Question 1

Figure 6-24
Suppose the government imposes a $2 on this market. 
-Refer to Figure 6-24. The buyers will bear a higher share of the tax burden than sellers if the demand is

Accepted Answer

A)  D1, and the supply is S1.
B)  D2, and the supply is S1.
C)  D1, and the supply is S2.
D)  D2, and the supply is S2.E) A) and B)
F) A) and C)

Question 2

Figure 6-8 1 dollars per unit for that quantity and sellers are willing and able to accept a minimum of P2 dollars per unit for that quantity. If P1 - P2 = $3, then the price control is A) a price ceiling of $2.00. B) a price ceiling of $5.00. C) a price floor of $5.00. D) either a price ceiling of $2.00 or a price floor of $5.00." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 6-8. When a certain price control is imposed on this market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P1 dollars per unit for that quantity and sellers are willing and able to accept a minimum of P2 dollars per unit for that quantity. If P1 - P2 = $3, then the price control is

Accepted Answer

A)  a price ceiling of $2.00.
B)  a price ceiling of $5.00.
C)  a price floor of $5.00.
D)  either a price ceiling of $2.00 or a price floor of $5.00.E) B) and D)
F) B) and C)

Question 3

In the short run, rent control causes the quantity supplied

Accepted Answer

A)  and quantity demanded to fall.
B)  to fall and quantity demanded to rise.
C)  to rise and quantity demanded to fall.
D)  and quantity demanded to rise.E) A) and C)
F) B) and D)

Question 4

The price received by sellers in a market will increase if the government decreases a

Accepted Answer

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

Question 5

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 detect inefficiencies in a market.
D)  All of the above are correct.E) None of the above
F) All of the above

Question 6

A price floor 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) A) and D)
F) All of the above

Question 7

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

Accepted Answer

A) True 
 B)False

Question 8

If a tax is levied on the sellers of flour, then

Accepted Answer

A)  buyers will bear the entire burden of the tax.
B)  sellers will bear the entire burden of the tax.
C)  buyers and sellers will share the burden of the tax.
D)  the government will bear the entire burden of the tax.E) None of the above
F) All of the above

Question 9

As rationing mechanisms, prices

Accepted Answer

A)  and long lines are efficient.
B)  are efficient, but long lines are inefficient.
C)  are inefficient, but long lines are efficient.
D)  and long lines are inefficient.E) B) and C)
F) All of the above

Question 10

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Accepted Answer

A) True 
 B)False

Question 11

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 D)
F) C) and D)

Question 12

Price is the rationing mechanism in a free, competitive market.

Accepted Answer

A) True 
 B)False

Question 13

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A)  buyers will bear a greater burden of the tax than the sellers.
B)  sellers will bear a greater burden of the tax than the buyers.
C)  buyers and sellers are likely to share the burden of the tax equally.
D)  buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.E) A) and B)
F) All of the above

Question 14

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Accepted Answer

A) True 
 B)False

Question 15

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Accepted Answer

A) True 
 B)False

Question 16

The United States is the only country in the world with minimum-wage laws.

Accepted Answer

A) True 
 B)False

Question 17

Figure 6-18 
-Refer to Figure 6-18. How much tax revenue does this tax generate for the government?

Accepted Answer

A)  $75
B)  $125
C)  $175
D)  $300E) A) and B)
F) A) and C)

Question 18

A tax on buyers shifts the demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 19

Figure 6-8 
-Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Accepted Answer

A)  no surplus of the good.
B)  a surplus of 20 units of the good.
C)  a surplus of 30 units of the good.
D)  a surplus of 55 units of the good.E) B) and C)
F) A) and C)

Question 20

When a tax is imposed on a good, the result is always a shortage of the good.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

The price received by sellers in a market will increase if the government decreases a

Correct Answer
verified

As rationing mechanisms, prices

Correct Answer
verified

In the short run, rent control causes the quantity supplied

Correct Answer
verified

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Correct Answer
verified

Price is the rationing mechanism in a free, competitive market.

Correct Answer
verified

Figure 6-18 -Refer to Figure 6-18. How much tax revenue does this tax generate for the government?

Correct Answer
verified

Figure 6-24 Suppose the government imposes a $2 on this market. -Refer to Figure 6-24. The buyers will bear a higher share of the tax burden than sellers if the demand is

Correct Answer
verified

A price floor is binding when it is set

Correct Answer
verified

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Correct Answer
verified

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Correct Answer
verified

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Correct Answer
verified

Correct Answer
verified

If a tax is levied on the sellers of flour, then

Correct Answer
verified

A price floor is

Correct Answer
verified

The United States is the only country in the world with minimum-wage laws.

Correct Answer
verified

A tax on buyers shifts the demand curve to the right.

Correct Answer
verified

When a tax is imposed on a good, the result is always a shortage of the good.

Correct Answer
verified

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

Correct Answer
verified

Price controls are usually enacted

Correct Answer
verified

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

The price received by sellers in a market will increase if the government decreases a

Correct AnswerverifiedShow Answer

As rationing mechanisms, prices

Correct AnswerverifiedShow Answer

In the short run, rent control causes the quantity supplied

Correct AnswerverifiedShow Answer

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Correct AnswerverifiedShow Answer

Price is the rationing mechanism in a free, competitive market.

Correct AnswerverifiedShow Answer

Figure 6-18 -Refer to Figure 6-18. How much tax revenue does this tax generate for the government?

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Figure 6-24 Suppose the government imposes a $2 on this market. -Refer to Figure 6-24. The buyers will bear a higher share of the tax burden than sellers if the demand is

Correct AnswerverifiedShow Answer

A price floor is binding when it is set

Correct AnswerverifiedShow Answer

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Correct AnswerverifiedShow Answer

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Correct AnswerverifiedShow Answer

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a tax is levied on the sellers of flour, then

Correct AnswerverifiedShow Answer

A price floor is

Correct AnswerverifiedShow Answer

The United States is the only country in the world with minimum-wage laws.

Correct AnswerverifiedShow Answer

A tax on buyers shifts the demand curve to the right.

Correct AnswerverifiedShow Answer

When a tax is imposed on a good, the result is always a shortage of the good.

Correct AnswerverifiedShow Answer

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

Correct AnswerverifiedShow Answer

Price controls are usually enacted

Correct AnswerverifiedShow Answer

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Correct AnswerverifiedShow Answer

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