Question 1

Table 6-1  
-Refer to Table 6-1. Which of the following price ceilings would be binding in this market?

Accepted Answer

A)  $80 
B)  $70 
C)  $60 
D)  $50 
A)  $80 
B)  $70 
C)  $60 
D)  $50

Question 2

If a price floor is a binding constraint on a market, then

Accepted Answer

A)  the equilibrium price must be above the price floor. 
B)  the quantity demanded must exceed the quantity supplied. 
C)  sellers cannot sell all they want to sell at the price floor. 
D)  buyers cannot buy all they want to buy at the price floor. 
A)  the equilibrium price must be above the price floor. 
B)  the quantity demanded must exceed the quantity supplied. 
C)  sellers cannot sell all they want to sell at the price floor. 
D)  buyers cannot buy all they want to buy at the price floor.

Question 3

Figure 6-15  
-Refer to Figure 6-15. For a price ceiling to be binding in this market, it would have to be set at

Accepted Answer

A)  any price below $3. 
B)  a price between $2 and $3. 
C)  a price between $3 and $4. 
D)  any price above $3. 
A)  any price below $3. 
B)  a price between $2 and $3. 
C)  a price between $3 and $4. 
D)  any price above $3.

Question 4

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a

Accepted Answer

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

Question 6

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

Accepted Answer

A)  This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor. 
B)  The effective price received by sellers is $5.00 per bottle less than it was before the tax. 
C)  Forty percent of the burden of the tax falls on buyers. 
D)  All of the above are correct. 
A)  This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor. 
B)  The effective price received by sellers is $5.00 per bottle less than it was before the tax. 
C)  Forty percent of the burden of the tax falls on buyers. 
D)  All of the above are correct.

Question 7

Table 6-2  
-Refer to Table 6-2. A price ceiling set at $20 will

Accepted Answer

A)  be binding and will result in a shortage of 75 units. 
B)  be binding and will result in a shortage of 200 units. 
C)  be binding and will result in a shortage of 125 units. 
D)  not be binding. 
A)  be binding and will result in a shortage of 75 units. 
B)  be binding and will result in a shortage of 200 units. 
C)  be binding and will result in a shortage of 125 units. 
D)  not be binding.

Question 8

The effects of rent control in the long run include lower rents and lower-quality housing.

Accepted Answer

A) True 
 B)False

Question 9

The demand for salt is inelastic, and the supply of salt is elastic. The demand for caviar is elastic, and the supply of caviar is inelastic. Suppose that a tax of $1 per pound is levied on the sellers of salt, and a tax of $1 per pound is levied on the buyers of caviar. We would expect that most of the burden of these taxes will fall on

Accepted Answer

A)  sellers of salt and the buyers of caviar. 
B)  sellers of salt and the sellers of caviar. 
C)  buyers of salt and the sellers of caviar. 
D)  buyers of salt and the buyers of caviar. 
A)  sellers of salt and the buyers of caviar. 
B)  sellers of salt and the sellers of caviar. 
C)  buyers of salt and the sellers of caviar. 
D)  buyers of salt and the buyers of caviar.

Question 10

Rent control

Accepted Answer

A)  is an example of a price ceiling. 
B)  leads to a larger shortage of apartments in the long run than in the short run. 
C)  leads to lower rents and, in the long run, to lower-quality housing. 
D)  All of the above are correct. 
A)  is an example of a price ceiling. 
B)  leads to a larger shortage of apartments in the long run than in the short run. 
C)  leads to lower rents and, in the long run, to lower-quality housing. 
D)  All of the above are correct.

Question 11

A tax imposed on the sellers of a good will raise the

Accepted Answer

A)  price paid by buyers and lower the equilibrium quantity. 
B)  price paid by buyers and raise the equilibrium quantity. 
C)  effective price received by sellers and lower the equilibrium quantity. 
D)  effective price received by sellers and raise the equilibrium quantity. 
A)  price paid by buyers and lower the equilibrium quantity. 
B)  price paid by buyers and raise the equilibrium quantity. 
C)  effective price received by sellers and lower the equilibrium quantity. 
D)  effective price received by sellers and raise the equilibrium quantity.

Question 12

Figure 6-9  
-Refer to Figure 6-9. At which price would a price floor be nonbinding?

Accepted Answer

A)  $8 
B)  $7 
C)  $6 
D)  $9 
A)  $8 
B)  $7 
C)  $6 
D)  $9

Question 13

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-5  
-Refer to Figure 6-5. If the horizontal line on the graph represents a price floor, then the price floor is

Accepted Answer

A)  binding and creates a surplus of 60 units of the good. 
B)  binding and creates a surplus of 20 units of the good. 
C)  binding and creates a surplus 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 surplus of 60 units of the good. 
B)  binding and creates a surplus of 20 units of the good. 
C)  binding and creates a surplus of 40 units of the good. 
D)  not binding, and there will be no surplus or shortage of the good.

Question 15

Taxes levied on sellers and taxes levied on buyers are equivalent.

Accepted Answer

A) True 
 B)False

Question 16

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Accepted Answer

A) True 
 B)False

Question 17

Figure 6-7  
-Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

Accepted Answer

A)  the quantity of the good supplied decreases by 20 units. 
B)  the demand curve shifts to the left; quantity sold is now 30 units and the price is $5. 
C)  buyers' total expenditure on the good decreases by $80. 
D)  the price of the good continues to serve as the rationing mechanism. 
A)  the quantity of the good supplied decreases by 20 units. 
B)  the demand curve shifts to the left; quantity sold is now 30 units and the price is $5. 
C)  buyers' total expenditure on the good decreases by $80. 
D)  the price of the good continues to serve as the rationing mechanism.

Question 18

Not all sellers benefit from a binding price floor.

Accepted Answer

A) True 
 B)False

Question 19

Figure 6-25  
-Refer to Figure 6-25. The effective price that sellers receive after the tax is imposed is

Accepted Answer

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

Question 20

Minimum-wage laws dictate

Accepted Answer

A)  the exact wage that firms must pay workers. 
B)  a maximum wage that firms may pay workers. 
C)  a minimum wage that firms may pay workers. 
D)  both a minimum wage and a maximum wage that firms may pay workers. 
A)  the exact wage that firms must pay workers. 
B)  a maximum wage that firms may pay workers. 
C)  a minimum wage that firms may pay workers. 
D)  both a minimum wage and a maximum wage that firms may pay workers.

Exam 6: Supply, Demand, and Government Policies

Table 6-1 -Refer to Table 6-1. Which of the following price ceilings would be binding in this market?

If a price floor is a binding constraint on a market, then

Figure 6-15 -Refer to Figure 6-15. For a price ceiling to be binding in this market, it would have to be set at

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

Table 6-2 -Refer to Table 6-2. A price ceiling set at $20 will

The effects of rent control in the long run include lower rents and lower-quality housing.

Rent control

A tax imposed on the sellers of a good will raise the

Figure 6-9 -Refer to Figure 6-9. At which price would a price floor be nonbinding?

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Figure 6-5 -Refer to Figure 6-5. If the horizontal line on the graph represents a price floor, then the price floor is

Taxes levied on sellers and taxes levied on buyers are equivalent.

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Figure 6-7 -Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

Not all sellers benefit from a binding price floor.

Figure 6-25 -Refer to Figure 6-25. The effective price that sellers receive after the tax is imposed is

Minimum-wage laws dictate

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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