Question 1

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Accepted Answer

A) True 
 B)False

Question 2

When a binding price floor is imposed on a market,

Accepted Answer

A)   price no longer serves as a rationing device.
B)   the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor.
C)   all sellers benefit.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 3

Figure 6-6 
-Refer to Figure 6-6. If the government imposes a price floor of $6 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 40 units.E) A) and D)
F) B) and C)

Question 4

The long-run effects of rent controls are a good illustration of the principle that

Accepted Answer

A)   society faces a short-run tradeoff between unemployment and inflation.
B)   the cost of something is what you give up to get it.
C)   people respond to incentives.
D)   government can sometimes improve on market outcomes.E) All of the above
F) A) and B)

Question 5

The imposition of a binding price ceiling on a market causes

Accepted Answer

A)   quantity demanded to be greater than quantity supplied.
B)   quantity demanded to be less than quantity supplied.
C)   quantity demanded to be equal to quantity supplied.
D)   the price of the good to be greater than its equilibrium price.E) A) and B)
F) A) and C)

Question 6

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

Accepted Answer

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

Question 7

Workers determine the supply of labor, and firms determine the demand for labor.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-15 
-Refer to Figure 6-15. Suppose a price ceiling of $2 is imposed on this market. As a result,

Accepted Answer

A)   the quantity of the good supplied decreases by 30 units.
B)   the demand curve shifts to the left so as to now pass through the point quantity = 30, price = $2) .
C)   buyers' total expenditure on the good decreases by $75.
D)   buyers' total expenditure on the good falls by $15.E) A) and B)
F) A) and C)

Question 9

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by

Accepted Answer

A)   less than $0.50.
B)   $0.50.
C)   between $0.50 and $1.
D)   $1.E) B) and C)
F) None of the above

Question 10

Figure 6-24 
-Refer to Figure 6-24. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

Accepted Answer

A)   $16
B)   $18
C)   $24
D)   $26E) None of the above
F) A) and B)

Question 11

Figure 6-31 
-Refer to Figure 6-31. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set ...

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

A $0.10 tax levied on the sellers of chocolate bars will cause the

Accepted Answer

A)   supply curve for chocolate bars to shift down by $0.10.
B)   supply curve for chocolate bars to shift up by $0.10.
C)   demand curve for chocolate bars to shift down by $0.10.
D)   demand curve for chocolate bars to shift up by $0.10.E) A) and B)
F) A) and C)

Question 14

The United States is the only country in the world with minimum-wage laws.

Accepted Answer

A) True 
 B)False

Question 15

Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

Accepted Answer

A)   An increase in the price of flour, which is used to make bread.
B)   A decrease in the price of lunch meat.
C)   A decease in the price of unsliced bread, which people consider as a substitute for sliced bread.
D)   An decrease in the price of peanut butter and jelly.E) A) and B)
F) A) and C)

Question 16

Figure 6-20 
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)   $5
B)   between $5 and $10
C)   between $10 and $14
D)   $14E) A) and B)
F) A) and C)

Question 17

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 effective price ...

Question 18

Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

Accepted Answer

A) True 
 B)False

Question 19

Table 6-5
 
-Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus or shortage)  in this market?

Accepted Answer

A)   0 units
B)   30 units
C)   45 units
D)   75 unitsE) None of the above
F) A) and B)

Question 20

The minimum wage does not apply to

Accepted Answer

A)   jobs for teenagers.
B)   jobs for members of minority groups.
C)   unpaid internships.
D)   jobs that include on-the-job training.E) B) and C)
F) A) and B)

Exam 6: Supply, Demand, and Government Policies

When a binding price floor is imposed on a market,

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Figure 6-15 -Refer to Figure 6-15. Suppose a price ceiling of $2 is imposed on this market. As a result,

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The long-run effects of rent controls are a good illustration of the principle that

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Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

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Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by

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The minimum wage does not apply to

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Workers determine the supply of labor, and firms determine the demand for labor.

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

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The United States is the only country in the world with minimum-wage laws.

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Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

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

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Table 6-5 -Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus or shortage) in this market?

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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?

Correct AnswerverifiedThe effective price ...View AnswerShow Answer

Figure 6-24 -Refer to Figure 6-24. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

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A $0.10 tax levied on the sellers of chocolate bars will cause the

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Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set ...View AnswerShow Answer

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

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A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

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Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

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The imposition of a binding price ceiling on a market causes

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The effective price ...
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A price ceiling set ...
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