Question 1

Consider the market for gasoline. Buyers

Accepted Answer

A)  and sellers would lobby for a price ceiling. 
B)  and sellers would lobby for a price floor. 
C)  would lobby for a price ceiling, whereas sellers would lobby for a price floor. 
D)  would lobby for a price floor, whereas sellers would lobby for a price ceiling. 
A)  and sellers would lobby for a price ceiling. 
B)  and sellers would lobby for a price floor. 
C)  would lobby for a price ceiling, whereas sellers would lobby for a price floor. 
D)  would lobby for a price floor, whereas sellers would lobby for a price ceiling.

Question 2

Figure 6-18
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-18. The per-unit burden of the tax on sellers is

Accepted Answer

A)  $6. 
B)  $8. 
C)  $10. 
D)  $14. 
A)  $6. 
B)  $8. 
C)  $10. 
D)  $14.

Question 3

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 $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 4

The United States is the only country in the world with minimum-wage laws.

Accepted Answer

A) True 
 B)False

Question 5

Table 6-2  
-Refer to Table 6-2. A price floor set at $20 results in

Accepted Answer

A)  75 units sold. 
B)  125 units sold. 
C)  200 units sold. 
D)  275 units sold. 
A)  75 units sold. 
B)  125 units sold. 
C)  200 units sold. 
D)  275 units sold.

Question 6

If the government levies a $0.25 tax per MP3 music file downloaded on buyers of MP3 music files, then the price received by sellers of MP3 music files would

Accepted Answer

A)  decrease by more than $0.25. 
B)  decrease by exactly $0.25. 
C)  decrease by less than $0.25. 
D)  increase by an indeterminate amount. 
A)  decrease by more than $0.25. 
B)  decrease by exactly $0.25. 
C)  decrease by less than $0.25. 
D)  increase by an indeterminate amount.

Question 7

Figure 6-33  
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. What is the effective price that sellers will receive for the good after the tax is imposed?

Accepted Answer

The effective price

Question 8

Figure 6-19  
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)  $3 
B)  between $3 and $5 
C)  between $5 and $7 
D)  $7 
A)  $3 
B)  between $3 and $5 
C)  between $5 and $7 
D)  $7

Question 9

Figure 6-7  
-Refer to Figure 6-7. For a price ceiling to be binding in this market, it would have to be set at

Accepted Answer

A)  any price below $7. 
B)  any price above $3. 
C)  any price below $9. 
D)  any price above $7. 
A)  any price below $7. 
B)  any price above $3. 
C)  any price below $9. 
D)  any price above $7.

Question 10

When a binding price floor is imposed on a market for a good, some people who want to sell the good cannot do so.

Accepted Answer

A) True 
 B)False

Question 11

When a tax is placed on the buyers of a product, the

Accepted Answer

A)  size of the market decreases. 
B)  effective price received by sellers decreases, and the price paid by buyers increases. 
C)  demand for the product decreases. 
D)  All of the above are correct. 
A)  size of the market decreases. 
B)  effective price received by sellers decreases, and the price paid by buyers increases. 
C)  demand for the product decreases. 
D)  All of the above are correct.

Question 12

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. If the government imposes a price ceiling of $6 on this market, then there will be

Accepted Answer

A)  no shortage. 
B)  a shortage of 5 units. 
C)  a shortage of 10 units. 
D)  a shortage of 20 units. 
A)  no shortage. 
B)  a shortage of 5 units. 
C)  a shortage of 10 units. 
D)  a shortage of 20 units.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-35  
-Refer to Figure 6-35. A price ceiling set at $70 would create a shortage of 40 units.

Accepted Answer

A) True 
 B)False

Question 15

You have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia. George, who is one of your advisors, says that the best way to avoid a shortage of oranges is to take no action at all. Charles, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop. Otto, a third advisor, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Which of your three advisors is most likely to have studied economics?

Accepted Answer

A)  George 
B)  Charles 
C)  Otto 
D)  Apparently, all three advisors have studied economics, but their views on positive economics are different. 
A)  George 
B)  Charles 
C)  Otto 
D)  Apparently, all three advisors have studied economics, but their views on positive economics are different.

Question 16

The primary effect of rent control in the short run is to reduce rents.

Accepted Answer

A) True 
 B)False

Question 17

Price ceilings are typically imposed to benefit sellers.

Accepted Answer

A) True 
 B)False

Question 18

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Accepted Answer

A)  less than $0.50 
B)  $0.50. 
C)  between $0.50 and $1. 
D)  $1. 
A)  less than $0.50 
B)  $0.50. 
C)  between $0.50 and $1. 
D)  $1.

Question 19

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 ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set

Question 20

Which of the following was not a result of the luxury tax imposed by Congress in 1990?

Accepted Answer

A)  The larger part of the tax burden fell on sellers. 
B)  A larger part of the tax burden fell on the middle class than on the rich. 
C)  Even the wealthy demanded fewer luxury goods. 
D)  The tax was never repealed or even modified. 
A)  The larger part of the tax burden fell on sellers. 
B)  A larger part of the tax burden fell on the middle class than on the rich. 
C)  Even the wealthy demanded fewer luxury goods. 
D)  The tax was never repealed or even modified.

Exam 6: Supply, Demand, and Government Policies

Consider the market for gasoline. Buyers

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The per-unit burden of the tax on sellers is

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 $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

The United States is the only country in the world with minimum-wage laws.

Table 6-2 -Refer to Table 6-2. A price floor set at $20 results in

If the government levies a $0.25 tax per MP3 music file downloaded on buyers of MP3 music files, then the price received by sellers of MP3 music files would

Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. What is the effective price that sellers will receive for the good after the tax is imposed?

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Figure 6-7 -Refer to Figure 6-7. For a price ceiling to be binding in this market, it would have to be set at

When a binding price floor is imposed on a market for a good, some people who want to sell the good cannot do so.

When a tax is placed on the buyers of a product, the

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price ceiling of $6 on this market, then there will be

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

Figure 6-35 -Refer to Figure 6-35. A price ceiling set at $70 would create a shortage of 40 units.

The primary effect of rent control in the short run is to reduce rents.

Price ceilings are typically imposed to benefit sellers.

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Which of the following was not a result of the luxury tax imposed by Congress in 1990?

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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