Question 1

Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

Accepted Answer

A)  Cellular phones become less popular.
B)  Traditional land line phones become more expensive.
C)  The components used to produce cellular phones become less expensive.
D)  Firms expect the price of cellular phones to fall in the future.E) B) and C)
F) All of the above

Question 2

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Accepted Answer

A)  a sharp increase in the demand for gasoline that was brought on by the Vietnam War.
B)  the government's policy of maintaining a price ceiling on gasoline.
C)  an indifference among U.S. consumers toward conservation.
D)  the lack of substitutes for crude oil.E) All of the above
F) B) and D)

Question 3

Figure 6-28 
-Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)  Buyers and sellers will share the burden of the tax equally.
B)  Buyers will bear more of the burden of the tax than sellers.
C)  Sellers will bear more of the burden of the tax than buyers.
D)  Any of the above is possible in this market.E) A) and C)
F) A) and D)

Question 4

Advocates of the minimum wage

Accepted Answer

A)  deny that the minimum wage produces any adverse effects.
B)  emphasize the benefits to teenagers of increases in the minimum wage.
C)  emphasize the low annual incomes of those who work for the minimum wage.
D)  All of the above are correct.E) C) and D)
F) A) and B)

Question 5

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 6

Figure 6-21 
-Refer to Figure 6-21. In the after-tax equilibrium, how much revenue does the government collect from the tax on this good?

Accepted Answer

A)  $210
B)  $345
C)  $420
D)  $480E) A) and B)
F) A) and D)

Question 7

When a binding price ceiling is imposed on a market,

Accepted Answer

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

Question 8

Price controls

Accepted Answer

A)  always produce a fair outcome.
B)  always produce an efficient outcome.
C)  can generate inequities of their own.
D)  All of the above are correct.E) B) and C)
F) A) and C)

Question 9

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

Question 10

Figure 6-27
This figure shows the market demand and market supply curves for good Z. 
-Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)  $16
B)  between $16 and $20
C)  between $20 and $22
D)  $22E) A) and C)
F) B) and D)

Question 11

If the government removes a binding price floor from a market, then the price received by sellers will

Accepted Answer

A)  decrease, and the quantity sold in the market will decrease.
B)  decrease, and the quantity sold in the market will increase.
C)  increase, and the quantity sold in the market will decrease.
D)  increase, and the quantity sold in the market will increase.E) C) and D)
F) B) and D)

Question 12

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 floors would be binding in this market?

Accepted Answer

A)  $3
B)  $4
C)  $5
D)  $6E) C) and D)
F) All of the above

Question 13

If a nonbinding price floor is imposed on a market, then the

Accepted Answer

A)  quantity sold in the market will decrease.
B)  quantity sold in the market will stay the same.
C)  price in the market will increase.
D)  price in the market will decrease.E) All of the above
F) B) and C)

Question 14

The minimum wage

Accepted Answer

A)  is an example of a price ceiling.
B)  has its greatest impact on middle-aged and immigrant workers.
C)  does not apply to unpaid internships.
D)  does not affect the quantity of labor demanded; it only affects the quantity of labor supplied.E) B) and C)
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) C) and D)
F) All of the above

Question 16

Table 6-5 
-Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus (or shortage)  in this market?

Accepted Answer

A)  0 units
B)  30 units
C)  45 units
D)  75 unitsE) B) and D)
F) B) and C)

Question 17

If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers.

Accepted Answer

A) True 
 B)False

Question 18

Figure 6-22 
-Refer to Figure 6-22. As the figure is drawn, who sends the tax payment to the government?

Accepted Answer

A)  The buyers send the tax payment.
B)  The sellers send the tax payment.
C)  A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers.
D)  The question of who sends the tax payment cannot be determined from the graph.E) All of the above
F) C) and D)

Question 19

​Figure 6-33
The diagram shows the effect of a tax as measured by the distance between J and K. 
-Refer to Figure 6-33. Based upon the diagram,

Accepted Answer

A)  ​the incidence of the tax falls more heavily on buyers.
B)  ​the incidence of the tax falls more heavily on sellers.
C)  ​the incidence of the tax is shared equally by both buyers and sellers.
D)  ​the incidence of the tax cannot be determined based upon the information in the diagram.E) C) and D)
F) B) and C)

Question 20

How is the burden of a tax divided? (i) 
When the tax is levied on the sellers, the sellers bear a higher proportion of the tax burden.
(ii) 
When the tax is levied on the buyers, the buyers bear a higher proportion of the tax burden.
(iii) 
Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear an equal proportion of the tax burden.
(iv) 
Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear some proportion of the tax burden.

Accepted Answer

A)  (i)  and (ii)  only
B)  (iv)  only
C)  (i) , (ii) , and (iii)  only
D)  (i) , (ii) , and (iv)  onlyE) All of the above
F) C) and D)

Exam 6: Supply, Demand, and Government Policies

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 floors would be binding in this market?

Correct Answer
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When a binding price ceiling is imposed on a market,

Correct Answer
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Table 6-5 -Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus (or shortage) in this market?

Correct Answer
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Figure 6-21 -Refer to Figure 6-21. In the after-tax equilibrium, how much revenue does the government collect from the tax on this good?

Correct Answer
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Price controls are usually enacted

Correct Answer
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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 Answer
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A price floor set at...
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Figure 6-22 -Refer to Figure 6-22. As the figure is drawn, who sends the tax payment to the government?

Correct Answer
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If a nonbinding price floor is imposed on a market, then the

Correct Answer
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If the government removes a binding price floor from a market, then the price received by sellers will

Correct Answer
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Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

Correct Answer
verified

If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers.

Correct Answer
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Price controls

Correct Answer
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Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Correct Answer
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Figure 6-33 The diagram shows the effect of a tax as measured by the distance between J and K. -Refer to Figure 6-33. Based upon the diagram,

Correct Answer
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Advocates of the minimum wage

Correct Answer
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The minimum wage

Correct Answer
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Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Correct Answer
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Rent control

Correct Answer
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Correct Answer
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Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

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

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 floors would be binding in this market?

Correct AnswerverifiedShow Answer

When a binding price ceiling is imposed on a market,

Correct AnswerverifiedShow Answer

Table 6-5 -Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus (or shortage) in this market?

Correct AnswerverifiedShow Answer

Figure 6-21 -Refer to Figure 6-21. In the after-tax equilibrium, how much revenue does the government collect from the tax on this good?

Correct AnswerverifiedShow Answer

Price controls are usually enacted

Correct AnswerverifiedShow Answer

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

Figure 6-22 -Refer to Figure 6-22. As the figure is drawn, who sends the tax payment to the government?

Correct AnswerverifiedShow Answer

If a nonbinding price floor is imposed on a market, then the

Correct AnswerverifiedShow Answer

If the government removes a binding price floor from a market, then the price received by sellers will

Correct AnswerverifiedShow Answer

Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

Correct AnswerverifiedShow Answer

If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers.

Correct AnswerverifiedShow Answer

Price controls

Correct AnswerverifiedShow Answer

Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Correct AnswerverifiedShow Answer

​Figure 6-33 The diagram shows the effect of a tax as measured by the distance between J and K. -Refer to Figure 6-33. Based upon the diagram,

Correct AnswerverifiedShow Answer

Advocates of the minimum wage

Correct AnswerverifiedShow Answer

The minimum wage

Correct AnswerverifiedShow Answer

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Correct AnswerverifiedShow Answer

Rent control

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

Correct AnswerverifiedShow Answer

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A price floor set at...
View Answer

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Figure 6-33 The diagram shows the effect of a tax as measured by the distance between J and K. -Refer to Figure 6-33. Based upon the diagram,

Correct Answer
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