Question 1

The economy contains many labor markets for different types of workers.

Accepted Answer

A) True 
 B)False

Question 2

A $5 tax levied on the buyers of pants will cause the

Accepted Answer

A)  supply curve for pants to shift down by $5. 
B)  supply curve for pants to shift up by $5. 
C)  demand curve for pants to shift down by $5. 
D)  demand curve for pants to shift up by $5.

Question 3

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

Accepted Answer

A)  He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people. 
B)  He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city. 
C)  He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted. 
D)  He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.

Question 4

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the

Accepted Answer

A)  demand curve for toothpaste shifts to the left. 
B)  supply curve for toothpaste shifts to the right. 
C)  quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases. 
D)  quantity supplied of toothpaste stays the same.

Question 5

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price of $12 in this market is an example of a

Accepted Answer

A)  binding price ceiling that creates a shortage. 
B)  non-binding price ceiling that creates a shortage. 
C)  binding price floor that creates a surplus. 
D)  non-binding price floor that creates a surplus.

Question 6

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Accepted Answer

A)  the demand for treadmills will increase. 
B)  the supply of treadmills will decrease. 
C)  a shortage of treadmills will develop. 
D)  All of the above are correct.

Question 7

Figure 6-21 
-Refer to Figure 6-21. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. Acme is left with how much money?

Accepted Answer

A)  $8.00 
B)  $9.00 
C)  $10.50 
D)  $12.00

Question 8

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 answer of Figure 6-33 
-Refer to Figure 6-33. Suppose...

Question 9

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

Accepted Answer

A)  Buyers bear the entire burden of the tax. 
B)  Sellers bear the entire burden of the tax. 
C)  Buyers and sellers share the burden of the tax. 
D)  We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination.

Question 10

A price floor set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 11

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 12

A binding minimum wage creates unemployment.

Accepted Answer

A) True 
 B)False

Question 13

Table 6-2
 
-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 250 units. 
C)  be binding and will result in a shortage of 300 units. 
D)  not be binding.

Question 14

A price floor is a legal minimum on the price at which a good or service can be sold.

Accepted Answer

A) True 
 B)False

Question 15

One common example of a price floor is the minimum wage.

Accepted Answer

A) True 
 B)False

Question 16

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Accepted Answer

A) True 
 B)False

Question 17

Figure 6-23
 
-Refer to Figure 6-23. The price paid by buyers after the tax is imposed is

Accepted Answer

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

Question 18

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

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A tax on the sellers of coffee mugs

Accepted Answer

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

Exam 6: Supply, Demand, and Government Policies

The economy contains many labor markets for different types of workers.

A $5 tax levied on the buyers of pants will cause the

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $12 in this market is an example of a

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Figure 6-21 -Refer to Figure 6-21. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. Acme is left with how much money?

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?

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

A price floor set above the equilibrium price is not binding.

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

A binding minimum wage creates unemployment.

Table 6-2 -Refer to Table 6-2. A price ceiling set at $5 will

A price floor is a legal minimum on the price at which a good or service can be sold.

One common example of a price floor is the minimum wage.

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Figure 6-23 -Refer to Figure 6-23. The price paid by buyers after the tax is imposed is

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?

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

A tax on the sellers of coffee mugs