Question 1

Figure 6-31 
-Refer to Figure 6-31. If the government set a price ceiling at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $15 wou...

Question 2

Figure 6-7 
-Refer to Figure 6-7. Which of the following price controls would cause a surplus of 20 units of the good?

Accepted Answer

A)   a price ceiling set at $6
B)   a price ceiling set at $5
C)   a price floor set at $9
D)   a price floor set at $8E) A) and B)
F) None of the above

Question 3

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would

Accepted Answer

A)   shift the supply curve upward by less than 50 cents.
B)   raise the equilibrium price by 50 cents.
C)   create a 50-cent tax burden each for buyers and sellers.
D)   discourage market activity.E) B) and C)
F) A) and B)

Question 4

If the supply curve is more price elastic than the demand curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.

Accepted Answer

When the supply curve is more price elas...

Question 5

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

Question 6

Figure 6-22 
-Refer to Figure 6-22. Sellers pay how much of the tax per unit?

Accepted Answer

A)   $0.50.
B)   $1.50.
C)   $3.00.
D)   $5.00.E) C) and D)
F) A) and B)

Question 7

A binding minimum wage creates a shortage of labor.

Accepted Answer

A) True 
 B)False

Question 8

Rent control

Accepted Answer

A)   is an example of a price ceiling.
B)   leads to a larger shortage of apartments in the long run than in the short run.
C)   leads to lower rents and, in the long run, to lower-quality housing.
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 9

Rent control policies tend to cause

Accepted Answer

A)   relatively smaller shortages in the short run than in the long run because supply and demand tends to be more elastic in the short run than in the long run.
B)   relatively larger shortages in the short run than in the long run because supply and demand tends to be more elastic in the short run than in the long run.
C)   relatively larger shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run.
D)   relatively smaller shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run.E) A) and C)
F) A) and D)

Question 10

Figure 6-26 
-Refer to Figure 6-26. How much tax revenue does this tax produce for the government?

Accepted Answer

A)   $480
B)   $640
C)   $360
D)   $120E) A) and B)
F) A) and C)

Question 11

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

Accepted Answer

A)   be binding and will result in a shortage of 75 units.
B)   be binding and will result in a shortage of 200 units.
C)   be binding and will result in a shortage of 125 units.
D)   not be binding.E) None of the above
F) A) and B)

Question 12

Table 6-6
 
-Refer to Table 6-6. If the government set a price ceiling at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $4 woul...

Question 13

A price ceiling set below the equilibrium price causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 14

A price floor is

Accepted Answer

A)   a legal minimum on the price at which a good can be sold.
B)   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 floor.
C)   a source of inefficiency in a market.
D)   All of the above are correct.E) A) and C)
F) B) and C)

Question 15

When OPEC raised the price of crude oil in the 1970s, it caused the

Accepted Answer

A)   supply of gasoline to decrease.
B)   quantity of gasoline demanded to decrease.
C)   equilibrium price of gasoline to increase.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 16

Table 6-3
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $2 above the equilibrium price in this market.
 
-Refer to Table 6-3. Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is

Accepted Answer

A)   $2.
B)   $3.
C)   $4.
D)   $5.E) All of the above
F) B) and C)

Question 17

Figure 6-5 
-Refer to Figure 6-5. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Accepted Answer

A)   binding and creates a surplus of 60 units of the good.
B)   binding and creates a surplus of 20 units of the good.
C)   not binding but creates a surplus of 40 units of the good.
D)   not binding, and there will be no surplus or shortage of the good.E) All of the above
F) None of the above

Question 18

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) A) and B)
F) A) and C)

Question 19

Figure 6-21 
-Refer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax in the same amount per unit as shown in the graph) . Relative to the tax on sellers, the tax on buyers would result in

Accepted Answer

A)   buyers bearing a larger share of the tax burden.
B)   sellers bearing a smaller share of the tax burden.
C)   the same amount of tax revenue for the government.
D)   Both a)  and b)  are correct.E) None of the above
F) A) and D)

Question 20

Figure 6-13
This figure shows the market demand and market supply curves for good X. 
-Refer to Figure 6-13. Which of the following price ceilings would be binding in this market?

Accepted Answer

A)   $4
B)   $5
C)   $6
D)   $7E) All of the above
F) C) and D)

Exam 6: Supply, Demand, and Government Policies

A price floor is

Correct Answer
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If the supply curve is more price elastic than the demand curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.

Correct Answer
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When the supply curve is more price elas...
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Table 6-6 -Refer to Table 6-6. If the government set a price ceiling at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

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A price ceiling set at $4 woul...
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Figure 6-26 -Refer to Figure 6-26. How much tax revenue does this tax produce for the government?

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A price ceiling set below the equilibrium price causes a shortage in the market.

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A binding minimum wage creates a shortage of labor.

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Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a surplus of 20 units of the good?

Correct Answer
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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?

Correct Answer
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Table 6-2 -Refer to Table 6-2. A price ceiling set at $20 will

Correct Answer
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Rent control policies tend to cause

Correct Answer
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When OPEC raised the price of crude oil in the 1970s, it caused the

Correct Answer
verified

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would

Correct Answer
verified

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct Answer
verified
A price ceiling set at $15 wou...
View Answer

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following price ceilings would be binding in this market?

Correct Answer
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Figure 6-5 -Refer to Figure 6-5. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Correct Answer
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Rent control

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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

Correct Answer
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Figure 6-21 -Refer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax in the same amount per unit as shown in the graph) . Relative to the tax on sellers, the tax on buyers would result in

Correct Answer
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Figure 6-22 -Refer to Figure 6-22. Sellers pay how much of the tax per unit?

Correct Answer
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Correct Answer
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Exam 6: Supply, Demand, and Government Policies

A price floor is

Correct AnswerverifiedShow Answer

If the supply curve is more price elastic than the demand curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.

Correct AnswerverifiedWhen the supply curve is more price elas...View AnswerShow Answer

Table 6-6 -Refer to Table 6-6. If the government set a price ceiling at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set at $4 woul...View AnswerShow Answer

Figure 6-26 -Refer to Figure 6-26. How much tax revenue does this tax produce for the government?

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A price ceiling set below the equilibrium price causes a shortage in the market.

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A binding minimum wage creates a shortage of labor.

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Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a surplus of 20 units of the good?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Rent control policies tend to cause

Correct AnswerverifiedShow Answer

When OPEC raised the price of crude oil in the 1970s, it caused the

Correct AnswerverifiedShow Answer

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would

Correct AnswerverifiedShow Answer

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set at $15 wou...View AnswerShow Answer

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following price ceilings would be binding in this market?

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Figure 6-5 -Refer to Figure 6-5. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Correct AnswerverifiedShow Answer

Rent control

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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

Correct AnswerverifiedShow Answer

Figure 6-21 -Refer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax in the same amount per unit as shown in the graph) . Relative to the tax on sellers, the tax on buyers would result in

Correct AnswerverifiedShow Answer

Figure 6-22 -Refer to Figure 6-22. Sellers pay how much of the tax per unit?

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Correct AnswerverifiedShow Answer

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When the supply curve is more price elas...
View Answer

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A price ceiling set at $4 woul...
View Answer

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A price ceiling set at $15 wou...
View Answer

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