Question 1

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-23    
-Refer to Figure 6-23. The effective price received by sellers after the tax is imposed is

Accepted Answer

A)  $3. 
B)  $4. 
C)  $5. 
D)  $6. 
A)  $3. 
B)  $4. 
C)  $5. 
D)  $6.

Question 3

A nonbinding price floor

Accepted Answer

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

Question 4

Which of the following is correct?

Accepted Answer

A)  Rent control and the minimum wage are both examples of price ceilings. 
B)  Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor. 
C)  Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling. 
D)  Rent control and the minimum wage are both examples of price floors. 
A)  Rent control and the minimum wage are both examples of price ceilings. 
B)  Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor. 
C)  Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling. 
D)  Rent control and the minimum wage are both examples of price floors.

Question 5

Figure 6-25  
-Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

Accepted Answer

A)  $150 
B)  $180 
C)  $250 
D)  $300 
A)  $150 
B)  $180 
C)  $250 
D)  $300

Question 6

The imposition of a binding price floor on a market

Accepted Answer

A)  causes quantity demanded to be greater than quantity supplied. 
B)  causes quantity demanded to be less than quantity supplied. 
C)  causes quantity demanded to be equal to quantity supplied. 
D)  causes a decrease in demand. 
A)  causes quantity demanded to be greater than quantity supplied. 
B)  causes quantity demanded to be less than quantity supplied. 
C)  causes quantity demanded to be equal to quantity supplied. 
D)  causes a decrease in demand.

Question 7

A price ceiling caused the gasoline shortage of 1973 in the United States.

Accepted Answer

A) True 
 B)False

Question 8

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Accepted Answer

A)  both taxes would fall more heavily on the buyers than on the sellers. 
B)  the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C)  the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D)  both taxes would fall more heavily on the sellers than on the buyers. 
A)  both taxes would fall more heavily on the buyers than on the sellers. 
B)  the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C)  the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D)  both taxes would fall more heavily on the sellers than on the buyers.

Question 9

Figure 6-15  
-Refer to Figure 6-15. For a price floor 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 10

The rationing mechanisms that develop under binding price floors are usually efficient.

Accepted Answer

A) True 
 B)False

Question 11

The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 12

Figure 6-35  
-Refer to Figure 6-35. A price ceiling set at $30 would create a shortage of 20 units.

Accepted Answer

A) True 
 B)False

Question 13

The minimum wage is more often binding for teenagers than for other members of the labor force.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-6  
-Refer to Figure 6-6. If the government imposes a price floor of $10 on this market, then there will be

Accepted Answer

A)  no surplus. 
B)  a surplus of 20 units. 
C)  a surplus of 30 units. 
D)  a surplus of 10 units. 
A)  no surplus. 
B)  a surplus of 20 units. 
C)  a surplus of 30 units. 
D)  a surplus of 10 units.

Question 15

Figure 6-24  
-Refer to Figure 6-24. The per-unit burden of the tax on buyers of the good is

Accepted Answer

A)  $2. 
B)  $4. 
C)  $6. 
D)  $8. 
A)  $2. 
B)  $4. 
C)  $6. 
D)  $8.

Question 16

Figure 6-31  
-Refer to Figure 6-31. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 17

The minimum wage is an example of a

Accepted Answer

A)  price ceiling. 
B)  price floor. 
C)  wage subsidy. 
D)  tax. 
A)  price ceiling. 
B)  price floor. 
C)  wage subsidy. 
D)  tax.

Question 18

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 19

The U.S. Congress first instituted a minimum wage in

Accepted Answer

A)  1776. 
B)  1812. 
C)  1938. 
D)  1975. 
A)  1776. 
B)  1812. 
C)  1938. 
D)  1975.

Question 20

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

Accepted Answer

A)  Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans. 
B)  The number of farmers selling soybeans decreases. 
C)  Consumers' income increases, and soybeans are a normal good. 
D)  The number of consumers buying soybeans increases. 
A)  Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans. 
B)  The number of farmers selling soybeans decreases. 
C)  Consumers' income increases, and soybeans are a normal good. 
D)  The number of consumers buying soybeans increases.

Exam 6: Supply, Demand, and Government Policies

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

Figure 6-23 -Refer to Figure 6-23. The effective price received by sellers after the tax is imposed is

A nonbinding price floor

Which of the following is correct?

Figure 6-25 -Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

The imposition of a binding price floor on a market

A price ceiling caused the gasoline shortage of 1973 in the United States.

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

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

The rationing mechanisms that develop under binding price floors are usually efficient.

The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.

Figure 6-35 -Refer to Figure 6-35. A price ceiling set at $30 would create a shortage of 20 units.

The minimum wage is more often binding for teenagers than for other members of the labor force.

Figure 6-6 -Refer to Figure 6-6. If the government imposes a price floor of $10 on this market, then there will be

Figure 6-24 -Refer to Figure 6-24. The per-unit burden of the tax on buyers of the good is

Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

The minimum wage is an example of a

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

The U.S. Congress first instituted a minimum wage in

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

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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