Question 1

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Accepted Answer

A) True 
 B)False

Question 2

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,

Accepted Answer

A)  the quantity of physicals demanded increases. 
B)  there is shortage of physicals. 
C)  the quantity of physicals supplied decreases. 
D)  All of the above are correct. 
A)  the quantity of physicals demanded increases. 
B)  there is shortage of physicals. 
C)  the quantity of physicals supplied decreases. 
D)  All of the above are correct.

Question 3

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market.  
-Refer to Table 6-4. How many units of the good are sold after the imposition of the price floor?

Accepted Answer

A)  3 
B)  9 
C)  15 
D)  18 
A)  3 
B)  9 
C)  15 
D)  18

Question 4

Price floors are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-18
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-18. The price that buyers pay after the tax is imposed is

Accepted Answer

A)  $8. 
B)  $10. 
C)  $16. 
D)  $24. 
A)  $8. 
B)  $10. 
C)  $16. 
D)  $24.

Question 6

A tax levied on the sellers of blueberries

Accepted Answer

A)  increases sellers' costs, reduces profits, and shifts the supply curve up. 
B)  increases sellers' costs, reduces profits, and shifts the supply curve down. 
C)  decreases sellers' costs, increases profits, and shifts the supply curve up. 
D)  decreases sellers' costs, increases profits, and shifts the supply curve down. 
A)  increases sellers' costs, reduces profits, and shifts the supply curve up. 
B)  increases sellers' costs, reduces profits, and shifts the supply curve down. 
C)  decreases sellers' costs, increases profits, and shifts the supply curve up. 
D)  decreases sellers' costs, increases profits, and shifts the supply curve down.

Question 7

In response to a shortage caused by the imposition of a binding price ceiling on a market,

Accepted Answer

A)  price will no longer be the mechanism that rations scarce resources. 
B)  long lines of buyers may develop. 
C)  sellers could ration the good or service according to their own personal biases. 
D)  All of the above are correct. 
A)  price will no longer be the mechanism that rations scarce resources. 
B)  long lines of buyers may develop. 
C)  sellers could ration the good or service according to their own personal biases. 
D)  All of the above are correct.

Question 8

A price floor set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 9

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

Accepted Answer

A) True 
 B)False

Question 10

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 11

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 floor at $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 12

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Accepted Answer

A)  demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20. 
B)  demand curve will shift upward by $20, and the price paid by buyers will decrease by $20. 
C)  supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20. 
D)  supply curve will shift downward by $20, and the effective price received by sellers will increase by $20. 
A)  demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20. 
B)  demand curve will shift upward by $20, and the price paid by buyers will decrease by $20. 
C)  supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20. 
D)  supply curve will shift downward by $20, and the effective price received by sellers will increase by $20.

Question 13

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

Accepted Answer

A binding price floo

Question 14

A tax imposed on the sellers of a good will lower the

Accepted Answer

A)  price paid by buyers and lower the equilibrium quantity. 
B)  price paid by buyers and raise the equilibrium quantity. 
C)  effective price received by sellers and lower the equilibrium quantity. 
D)  effective price received by sellers and raise the equilibrium quantity. 
A)  price paid by buyers and lower the equilibrium quantity. 
B)  price paid by buyers and raise the equilibrium quantity. 
C)  effective price received by sellers and lower the equilibrium quantity. 
D)  effective price received by sellers and raise the equilibrium quantity.

Question 15

Which of the following is not correct?

Accepted Answer

A)  Some states in the U.S. mandate minimum wages above the federal level. 
B)  Most European nations have minimum-wage laws. 
C)  The U.S. minimum wage is significantly higher than the minimum wages in France and the United Kingdom. 
D)  The U.S. Congress first instituted a minimum wage with the Fair Labor Standards Act. 
A)  Some states in the U.S. mandate minimum wages above the federal level. 
B)  Most European nations have minimum-wage laws. 
C)  The U.S. minimum wage is significantly higher than the minimum wages in France and the United Kingdom. 
D)  The U.S. Congress first instituted a minimum wage with the Fair Labor Standards Act.

Question 16

Unlike minimum wage laws, wage subsidies

Accepted Answer

A)  discourage firms from hiring the working poor. 
B)  cause unemployment. 
C)  help only wealthy workers. 
D)  raise the living standards of the working poor without creating unemployment. 
A)  discourage firms from hiring the working poor. 
B)  cause unemployment. 
C)  help only wealthy workers. 
D)  raise the living standards of the working poor without creating unemployment.

Question 17

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the buyers in this market?

Accepted Answer

With a $6 tax per unit, the pr

Question 18

Figure 6-24  
-Refer to Figure 6-24. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

Accepted Answer

A)  $16 
B)  $18 
C)  $24 
D)  $26 
A)  $16 
B)  $18 
C)  $24 
D)  $26

Question 19

Figure 6-33  
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

Accepted Answer

The burden

Question 20

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

Accepted Answer

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

Exam 6: Supply, Demand, and Government Policies

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,

Price floors are typically imposed to benefit buyers.

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The price that buyers pay after the tax is imposed is

A tax levied on the sellers of blueberries

In response to a shortage caused by the imposition of a binding price ceiling on a market,

A price floor set above the equilibrium price is not binding.

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

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?

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 floor at $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

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

A tax imposed on the sellers of a good will lower the

Which of the following is not correct?

Unlike minimum wage laws, wage subsidies

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the buyers in this market?

Figure 6-24 -Refer to Figure 6-24. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

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

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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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