Question 1

If a price floor is not binding, then

Accepted Answer

A)   the equilibrium price is above the price floor.
B)   the equilibrium price is below the price floor.
C)   there will be a surplus in the market.
D)   there will be a shortage in the market.E) B) and C)
F) A) and B)

Question 2

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.E) B) and D)
F) All of the above

Question 3

A price ceiling is binding when it is set

Accepted Answer

A)   above the equilibrium price, causing a shortage.
B)   above the equilibrium price, causing a surplus.
C)   below the equilibrium price, causing a shortage.
D)   below the equilibrium price, causing a surplus.E) B) and C)
F) A) and B)

Question 4

Price floors are typically imposed to benefit sellers.

Accepted Answer

A) True 
 B)False

Question 5

When a binding price ceiling is imposed on a market to benefit buyers,

Accepted Answer

A)   no buyers actually benefit.
B)   some buyers benefit, but no buyers are harmed.
C)   some buyers benefit, and some buyers are harmed.
D)   all buyers benefit.E) All of the above
F) A) and C)

Question 6

If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-6 
-Refer to Figure 6-6. If the government imposes a price ceiling of $8 on this market, then there will be

Accepted Answer

A)   no shortage.
B)   a shortage of 10 units.
C)   a shortage of 20 units.
D)   a shortage of 40 units.E) C) and D)
F) B) and D)

Question 8

Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

Accepted Answer

A)   less than $10
B)   $10.
C)   between $10 and $20.
D)   $20.E) A) and C)
F) None of the above

Question 9

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

Accepted Answer

A) True 
 B)False

Question 10

Figure 6-24 
-Refer to Figure 6-24. What is the amount of the tax per unit?

Accepted Answer

A)   $8
B)   $6
C)   $4
D)   $2E) A) and D)
F) None of the above

Question 11

If the government wants to reduce smoking, it should impose a tax on

Accepted Answer

A)   buyers of cigarettes.
B)   sellers of cigarettes.
C)   either buyers or sellers of cigarettes.
D)   whichever side of the market is less elastid.E) A) and B)
F) C) and D)

Question 12

A price floor set below the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 13

A binding price ceiling may not help all consumers, but it does not hurt any consumers.

Accepted Answer

A) True 
 B)False

Question 14

If a tax is levied on the buyers of a product, then there will be a(n)

Accepted Answer

A)   downward shift of the supply curve.
B)   upward shift of the supply curve.
C)   movement up and to the right along the supply curve.
D)   movement down and to the left along the supply curve.E) B) and D)
F) A) and C)

Question 15

Price controls are usually enacted

Accepted Answer

A)   as a means of raising revenue for public purposes.
B)   when policymakers believe that the market price of a good or service is unfair to buyers or sellers.
C)   when policymakers tax a good.
D)   All of the above are correct.E) A) and B)
F) All of the above

Question 16

In an unregulated labor market, the wage adjusts to balance labor supply and labor demand.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The goal of rent control is to help the poor by making housing more affordable.

Accepted Answer

A) True 
 B)False

Question 19

Price ceilings and price floors that are binding

Accepted Answer

A)   are desirable because they make markets more efficient and more fair.
B)   cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price.
C)   can have the effect of restoring a market to equilibrium.
D)   are imposed because they can make the poor in the economy better off without causing adverse effects.E) A) and B)
F) A) and C)

Question 20

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i)  supply is more elastic than the demand.
(ii)  demand in more elastic than the supply.
(iii)  tax is placed on the sellers of the product.
(iv)  tax is placed on the buyers of the product.

Accepted Answer

A)   (i)  only
B)   (ii)  only
C)   (i)  and (iv)  only
D)   (ii)  and (iii)  onlyE) A) and B)
F) A) and D)

Exam 6: Supply, Demand, and Government Policies

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

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Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i) supply is more elastic than the demand. (ii) demand in more elastic than the supply. (iii) tax is placed on the sellers of the product. (iv) tax is placed on the buyers of the product.

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A binding price ceiling may not help all consumers, but it does not hurt any consumers.

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A tax on the buyers of sofas

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Price ceilings and price floors that are binding

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If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

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Figure 6-24 -Refer to Figure 6-24. What is the amount of the tax per unit?

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The goal of rent control is to help the poor by making housing more affordable.

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If a price floor is not binding, then

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Figure 6-6 -Refer to Figure 6-6. If the government imposes a price ceiling of $8 on this market, then there will be

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A price ceiling is binding when it is set

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Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

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A price floor set below the equilibrium price causes a surplus in the market.

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When a binding price ceiling is imposed on a market to benefit buyers,

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Price controls are usually enacted

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If a tax is levied on the buyers of a product, then there will be a(n)

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If the government wants to reduce smoking, it should impose a tax on

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

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In an unregulated labor market, the wage adjusts to balance labor supply and labor demand.

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Price floors are typically imposed to benefit sellers.

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