Question 1

Price controls often hurt those they are trying to help.

Accepted Answer

A) True 
 B)False

Question 2

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Figure 6-1
Panel (a) Panel (b)    
-Refer to Figure 6-1. In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

Accepted Answer

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

Question 5

Table 6-6  
-Refer to Table 6-6. If the government set a price floor at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at $2 would

Question 6

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell, then

Accepted Answer

A)  the supply curve for mopeds shifts downward by $200. 
B)  sellers of mopeds receive $200 less per moped than they were receiving before the tax. 
C)  buyers of mopeds are unaffected by the tax. 
D)  None of the above is correct. 
A)  the supply curve for mopeds shifts downward by $200. 
B)  sellers of mopeds receive $200 less per moped than they were receiving before the tax. 
C)  buyers of mopeds are unaffected by the tax. 
D)  None of the above is correct.

Question 7

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 8

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

Accepted Answer

A)  supplied to exceed quantity demanded by 45 units. 
B)  supplied to exceed quantity demanded by 85 units. 
C)  demanded to exceed quantity supplied by 45 units. 
D)  demanded to exceed quantity supplied by 85 units. 
A)  supplied to exceed quantity demanded by 45 units. 
B)  supplied to exceed quantity demanded by 85 units. 
C)  demanded to exceed quantity supplied by 45 units. 
D)  demanded to exceed quantity supplied by 85 units.

Question 9

Figure 6-1
Panel (a) Panel (b)    
-Refer to Figure 6-1. The price ceiling shown in panel (a)

Accepted Answer

A)  is not binding. 
B)  creates a surplus. 
C)  creates a shortage. 
D)  Both a) and b) are correct. 
A)  is not binding. 
B)  creates a surplus. 
C)  creates a shortage. 
D)  Both a) and b) are correct.

Question 10

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

@#IMG-DLM& Those who are helped by the minimum wag

Question 11

Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

Accepted Answer

A)  The effective price received by sellers is $0.40 per bottle less than it was before the tax. 
B)  Sixty percent of the burden of the tax falls on sellers. 
C)  This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume. 
D)  All of the above are correct. 
A)  The effective price received by sellers is $0.40 per bottle less than it was before the tax. 
B)  Sixty percent of the burden of the tax falls on sellers. 
C)  This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume. 
D)  All of the above are correct.

Question 12

Suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

Accepted Answer

A)  less than $1. 
B)  $1. 
C)  between $1 and $2. 
D)  $2. 
A)  less than $1. 
B)  $1. 
C)  between $1 and $2. 
D)  $2.

Question 13

Which of the following is correct?

Accepted Answer

A)  Workers determine the supply of labor, and firms determine the demand for labor. 
B)  Workers determine the demand for labor, and firms determine the supply of labor. 
C)  The labor market is a single market for all different types of workers. 
D)  The price of the product produced by labor adjusts to balance the supply of labor and the demand for labor. 
A)  Workers determine the supply of labor, and firms determine the demand for labor. 
B)  Workers determine the demand for labor, and firms determine the supply of labor. 
C)  The labor market is a single market for all different types of workers. 
D)  The price of the product produced by labor adjusts to balance the supply of labor and the demand for labor.

Question 14

Figure 6-11  
-Refer to Figure 6-11. If the government imposes a price ceiling at $6, it would be

Accepted Answer

A)  binding if market demand is Demand A or Demand B. 
B)  non-binding if market demand is Demand A or Demand B. 
C)  binding if market demand is Demand A and non-binding if market demand is Demand B. 
D)  non-binding if market demand is Demand A and binding if market demand is Demand B. 
A)  binding if market demand is Demand A or Demand B. 
B)  non-binding if market demand is Demand A or Demand B. 
C)  binding if market demand is Demand A and non-binding if market demand is Demand B. 
D)  non-binding if market demand is Demand A and binding if market demand is Demand B.

Question 15

Figure 6-29
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-29. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2,

Accepted Answer

A)  buyers bear a higher burden of the tax in the short run than in the long run. 
B)  sellers bear a higher burden of the tax in the short run than in the long run. 
C)  buyers and sellers bear an equal burden of the tax in both the short run and long run. 
D)  buyers and sellers bear an equal burden of the tax in the short run, but buyers bear a higher burden of the tax in the long run. 
A)  buyers bear a higher burden of the tax in the short run than in the long run. 
B)  sellers bear a higher burden of the tax in the short run than in the long run. 
C)  buyers and sellers bear an equal burden of the tax in both the short run and long run. 
D)  buyers and sellers bear an equal burden of the tax in the short run, but buyers bear a higher burden of the tax in the long run.

Question 16

Buyers and sellers always share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 17

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $6.

Accepted Answer

A) True 
 B)False

Question 18

Figure 6-25  
-Refer to Figure 6-25. As the figure is drawn, who sends the tax payment to the government?

Accepted Answer

A)  The buyers send the tax payment. 
B)  The sellers send the tax payment. 
C)  A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers. 
D)  The question of who sends the tax payment cannot be determined from the figure. 
A)  The buyers send the tax payment. 
B)  The sellers send the tax payment. 
C)  A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers. 
D)  The question of who sends the tax payment cannot be determined from the figure.

Question 19

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers 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 effective price received by sellers will increase by $20. 
B)  demand curve will shift upward by $20, and the effective price received by sellers will increase by less than $20. 
C)  supply curve will shift downward by $20, and the price paid by buyers will decrease by $20. 
D)  supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20. 
A)  demand curve will shift upward by $20, and the effective price received by sellers will increase by $20. 
B)  demand curve will shift upward by $20, and the effective price received by sellers will increase by less than $20. 
C)  supply curve will shift downward by $20, and the price paid by buyers will decrease by $20. 
D)  supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20.

Question 20

Workers determine the supply of labor, and firms determine the demand for labor.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Price controls often hurt those they are trying to help.

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Policymakers use taxes

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

Table 6-6 -Refer to Table 6-6. If the government set a price floor at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell, then

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

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. The price ceiling shown in panel (a)

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.

Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

Suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

Which of the following is correct?

Figure 6-11 -Refer to Figure 6-11. If the government imposes a price ceiling at $6, it would be

Buyers and sellers always share the burden of a tax equally.

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $6.

Figure 6-25 -Refer to Figure 6-25. As the figure is drawn, who sends the tax payment to the government?

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers 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

Workers determine the supply of labor, and firms determine the demand for labor.

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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