Question 1

Figure 6-1
 
-Refer to Figure 6-1. The price ceiling shown in panel (b)

Accepted Answer

A) is not binding. 
B) creates a surplus. 
C) creates a shortage. 
D) Both a) and b) are correct.

Question 2

Suppose that the demand for lava lamps is elastic, and the supply of lava lamps is inelastic. A tax of $2 per lamp levied on lava lamps will increase the price paid by buyers of lava lamps by

Accepted Answer

A) less than $1. 
B) $1. 
C) between $1 and $2. 
D) $2.

Question 3

Figure 6-1
 
-Refer to Figure 6-1. A binding price ceiling is shown in

Accepted Answer

A) panel (a) only. 
B) panel (b) only. 
C) both panel (a) and panel (b). 
D) neither panel (a) nor panel (b).

Question 4

A tax on the buyers of sofas

Accepted Answer

A) increases the size of the sofa market. 
B) decreases the size of the sofa market. 
C) has no effect on the size of the sofa market. 
D) may increase, decrease, or have no effect on the size of the sofa market.

Question 5

A tax on buyers shifts the demand curve and the supply curve.

Accepted Answer

A) True 
 B)False

Question 6

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.

Question 7

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

Accepted Answer

A) $6 will be binding and will result in a surplus of 8 units. 
B) $6 will be binding and will result in a surplus of 4 units. 
C) $16 will be binding and will result in a surplus of 12 units. 
D) $16 will be binding and will result in a surplus of 6 units.

Question 8

Figure 6-4 
-Refer to Figure 6-4. Which of the following statements is not correct?

Accepted Answer

A) When the price is $10, quantity supplied equals quantity demanded. 
B) When the price is $6, there is a surplus of 8 units. 
C) When the price is $12, there is a surplus of 4 units. 
D) When the price is $16, quantity supplied exceeds quantity demanded by 12 units.

Question 9

When a free market for a good reaches equilibrium, anyone who is willing and able to sell at the market price can sell the good.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) binding and creates a surplus of 40 units of the good. 
B) binding and creates a surplus of 90 units of the good. 
C) not binding but creates a surplus of 40 units of the good. 
D) not binding, and there will be no surplus or shortage of the good.

Question 11

A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded.

Accepted Answer

A) True 
 B)False

Question 12

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Accepted Answer

A) demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20. 
B) demand curve will shift upward by $20, and the price paid by buyers will decrease by $20. 
C) supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20. 
D) supply curve will shift downward by $20, and the effective price received by sellers will increase by $20.

Question 13

When OPEC raised the price of crude oil in the 1970s, it caused the United States'

Accepted Answer

A) nonbinding price floor on gasoline to become binding. 
B) binding price floor on gasoline to become nonbinding. 
C) nonbinding price ceiling on gasoline to become binding. 
D) binding price ceiling on gasoline to become nonbinding.

Question 14

Figure 6-21 
-Refer to Figure 6-21. The effective price that sellers receive after the tax is imposed is

Accepted Answer

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

Question 15

Figure 6-19 
-Refer to Figure 6-19. For every unit of the good that is sold, sellers are required to send

Accepted Answer

A) one dollar to the government, and buyers are required to send two dollars to the government. 
B) two dollars to the government, and buyers are required to send one dollar to the government. 
C) three dollars to the government, and buyers are required to send nothing to the government. 
D) nothing to the government, and buyers are required to send two dollars to the government.

Question 16

Table 6-2
 $$\begin{array} { | c | c | c | } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Sugplied }
\end{array} \
\hline \$ 10 & 250 & 0\
\hline \$ 5 & 200 & 75 \
\hline \$ 10 & 150 & 150 \
\hline \$ 15 & 100 & 225 \
\hline \$ 20 & 50 & 300 \
\hline \$ 25 & 0 & 375 \
\hline
\end{array}$$
-Refer to Table 6-2. A price ceiling set at $5 will

Accepted Answer

A) be binding and will result in a shortage of 50 units. 
B) be binding and will result in a shortage of 75 units. 
C) be binding and will result in a shortage of 125 units. 
D) not be binding.

Question 17

Figure 6-8 
-Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

Accepted Answer

A) a price ceiling of $4 is imposed. 
B) a price ceiling of $5 is imposed. 
C) a price floor of $3 is imposed. 
D) All of the above are correct.

Question 18

Figure 6-23 
-Refer to Figure 6-23. The amount of the tax per unit is

Accepted Answer

A) $4. 
B) $5. 
C) $6. 
D) $10.

Question 19

Figure 6-27 
-Refer to Figure 6-27. If the government places a $2 tax in the market, the seller receives $4.

Accepted Answer

A) True 
 B)False

Question 20

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

Accepted Answer

A) decrease by less than $500. 
B) decrease by exactly $500. 
C) decrease by more than $500. 
D) increase by an indeterminate amount.

Exam 6: Supply, Demand, and Government Policies

Figure 6-1 -Refer to Figure 6-1. The price ceiling shown in panel (b)

Suppose that the demand for lava lamps is elastic, and the supply of lava lamps is inelastic. A tax of $2 per lamp levied on lava lamps will increase the price paid by buyers of lava lamps by

Figure 6-1 -Refer to Figure 6-1. A binding price ceiling is shown in

A tax on the buyers of sofas

A tax on buyers shifts the demand curve and the supply curve.

A surplus results when a

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

Figure 6-4 -Refer to Figure 6-4. Which of the following statements is not correct?

When a free market for a good reaches equilibrium, anyone who is willing and able to sell at the market price can sell the good.

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

A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded.

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

When OPEC raised the price of crude oil in the 1970s, it caused the United States'

Figure 6-21 -Refer to Figure 6-21. The effective price that sellers receive after the tax is imposed is

Figure 6-19 -Refer to Figure 6-19. For every unit of the good that is sold, sellers are required to send

Figure 6-8 -Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

Figure 6-23 -Refer to Figure 6-23. The amount of the tax per unit is

Figure 6-27 -Refer to Figure 6-27. If the government places a $2 tax in the market, the seller receives $4.

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would