Question 1

Figure 6-26 
-Refer to Figure 6-26. The per-unit burden of the tax is

Accepted Answer

A)   $2 for buyers and $6 for sellers.
B)   $4 for buyers and $4 for sellers.
C)   $6 for buyers and $2 for sellers.
D)   $8 for buyers and $0 for sellers.E) None of the above
F) C) and D)

Question 2

A minimum wage that is set above a market's equilibrium wage will result in an excess

Accepted Answer

A)   demand for labor, that is, unemployment.
B)   demand for labor, that is, a shortage of workers.
C)   supply of labor, that is, unemployment.
D)   supply of labor, that is, a shortage of workers.E) C) and D)
F) All of the above

Question 3

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the sellers in this market?

Accepted Answer

With a $6 tax per unit, the am...

Question 4

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)   75 units sold.
B)   125 units sold.
C)   200 units sold.
D)   275 units sold.E) C) and D)
F) B) and C)

Question 6

When free markets ration goods with prices, it is both efficient and impersonal.

Accepted Answer

A) True 
 B)False

Question 7

A tax imposed on the buyers of a good will

Accepted Answer

A)   raise both the price buyers pay and the effective price sellers receive.
B)   raise the price buyers pay and lower the effective price sellers receive.
C)   lower the price buyers pay and raise the effective price sellers receive.
D)   lower both the price buyers pay and the effective price sellers receive.E) B) and C)
F) None of the above

Question 8

Figure 6-32 
-Refer to Figure 6-32. If the government set a price ceiling at $80, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $80 wou...

Question 9

Opponents of the minimum wage point out that the minimum wage

Accepted Answer

A)   encourages teenagers to drop out of school.
B)   prevents some workers from getting needed on-the-job training.
C)   contributes to the problem of unemployment.
D)   All of the above are correct.E) B) and C)
F) All of the above

Question 10

A tax on sellers reduces the size of a market.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-3
Panel (a)  Panel (b) 
  
-Refer to Figure 6-3. In panel (b) , there will be

Accepted Answer

A)   a shortage.
B)   equilibrium in the market.
C)   a surplus.
D)   lines of people waiting to buy the good.E) B) and D)
F) A) and C)

Question 12

Table 6-5
 
-Refer to Table 6-5. Suppose the government imposes a price ceiling of $3 on this market. What will be the size of the 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 13

When a tax is imposed on the sellers of a good, the supply curve shifts

Accepted Answer

A)   upward by the amount of the tax.
B)   downward by the amount of the tax.
C)   upward by less than the amount of the tax.
D)   downward by less than the amount of the tax.E) B) and C)
F) A) and B)

Question 14

Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because

Accepted Answer

A)   with rent control, the government guarantees landlords a minimum level of profit.
B)   they become resigned to the fact that many of their apartments are going to be vacant at any given time.
C)   with shortages and waiting lists, they have no incentive to maintain and improve their property.
D)   with rent control, it becomes the government's responsibility to maintain rental housing.E) All of the above
F) A) and B)

Question 15

Tax incidence

Accepted Answer

A)   depends on the legislated burden.
B)   is entirely random.
C)   depends on the elasticities of supply and demand.
D)   falls entirely on buyers or entirely on sellers.E) A) and D)
F) All of the above

Question 16

A price floor will be binding only if it is set

Accepted Answer

A)   equal to the equilibrium price.
B)   above the equilibrium price.
C)   below the equilibrium price.
D)   either above or below the equilibrium price.E) B) and C)
F) A) and B)

Question 17

The price paid by buyers in a market will increase if the government (i)  increases a binding price floor in that market.
(ii)  increases a binding price ceiling in that market.
(iii)  decreases a tax on the good sold in that market.

Accepted Answer

A)   (ii)  only
B)   (iii)  only
C)   (i)  and (ii)  only
D)   (i) , (ii) , and (iii) E) All of the above
F) C) and D)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The quantity sold in a market will increase if the government

Accepted Answer

A)   decreases a binding price floor in that market.
B)   decreases a binding price ceiling in that market.
C)   increases a tax on the good sold in that market.
D)   More than one of the above is correct.E) None of the above
F) B) and C)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

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

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A price floor will be binding only if it is set

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Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the sellers in this market?

Correct AnswerverifiedWith a $6 tax per unit, the am...View AnswerShow Answer

Figure 6-3 Panel (a) Panel (b) -Refer to Figure 6-3. In panel (b) , there will be

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A minimum wage that is set above a market's equilibrium wage will result in an excess

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Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because

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

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Tax incidence

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When a tax is imposed on the sellers of a good, the supply curve shifts

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Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $80, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set at $80 wou...View AnswerShow Answer

A tax imposed on the buyers of a good will

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

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The price paid by buyers in a market will increase if the government (i) increases a binding price floor in that market. (ii) increases a binding price ceiling in that market. (iii) decreases a tax on the good sold in that market.

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When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

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Opponents of the minimum wage point out that the minimum wage

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Figure 6-26 -Refer to Figure 6-26. The per-unit burden of the tax is

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The quantity sold in a market will increase if the government

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

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When free markets ration goods with prices, it is both efficient and impersonal.

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A tax on sellers reduces the size of a market.

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With a $6 tax per unit, the am...
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A price ceiling set at $80 wou...
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