Question 1

The price received by sellers in a market will increase 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)  None of the above is 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)  None of the above is correct.

Question 2

Figure 6-5  
-Refer to Figure 6-5. Suppose the market is initially in equilibrium. Then the government imposes a price control, as represented by the horizontal line on the graph. If the price control is a price floor, then the price control

Accepted Answer

A)  causes the quantity demanded to decrease by 50 units, relative to the initial equilibrium. 
B)  causes the quantity supplied to increase by 40 units, relative to the initial equilibrium. 
C)  results in some firms being more successful than others in selling their goods. 
D)  All of the above are correct. 
A)  causes the quantity demanded to decrease by 50 units, relative to the initial equilibrium. 
B)  causes the quantity supplied to increase by 40 units, relative to the initial equilibrium. 
C)  results in some firms being more successful than others in selling their goods. 
D)  All of the above are correct.

Question 3

A binding price ceiling causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 4

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.

Question 5

Figure 6-3
Panel (a) Panel (b)    
-Refer to Figure 6-3. In panel (b), there will be

Accepted Answer

A)  a shortage. 
B)  equilibrium in the market. 
C)  a surplus. 
D)  lines of people waiting to buy the good. 
A)  a shortage. 
B)  equilibrium in the market. 
C)  a surplus. 
D)  lines of people waiting to buy the good.

Question 6

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. What will be the new equilibrium quantity in this market?

Accepted Answer

A)  less than 8 units 
B)  8 units 
C)  between 8 units and 10 units 
D)  greater than 10 units 
A)  less than 8 units 
B)  8 units 
C)  between 8 units and 10 units 
D)  greater than 10 units

Question 7

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 8

After a binding price floor becomes effective, a

Accepted Answer

A)  smaller quantity of the good is bought and sold. 
B)  a larger quantity of the good is demanded. 
C)  a smaller quantity of the good is supplied. 
D)  All of the above are correct. 
A)  smaller quantity of the good is bought and sold. 
B)  a larger quantity of the good is demanded. 
C)  a smaller quantity of the good is supplied. 
D)  All of the above are correct.

Question 9

A tax on buyers will shift the

Accepted Answer

A)  demand curve upward by the amount of the tax. 
B)  demand curve downward by the amount of the tax. 
C)  supply curve upward by the amount of the tax. 
D)  supply curve downward by the amount of the tax. 
A)  demand curve upward by the amount of the tax. 
B)  demand curve downward by the amount of the tax. 
C)  supply curve upward by the amount of the tax. 
D)  supply curve downward by the amount of the tax.

Question 10

Figure 6-19  
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)  less than 50 units 
B)  50 units 
C)  between 50 units and 100 units 
D)  greater than 100 units 
A)  less than 50 units 
B)  50 units 
C)  between 50 units and 100 units 
D)  greater than 100 units

Question 11

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,

Accepted Answer

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

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

Accepted Answer

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

Question 14

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 15

A binding minimum wage creates a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 16

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 17

Buyers of a good bear the larger share of the tax burden when the

Accepted Answer

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

Question 18

Table 6-5  
-Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus (or 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 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

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Accepted Answer

A)  Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole. 
B)  Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
C)  Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
D)  Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling. 
A)  Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole. 
B)  Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
C)  Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
D)  Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling.

Exam 6: Supply, Demand, and Government Policies

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

Figure 6-5 -Refer to Figure 6-5. Suppose the market is initially in equilibrium. Then the government imposes a price control, as represented by the horizontal line on the graph. If the price control is a price floor, then the price control

A binding price ceiling causes a shortage in the market.

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

Figure 6-3 Panel (a) Panel (b) -Refer to Figure 6-3. In panel (b), there will be

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. What will be the new equilibrium quantity in this market?

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

After a binding price floor becomes effective, a

A tax on buyers will shift the

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,

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.

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

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

A binding minimum wage creates a surplus of labor.

Which of the following is not correct?

Buyers of a good bear the larger share of the tax burden when the

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

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?

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

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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