the following is not correct? The tax would

Table 6-5 -Refer to Table 6-5. Suppose the government imposes a price ceiling of $3 on this market. What will be the size of the shortage in this market?

The minimum wage was instituted to ensure workers

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 $6 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Figure 6-17 This figure shows the market demand and market supply curves for good Y -Refer to Figure 6-17. A government-imposed price of $24 in this market is an example of a

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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