Question 1

In an unregulated labor market, the wage adjusts to balance labor supply and labor demand.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-8  
-Refer to Figure 6-8. When a certain price control is imposed on this market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P1 dollars per unit for that quantity and sellers are willing and able to accept a minimum of P2 dollars per unit for that quantity. If P1 - P2 = $3, then the price control is

Accepted Answer

A)  a price ceiling of $2.00. 
B)  a price ceiling of $5.00. 
C)  a price floor of $5.00. 
D)  either a price ceiling of $2.00 or a price floor of $5.00. 
A)  a price ceiling of $2.00. 
B)  a price ceiling of $5.00. 
C)  a price floor of $5.00. 
D)  either a price ceiling of $2.00 or a price floor of $5.00.

Question 3

A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

Accepted Answer

A) True 
 B)False

Question 4

When OPEC raised the price of crude oil in the 1970s, it caused the

Accepted Answer

A)  demand for gasoline to increase. 
B)  demand for gasoline to decrease. 
C)  supply of gasoline to increase. 
D)  supply of gasoline to decrease. 
A)  demand for gasoline to increase. 
B)  demand for gasoline to decrease. 
C)  supply of gasoline to increase. 
D)  supply of gasoline to decrease.

Question 5

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 6

If a nonbinding price ceiling is imposed on a market, then the

Accepted Answer

A)  quantity sold in the market will decrease. 
B)  quantity sold in the market will stay the same. 
C)  price in the market will increase. 
D)  price in the market will decrease. 
A)  quantity sold in the market will decrease. 
B)  quantity sold in the market will stay the same. 
C)  price in the market will increase. 
D)  price in the market will decrease.

Question 7

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

Accepted Answer

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

Question 8

Figure 6-5  
-Refer to Figure 6-5. If government imposes a price floor at $9, then the price floor causes

Accepted Answer

A)  quantity demanded to decrease by 40 units. 
B)  quantity supplied to increase by 20 units. 
C)  a surplus of 60 units. 
D)  All of the above are correct. 
A)  quantity demanded to decrease by 40 units. 
B)  quantity supplied to increase by 20 units. 
C)  a surplus of 60 units. 
D)  All of the above are correct.

Question 9

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A)  an enhancement of efficiency. 
B)  undesirable rationing mechanisms. 
C)  a surplus. 
D)  a shortage. 
A)  an enhancement of efficiency. 
B)  undesirable rationing mechanisms. 
C)  a surplus. 
D)  a shortage.

Question 10

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A)  buyers will bear a greater burden of the tax than the sellers. 
B)  sellers will bear a greater burden of the tax than the buyers. 
C)  buyers and sellers are likely to share the burden of the tax equally. 
D)  buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information. 
A)  buyers will bear a greater burden of the tax than the sellers. 
B)  sellers will bear a greater burden of the tax than the buyers. 
C)  buyers and sellers are likely to share the burden of the tax equally. 
D)  buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

Question 11

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

Accepted Answer

A)  a surplus of 2 units. 
B)  a surplus of 4 units. 
C)  12 units sold. 
D)  10 units sold. 
A)  a surplus of 2 units. 
B)  a surplus of 4 units. 
C)  12 units sold. 
D)  10 units sold.

Question 12

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 13

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Accepted Answer

A) True 
 B)False

Question 14

If a binding price floor is imposed on the market for eBooks, then

Accepted Answer

A)  the demand for eBooks will decrease. 
B)  the supply of eBooks will increase. 
C)  a surplus of eBooks will develop. 
D)  All of the above are correct. 
A)  the demand for eBooks will decrease. 
B)  the supply of eBooks will increase. 
C)  a surplus of eBooks will develop. 
D)  All of the above are correct.

Question 15

Table 6-3
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 $2 above the equilibrium price in this market.  
-Refer to Table 6-3. Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is

Accepted Answer

A)  $2. 
B)  $3. 
C)  $4. 
D)  $5. 
A)  $2. 
B)  $3. 
C)  $4. 
D)  $5.

Question 16

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

Accepted Answer

A) True 
 B)False

Question 17

Under rent control, tenants can expect

Accepted Answer

A)  lower rent and higher quality housing. 
B)  lower rent and lower quality housing. 
C)  higher rent and a shortage of rental housing. 
D)  higher rent and a surplus of rental housing. 
A)  lower rent and higher quality housing. 
B)  lower rent and lower quality housing. 
C)  higher rent and a shortage of rental housing. 
D)  higher rent and a surplus of rental housing.

Question 18

A tax imposed on the sellers of a good will

Accepted Answer

A)  raise both the price buyers pay and the effective price sellers receive. 
B)  raise the price buyers pay and lower the effective price sellers receive. 
C)  lower the price buyers pay and raise the effective price sellers receive. 
D)  lower both the price buyers pay and the effective price sellers receive. 
A)  raise both the price buyers pay and the effective price sellers receive. 
B)  raise the price buyers pay and lower the effective price sellers receive. 
C)  lower the price buyers pay and raise the effective price sellers receive. 
D)  lower both the price buyers pay and the effective price sellers receive.

Question 19

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Accepted Answer

A) True 
 B)False

Question 20

A tax imposed on the buyers of a good will

Accepted Answer

A)  raise both the price buyers pay and the effective price sellers receive. 
B)  raise the price buyers pay and lower the effective price sellers receive. 
C)  lower the price buyers pay and raise the effective price sellers receive. 
D)  lower both the price buyers pay and the effective price sellers receive. 
A)  raise both the price buyers pay and the effective price sellers receive. 
B)  raise the price buyers pay and lower the effective price sellers receive. 
C)  lower the price buyers pay and raise the effective price sellers receive. 
D)  lower both the price buyers pay and the effective price sellers receive.

Exam 6: Supply, Demand, and Government Policies

In an unregulated labor market, the wage adjusts to balance labor supply and labor demand.

A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

When OPEC raised the price of crude oil in the 1970s, it caused the

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?

If a nonbinding price ceiling is imposed on a market, then the

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

Figure 6-5 -Refer to Figure 6-5. If government imposes a price floor at $9, then the price floor causes

An outcome that can result from either a price ceiling or a price floor is

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Figure 6-4 -Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

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

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

If a binding price floor is imposed on the market for eBooks, then

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

Under rent control, tenants can expect

A tax imposed on the sellers of a good will

A binding price ceiling causes quantity demanded to be less than quantity supplied.

A tax imposed on the buyers of a good will

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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