Question 1

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-16  
-Refer to Figure 6-16. In this market, a minimum wage of $7.25 creates a labor

Accepted Answer

A)  shortage of 2,250 workers. 
B)  shortage of 4,500 workers. 
C)  surplus of 2,250 workers. 
D)  surplus of 4,500 workers. 
A)  shortage of 2,250 workers. 
B)  shortage of 4,500 workers. 
C)  surplus of 2,250 workers. 
D)  surplus of 4,500 workers.

Question 3

Most economists are in favor of price controls as a way of allocating resources in the economy.

Accepted Answer

A) True 
 B)False

Question 4

A surplus results when a

Accepted Answer

A)  nonbinding price floor is imposed on a market. 
B)  nonbinding price floor is removed from a market. 
C)  binding price floor is imposed on a market. 
D)  binding price floor is removed from a market. 
A)  nonbinding price floor is imposed on a market. 
B)  nonbinding price floor is removed from a market. 
C)  binding price floor is imposed on a market. 
D)  binding price floor is removed from a market.

Question 5

Suppose the government imposes a 30-cent tax on the sellers of soft drinks. Which of the following is not correct? The tax would

Accepted Answer

A)  shift the supply curve upward by 30 cents. 
B)  raise the equilibrium price by 30 cents. 
C)  reduce the equilibrium quantity. 
D)  discourage market activity. 
A)  shift the supply curve upward by 30 cents. 
B)  raise the equilibrium price by 30 cents. 
C)  reduce the equilibrium quantity. 
D)  discourage market activity.

Question 6

The minimum wage, if it is binding, raises the incomes of

Accepted Answer

A)  no workers. 
B)  only those workers who cannot find jobs. 
C)  only those workers whose jobs would pay less than the minimum wage if it didn't exist. 
D)  all workers. 
A)  no workers. 
B)  only those workers who cannot find jobs. 
C)  only those workers whose jobs would pay less than the minimum wage if it didn't exist. 
D)  all workers.

Question 7

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

Accepted Answer

A)  causes a shortage of 40 units. 
B)  is not binding, because it is set above the equilibrium price. 
C)  causes a shortage of 45 units. 
D)  causes a shortage of 85 units. 
A)  causes a shortage of 40 units. 
B)  is not binding, because it is set above the equilibrium price. 
C)  causes a shortage of 45 units. 
D)  causes a shortage of 85 units.

Question 8

Table 6-1  
-Refer to Table 6-1. Suppose the government imposes a price floor of $30 on this market. What will be the size of the surplus in this market?

Accepted Answer

A)  0 units 
B)  200 units 
C)  1800 units 
D)  2000 units 
A)  0 units 
B)  200 units 
C)  1800 units 
D)  2000 units

Question 9

The price paid by buyers in a market will decrease if the government

Accepted Answer

A)  imposes a binding price floor in that market. 
B)  increases a binding price ceiling in that market. 
C)  increases a tax on the good sold in that market. 
D)  decreases a binding price floor in that market. 
A)  imposes a binding price floor in that market. 
B)  increases a binding price ceiling in that market. 
C)  increases a tax on the good sold in that market. 
D)  decreases a binding price floor in that market.

Question 10

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 $3 per unit is imposed on this market. How much will sellers receive 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 11

A price ceiling is always a binding price control, whereas a price floor may be either binding or not binding.

Accepted Answer

A) True 
 B)False

Question 12

If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-24  
-Refer to Figure 6-24. What is the amount of the tax per unit?

Accepted Answer

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

Question 14

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

Accepted Answer

A)  U.S. government regulations pertaining to the price of gasoline. 
B)  the Organization of Petroleum Exporting Countries (OPE
C) . 
C)  major oil companies operating in the U.S. 
D)  consumers who bought gasoline frequently, even when their cars' gasoline tanks were nearly full. 
A)  U.S. government regulations pertaining to the price of gasoline. 
B)  the Organization of Petroleum Exporting Countries (OPE
C) . 
C)  major oil companies operating in the U.S. 
D)  consumers who bought gasoline frequently, even when their cars' gasoline tanks were nearly full.

Question 15

The tax burden will fall most heavily on sellers of the good when the demand curve

Accepted Answer

A)  is relatively steep, and the supply curve is relatively flat. 
B)  is relatively flat, and the supply curve is relatively steep. 
C)  and the supply curve are both relatively flat. 
D)  and the supply curve are both relatively steep. 
A)  is relatively steep, and the supply curve is relatively flat. 
B)  is relatively flat, and the supply curve is relatively steep. 
C)  and the supply curve are both relatively flat. 
D)  and the supply curve are both relatively steep.

Question 16

Figure 6-26  
-Refer to Figure 6-26. How much tax revenue does this tax produce for the government?

Accepted Answer

A)  $480 
B)  $640 
C)  $360 
D)  $120 
A)  $480 
B)  $640 
C)  $360 
D)  $120

Question 17

Price controls can generate inequities.

Accepted Answer

A) True 
 B)False

Question 18

Figure 6-10  
-Refer to Figure 6-10. A price ceiling set at

Accepted Answer

A)  $6 will be binding and will result in a shortage of 10 units. 
B)  $6 will be binding and will result in a shortage of 6 units. 
C)  $16 will be binding and will result in a shortage of 10 units. 
D)  $16 will be binding and will result in a shortage of 4 units. 
A)  $6 will be binding and will result in a shortage of 10 units. 
B)  $6 will be binding and will result in a shortage of 6 units. 
C)  $16 will be binding and will result in a shortage of 10 units. 
D)  $16 will be binding and will result in a shortage of 4 units.

Question 19

Figure 6-16  
-Refer to Figure 6-16. In this market, a minimum wage of $2.75 creates a labor

Accepted Answer

A)  shortage of 2,250 workers. 
B)  shortage of 4,500 workers. 
C)  surplus of 2,250 workers. 
D)  neither a labor shortage nor surplus. 
A)  shortage of 2,250 workers. 
B)  shortage of 4,500 workers. 
C)  surplus of 2,250 workers. 
D)  neither a labor shortage nor surplus.

Question 20

Figure 6-25  
-Refer to Figure 6-25. The amount of the tax per unit is

Accepted Answer

A)  $1. 
B)  $1.50. 
C)  $2. 
D)  $3. 
A)  $1. 
B)  $1.50. 
C)  $2. 
D)  $3.

Exam 6: Supply, Demand, and Government Policies

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $7.25 creates a labor

Most economists are in favor of price controls as a way of allocating resources in the economy.

A surplus results when a

Suppose the government imposes a 30-cent tax on the sellers of soft drinks. Which of the following is not correct? The tax would

The minimum wage, if it is binding, raises the incomes of

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

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price floor of $30 on this market. What will be the size of the surplus in this market?

The price paid by buyers in a market will decrease if the government

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 $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

A price ceiling is always a binding price control, whereas a price floor may be either binding or not binding.

If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

Figure 6-24 -Refer to Figure 6-24. What is the amount of the tax per unit?

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

The tax burden will fall most heavily on sellers of the good when the demand curve

Figure 6-26 -Refer to Figure 6-26. How much tax revenue does this tax produce for the government?

Price controls can generate inequities.

Figure 6-10 -Refer to Figure 6-10. A price ceiling set at

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $2.75 creates a labor

Figure 6-25 -Refer to Figure 6-25. The amount of the tax per unit is

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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