Question 1

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

Question 2

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

Accepted Answer

A)   increase by less than $5.
B)   increase by exactly $5.
C)   increase by more than $5.
D)   decrease by an indeterminate amount.E) B) and C)
F) A) and B)

Question 3

As a rationing mechanism, discrimination according to seller bias is

Accepted Answer

A)   efficient and fair.
B)   efficient, but potentially unfair.
C)   inefficient, but fair.
D)   inefficient and potentially unfair.E) A) and B)
F) A) and C)

Question 4

The minimum wage is more often binding for teenagers than for other members of the labor force.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-23
 
-Refer to Figure 6-23. The effective price received by sellers after the tax is imposed is

Accepted Answer

A)   $3.
B)   $4.
C)   $5.
D)   $6.E) A) and D)
F) A) and C)

Question 6

Which of the following causes a surplus of a good?

Accepted Answer

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

Question 7

The effects of rent control in the long run include lower rents and lower-quality housing.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-28 
-Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)   less than 20 units
B)   20 units
C)   between 20 units and 35 units
D)   greater than 35 unitsE) A) and D)
F) None of the above

Question 9

Suppose that in a particular market, the demand curve is highly elastic, and the supply 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 10

If a binding price ceiling is imposed on the baby formula market, then

Accepted Answer

A)   the quantity of baby formula demanded will increase.
B)   the quantity of baby formula supplied will decrease.
C)   a shortage of baby formula will develop.
D)   All of the above are correct.E) None of the above
F) A) and D)

Question 11

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, 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 not change.
C)   not change, and the price received by sellers will increase.
D)   not change, and the price received by sellers will not change.E) B) and C)
F) A) and D)

Question 12

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Accepted Answer

A)   the actual tax incidence is unaffected by the legislated tax incidence.
B)   the employer now is required by law to pay more than 50 percent of the tax.
C)   the employee now is required by law to pay more than 50 percent of the tax.
D)   employers are no longer required by law to pay any portion of the tax.E) A) and C)
F) A) and B)

Question 13

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 14

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A)   an enhancement of efficiency.
B)   undesirable rationing mechanisms.
C)   a surplus.
D)   a shortage.E) B) and C)
F) A) and D)

Question 15

Most economists are in favor of price controls as a way of allocating resources in the economy.

Accepted Answer

A) True 
 B)False

Question 16

When a binding price floor is imposed on a market,

Accepted Answer

A)   price no longer serves as a rationing device.
B)   the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor.
C)   only some sellers benefit.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 17

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

Accepted Answer

A)   $4.
B)   $8.
C)   $14.
D)   $10.E) B) and C)
F) None of the above

Question 18

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

Accepted Answer

A)   This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity.
B)   The price paid by buyers is $0.30 per drink more than it was before the tax.
C)   Forty percent of the burden of the tax falls on sellers.
D)   All of the above are correct.E) A) and D)
F) None of the above

Question 19

Scenario 6-1
Suppose that demand in the market for good X is given by the equation  and that supply in the market for good X is given by the equation 
-Refer to Scenario 6-1. If the government set a price floor at $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at...

Question 20

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

The effects of rent control in the long run include lower rents and lower-quality housing.

Correct AnswerverifiedShow Answer

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

Correct AnswerverifiedShow Answer

As a rationing mechanism, discrimination according to seller bias is

Correct AnswerverifiedShow Answer

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

Correct AnswerverifiedShow Answer

The minimum wage is more often binding for teenagers than for other members of the labor force.

Correct AnswerverifiedShow Answer

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Correct AnswerverifiedShow Answer

When a binding price floor is imposed on a market,

Correct AnswerverifiedShow Answer

Figure 6-23 -Refer to Figure 6-23. The effective price received by sellers after the tax is imposed is

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If a binding price ceiling is imposed on the baby formula market, then

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

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Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

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Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

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Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. If the government set a price floor at $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price floor set at...View AnswerShow Answer

An outcome that can result from either a price ceiling or a price floor is

Correct AnswerverifiedShow Answer

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following causes a surplus of a good?

Correct AnswerverifiedShow Answer

Most economists are in favor of price controls as a way of allocating resources in the economy.

Correct AnswerverifiedShow 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 AnswerverifiedShow Answer

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Correct AnswerverifiedShow Answer

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A price floor set at...
View Answer

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