Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-24
Suppose the government imposes a $2 on this market. 
-Refer to Figure 6-24. Suppose D1 represents the demand curve for paperback novels, D2 represents the demand curve for gasoline, and S1 represents the supply curve for paperback novels and gasoline. After the imposition of the $2 on paperback novels and on gasoline, the

Accepted Answer

A)  buyers of gasoline bear a higher burden of the $2 tax than buyers of paperback novels.
B)  sellers of gasoline bear a higher burden of the $2 tax than sellers of paperback novels.
C)  buyers of gasoline bear an equal burden of the $2 tax as buyers of paperback novels.
D)  Both a)  and b)  are correct.E) None of the above
F) B) and C)

Question 3

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A)  every seller in the market benefits.
B)  all buyers and sellers benefit.
C)  every seller who wants to sell the good will be able to do so, but only if he appeals to the personal biases of the buyers.
D)  some sellers will not be able to sell any amount of the good.E) A) and C)
F) A) and D)

Question 4

Suppose buyers of vodka are required to send $1.00 to the government for every bottle of vodka they buy. Further, suppose this tax causes the effective price received by sellers of vodka to fall by $0.60 per bottle. Which of the following statements is correct?

Accepted Answer

A)  This tax causes the supply curve for vodka to shift upward by $1.00 at each quantity of vodka.
B)  The price paid by buyers is $0.40 per bottle more than it was before the tax.
C)  Sixty percent of the burden of the tax falls on buyers.
D)  All of the above are correct.E) B) and D)
F) A) and C)

Question 5

Figure 6-6 
-Refer to Figure 6-6. Which of the following statements is correct?

Accepted Answer

A)  A price ceiling set at $12 would be binding, but a price ceiling set at $8 would not be binding.
B)  A price floor set at $8 would be binding, but a price ceiling set at $8 would not be binding.
C)  A price ceiling set at $9 would result in a surplus.
D)  A price floor set at $11 would result in a surplus.E) None of the above
F) B) and C)

Question 6

A binding price floor causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 7

If the government removes a tax on a good, then the quantity of the good sold will

Accepted Answer

A)  increase.
B)  decrease.
C)  not change.
D)  All of the above are possible.E) None of the above
F) All of the above

Question 8

When a tax is placed on the buyers of a product, buyers pay

Accepted Answer

A)  more and sellers receive more than they did before the tax.
B)  more and sellers receive less than they did before the tax.
C)  less and sellers receive more than they did before the tax.
D)  less and sellers receive less than they did before the tax.E) None of the above
F) All of the above

Question 9

Consider the market for watermelons. Buyers

Accepted Answer

A)  and sellers would lobby for a price ceiling.
B)  and sellers would lobby for a price floor.
C)  would lobby for a price ceiling, whereas sellers would lobby for a price floor.
D)  would lobby for a price floor, whereas sellers would lobby for a price ceiling.E) A) and B)
F) All of the above

Question 10

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 effective price received by sellers will increase by $20.
B)  demand curve will shift upward by $20, and the effective price received by sellers will increase by less than $20.
C)  supply curve will shift downward by $20, and the price paid by buyers will decrease by $20.
D)  supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20.E) A) and D)
F) None of the above

Question 11

Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

Accepted Answer

A) True 
 B)False

Question 12

A tax of $1 on sellers always increases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-13 
-Refer to Figure 6-13. In this market, a minimum wage of $2.75 is

Accepted Answer

A)  binding and creates a labor shortage.
B)  binding and creates unemployment.
C)  nonbinding and creates a labor shortage.
D)  nonbinding and creates neither a labor shortage nor unemployment.E) A) and B)
F) B) and C)

Question 14

A $0.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Accepted Answer

A)  upward by exactly $0.50.
B)  upward by less than $0.50.
C)  downward by exactly $0.50.
D)  downward by less than $0.50.E) B) and C)
F) C) and D)

Question 15

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 16

Which of the following is not correct?

Accepted Answer

A)  Taxes levied on sellers and taxes levied on buyers are not equivalent.
B)  A tax places a wedge between the price that buyers pay and the price that sellers receive.
C)  The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.
D)  In the new after-tax equilibrium, buyers and sellers share the burden of the tax.E) A) and B)
F) None of the above

Question 17

States in the U.S. may mandate minimum wages above the federal level.

Accepted Answer

A) True 
 B)False

Question 18

Economists generally believe that rent control is

Accepted Answer

A)  an efficient and fair way to help the poor.
B)  inefficient but the best available means of solving a serious social problem.
C)  a highly inefficient way to help the poor raise their standard of living.
D)  an efficient way to allocate housing, but not a good way to help the poor.E) A) and B)
F) None of the above

Question 19

Figure 6-15 
-Refer to Figure 6-15. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)  $3
B)  between $3 and $5
C)  between $5 and $7
D)  $7E) A) and B)
F) B) and D)

Question 20

Minimum-wage laws benefit society by creating a surplus of labor.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

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

Correct Answer
verified

Consider the market for watermelons. Buyers

Correct Answer
verified

Minimum-wage laws benefit society by creating a surplus of labor.

Correct Answer
verified

When a tax is placed on the buyers of a product, buyers pay

Correct Answer
verified

Which of the following is not correct?

Correct Answer
verified

When a binding price floor is imposed on a market to benefit sellers,

Correct Answer
verified

States in the U.S. may mandate minimum wages above the federal level.

Correct Answer
verified

Economists generally believe that rent control is

Correct Answer
verified

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

Correct Answer
verified

Figure 6-15 -Refer to Figure 6-15. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Correct Answer
verified

Figure 6-13 -Refer to Figure 6-13. In this market, a minimum wage of $2.75 is

Correct Answer
verified

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.

Correct Answer
verified

A tax of $1 on sellers always increases the equilibrium price by $1.

Correct Answer
verified

Figure 6-6 -Refer to Figure 6-6. Which of the following statements is correct?

Correct Answer
verified

Suppose buyers of vodka are required to send $1.00 to the government for every bottle of vodka they buy. Further, suppose this tax causes the effective price received by sellers of vodka to fall by $0.60 per bottle. Which of the following statements is correct?

Correct Answer
verified

A $0.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Correct Answer
verified

A binding price floor causes a shortage in the market.

Correct Answer
verified

Correct Answer
verified

Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

Correct Answer
verified

If the government removes a tax on a good, then the quantity of the good sold will

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

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

Correct AnswerverifiedShow Answer

Consider the market for watermelons. Buyers

Correct AnswerverifiedShow Answer

Minimum-wage laws benefit society by creating a surplus of labor.

Correct AnswerverifiedShow Answer

When a tax is placed on the buyers of a product, buyers pay

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

When a binding price floor is imposed on a market to benefit sellers,

Correct AnswerverifiedShow Answer

States in the U.S. may mandate minimum wages above the federal level.

Correct AnswerverifiedShow Answer

Economists generally believe that rent control is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-15 -Refer to Figure 6-15. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Correct AnswerverifiedShow Answer

Figure 6-13 -Refer to Figure 6-13. In this market, a minimum wage of $2.75 is

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

A tax of $1 on sellers always increases the equilibrium price by $1.

Correct AnswerverifiedShow Answer

Figure 6-6 -Refer to Figure 6-6. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Suppose buyers of vodka are required to send $1.00 to the government for every bottle of vodka they buy. Further, suppose this tax causes the effective price received by sellers of vodka to fall by $0.60 per bottle. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A $0.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Correct AnswerverifiedShow Answer

A binding price floor causes a shortage in the market.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

Correct AnswerverifiedShow Answer

If the government removes a tax on a good, then the quantity of the good sold will

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified