Question 1

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)   be binding and will result in a surplus of 50 units.
B)   be binding and will result in a surplus of 250 units.
C)   be binding and will result in a surplus of 300 units.
D)   not be binding.E) C) and D)
F) A) and D)

Question 3

Suppose buyers of vodka are required to send $5.00 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 $3.00 per bottle. Which of the following statements is correct?

Accepted Answer

A)   This tax causes the demand curve for vodka to shift downward by $5.00 at each quantity of vodka.
B)   The price paid by buyers is $2.00 per bottle more than it was before the tax.
C)   Sixty percent of the burden of the tax falls on sellers.
D)   All of the above are correct.E) B) and D)
F) A) and B)

Question 4

A legal maximum on the price at which a good can be sold is called a price

Accepted Answer

A)   floor.
B)   subsidy.
C)   support.
D)   ceiling.E) C) and D)
F) B) and C)

Question 5

Figure 6-1
Panel a)  Panel b) 
  
-Refer to Figure 6-1. A binding price ceiling is shown in

Accepted Answer

A)   panel a)  only.
B)   panel b)  only.
C)   both panel a)  and panel b) .
D)   neither panel a)  nor panel b) .E) B) and C)
F) All of the above

Question 6

Scenario 6-2
Suppose demand for a product is given by the equation  and supply for the product is given by the equation 
-Refer to Scenario 6-2. What are the equilibrium price and equilibrium quantity in the market for this product?

Accepted Answer

The equilibrium pric...

Question 7

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) A) and B)
F) B) and D)

Question 8

The price paid by buyers in a market will decrease if the government

Accepted Answer

A)   increases a binding price floor in that market.
B)   increases a binding price ceiling in that market.
C)   decreases a tax on the good sold in that market.
D)   All of the above are correct.E) B) and C)
F) All of the above

Question 9

Which of the following statements about the effects of rent control is correct?

Accepted Answer

A)   The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments.
B)   The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments.
C)   In the long run, rent control leads to a shortage of apartments and an improvement in the quality of available apartments.
D)   The effects of rent control are very noticeable to the public in the short run because the primary effects of rent control occur very quickly.E) A) and C)
F) A) and D)

Question 10

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 increase the price paid by buyers 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 D)
F) A) and B)

Question 11

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Accepted Answer

A)   upward by exactly $2.00.
B)   upward by less than $2.00.
C)   downward by exactly $2.00.
D)   downward by less than $2.00.E) A) and B)
F) A) and C)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

A large majority of economists favor eliminating the minimum wage.

Accepted Answer

A) True 
 B)False

Question 15

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

Accepted Answer

A) True 
 B)False

Question 16

A price ceiling is

Accepted Answer

A)   often imposed on markets in which "cutthroat competition" would prevail without a price ceiling.
B)   a legal maximum on the price at which a good can be sold.
C)   often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 17

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 D)
F) B) and C)

Question 18

Figure 6-15 
-Refer to Figure 6-15. Suppose a price floor of $4 is imposed on this market. As a result,

Accepted Answer

A)   buyers' total expenditure on the good decreases by $15.
B)   the supply curve shifts to the left so as to now pass through the point quantity = 30, price = $4) .
C)   the quantity demanded of the good decreases by 30 units.
D)   the number of units sold in the market will increase by 15 units.E) B) and D)
F) C) and D)

Question 19

The price paid by buyers in a market will decrease if the government

Accepted Answer

A)   imposes a binding price floor in that market.
B)   increases a binding price ceiling in that market.
C)   increases a tax on the good sold in that market.
D)   decreases a binding price floor in that market.E) B) and C)
F) All of the above

Question 20

If the government removes a tax on a good, then the price paid by buyers will

Accepted Answer

A)   increase, and the price received by sellers will increase.
B)   increase, and the price received by sellers will decrease.
C)   decrease, and the price received by sellers will increase.
D)   decrease, and the price received by sellers will decrease.E) B) and C)
F) All of the above

Exam 6: Supply, Demand, and Government Policies

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

Correct AnswerverifiedShow Answer

If the government removes a tax on a good, then the price paid by buyers will

Correct AnswerverifiedShow Answer

A price ceiling is

Correct AnswerverifiedShow Answer

Figure 6-1 Panel a) Panel b) -Refer to Figure 6-1. A binding price ceiling is shown in

Correct AnswerverifiedShow Answer

Figure 6-15 -Refer to Figure 6-15. Suppose a price floor of $4 is imposed on this market. As a result,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A legal maximum on the price at which a good can be sold is called a price

Correct AnswerverifiedShow Answer

A large majority of economists favor eliminating the minimum wage.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

Correct AnswerverifiedShow 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?

Correct AnswerverifiedShow Answer

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Correct AnswerverifiedShow Answer

The price paid by buyers in a market will decrease if the government

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose buyers of vodka are required to send $5.00 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 $3.00 per bottle. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Scenario 6-2 Suppose demand for a product is given by the equation and supply for the product is given by the equation -Refer to Scenario 6-2. What are the equilibrium price and equilibrium quantity in the market for this product?

Correct AnswerverifiedThe equilibrium pric...View AnswerShow Answer

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 increase the price paid by buyers of picture frames by

Correct AnswerverifiedShow Answer

The price paid by buyers in a market will decrease if the government

Correct AnswerverifiedShow Answer

Which of the following statements about the effects of rent control is correct?

Correct AnswerverifiedShow Answer

Price ceilings are typically imposed to benefit buyers.

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
The equilibrium pric...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified