Question 1

Figure 6-26  
-Refer to Figure 6-26. The amount of the tax per unit is

Accepted Answer

A)  $4. 
B)  $8. 
C)  $14. 
D)  $10. 
A)  $4. 
B)  $8. 
C)  $14. 
D)  $10.

Question 2

A tax burden falls more heavily on the side of the market that

Accepted Answer

A)  has a fewer number of participants. 
B)  is more inelastic. 
C)  is closer to unit elastic. 
D)  is less inelastic. 
A)  has a fewer number of participants. 
B)  is more inelastic. 
C)  is closer to unit elastic. 
D)  is less inelastic.

Question 3

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

Accepted Answer

A)  He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people. 
B)  He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city. 
C)  He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted. 
D)  He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city. 
A)  He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people. 
B)  He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city. 
C)  He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted. 
D)  He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.

Question 4

Which of the following would not interfere with market equilibria?

Accepted Answer

A)  a minimum wage 
B)  a rent control 
C)  a non-binding price floor 
D)  a binding price ceiling 
A)  a minimum wage 
B)  a rent control 
C)  a non-binding price floor 
D)  a binding price ceiling

Question 5

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

Accepted Answer

A)  the payment by government of a fraction of a poor family's rent. 
B)  higher taxes on rental income earned by landlords. 
C)  a policy that prevents landlords from evicting tenants. 
D)  a policy that allows government to confiscate residential property for the purpose of commercial development. 
A)  the payment by government of a fraction of a poor family's rent. 
B)  higher taxes on rental income earned by landlords. 
C)  a policy that prevents landlords from evicting tenants. 
D)  a policy that allows government to confiscate residential property for the purpose of commercial development.

Question 6

The goal of rent control is to

Accepted Answer

A)  facilitate controlled economic experiments in urban areas. 
B)  help landlords by assuring them a low vacancy rate for their apartments. 
C)  help the poor by assuring them an adequate supply of apartments. 
D)  help the poor by making housing more affordable. 
A)  facilitate controlled economic experiments in urban areas. 
B)  help landlords by assuring them a low vacancy rate for their apartments. 
C)  help the poor by assuring them an adequate supply of apartments. 
D)  help the poor by making housing more affordable.

Question 7

Figure 6-22  
-Refer to Figure 6-22. Buyers pay how much of the tax per unit?

Accepted Answer

A)  $0.50. 
B)  $1.50. 
C)  $3.00. 
D)  $5.00. 
A)  $0.50. 
B)  $1.50. 
C)  $3.00. 
D)  $5.00.

Question 8

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Accepted Answer

A)  upward by exactly $1.50. 
B)  upward by less than $1.50. 
C)  downward by exactly $1.50. 
D)  downward by less than $1.50. 
A)  upward by exactly $1.50. 
B)  upward by less than $1.50. 
C)  downward by exactly $1.50. 
D)  downward by less than $1.50.

Question 9

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

Accepted Answer

A price ceiling set

Question 10

Which of the following is correct?

Accepted Answer

A)  Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage raises the average wage of teenagers by 10 percent. 
B)  The drop in teenage employment caused by a 10 percent increase in the minimum wage is not significant. 
C)  The minimum wage is more often binding for teenagers than for other members of the labor force. 
D)  All firms consistently enforce minimum-wage laws. 
A)  Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage raises the average wage of teenagers by 10 percent. 
B)  The drop in teenage employment caused by a 10 percent increase in the minimum wage is not significant. 
C)  The minimum wage is more often binding for teenagers than for other members of the labor force. 
D)  All firms consistently enforce minimum-wage laws.

Question 11

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Accepted Answer

A)  less than one-third. 
B)  between one-third and one-half. 
C)  between one-half and two-thirds. 
D)  greater than two-thirds. 
A)  less than one-third. 
B)  between one-third and one-half. 
C)  between one-half and two-thirds. 
D)  greater than two-thirds.

Question 12

A price ceiling set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 13

If the government removes a tax on a good, then the price paid by buyers will

Accepted Answer

A)  increase, and the price received by sellers will increase. 
B)  increase, and the price received by sellers will decrease. 
C)  decrease, and the price received by sellers will increase. 
D)  decrease, and the price received by sellers will decrease. 
A)  increase, and the price received by sellers will increase. 
B)  increase, and the price received by sellers will decrease. 
C)  decrease, and the price received by sellers will increase. 
D)  decrease, and the price received by sellers will decrease.

Question 14

Figure 6-14  
-Refer to Figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Accepted Answer

A)  binding and creates a shortage of 20 units of the good. 
B)  binding and creates a shortage of 40 units of the good. 
C)  not binding but creates a shortage of 40 units of the good. 
D)  not binding, and there will be no surplus or shortage of the good. 
A)  binding and creates a shortage of 20 units of the good. 
B)  binding and creates a shortage of 40 units of the good. 
C)  not binding but creates a shortage of 40 units of the good. 
D)  not binding, and there will be no surplus or shortage of the good.

Question 15

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $6 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 16

Congress intended that

Accepted Answer

A)  the entire FICA tax be paid by workers. 
B)  the entire FICA tax be paid by firms. 
C)  one-quarter of the FICA tax be paid by workers, and three-quarters be paid by firms. 
D)  half the FICA tax be paid by workers, and half be paid by firms. 
A)  the entire FICA tax be paid by workers. 
B)  the entire FICA tax be paid by firms. 
C)  one-quarter of the FICA tax be paid by workers, and three-quarters be paid by firms. 
D)  half the FICA tax be paid by workers, and half be paid by firms.

Question 17

Figure 6-11  
-Refer to Figure 6-11. If the government imposes a price floor at $10, 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 18

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, what price will buyers pay per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un

Question 19

To be binding, a price ceiling must be set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 20

If a nonbinding price floor 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.

Exam 6: Supply, Demand, and Government Policies

Figure 6-26 -Refer to Figure 6-26. The amount of the tax per unit is

A tax burden falls more heavily on the side of the market that

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

Which of the following would not interfere with market equilibria?

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

The goal of rent control is to

Figure 6-22 -Refer to Figure 6-22. Buyers pay how much of the tax per unit?

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

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

Which of the following is correct?

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

A price ceiling set above the equilibrium price causes a surplus in the market.

If the government removes a tax on a good, then the price paid by buyers will

Figure 6-14 -Refer to Figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

Congress intended that

Figure 6-11 -Refer to Figure 6-11. If the government imposes a price floor at $10, it would be

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, what price will buyers pay per unit after the tax is imposed?

To be binding, a price ceiling must be set above the equilibrium price.

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

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

Filters