Question 1

A tax imposed on the buyers of a good will raise the

Accepted Answer

A)   price paid by buyers and lower the equilibrium quantity.
B)   price paid by buyers and raise the equilibrium quantity.
C)   effective price received by sellers and lower the equilibrium quantity.
D)   effective price received by sellers and raise the equilibrium quantity.E) B) and D)
F) All of the above

Question 2

Lawmakers can decide whether the buyers or the sellers must send a tax to the government,but they cannot legislate the true burden of a tax.

Accepted Answer

A) True 
 B)False

Question 3

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

Question 4

If a price floor is not binding,then it will have no effect on the market.

Accepted Answer

A) True 
 B)False

Question 5

When policymakers set prices by legal decree,they

Accepted Answer

A)   are usually following the advice of mainstream economists.
B)   improve the organization of economic activity.
C)   obscure the signals that normally guide the allocation of society's resources.
D)   are demonstrating a willingness to sacrifice fairness for the sake of a gain in efficiency.E) C) and D)
F) All of the above

Question 6

A binding price floor causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 7

If the government removes a binding price ceiling 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) A) and D)
F) A) and C)

Question 8

A tax on sellers reduces the size of a market.

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-8 
-Refer to Figure 6-8.The price of the good would continue to serve as the rationing mechanism if

Accepted Answer

A)   a price ceiling of $4 is imposed.
B)   a price ceiling of $5 is imposed.
C)   a price floor of $3 is imposed.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 10

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

Accepted Answer

A)   Cellular phones become more popular.
B)   Traditional land line phones become more expensive.
C)   The components used to produce cellular phones become more expensive.
D)   A technological advance makes cellular phone production less expensive.E) A) and B)
F) A) and C)

Question 11

Figure 6-19 
-Refer to Figure 6-19.For every unit of the good that is sold,sellers are required to send

Accepted Answer

A)   one dollar to the government,and buyers are required to send two dollars to the government.
B)   two dollars to the government,and buyers are required to send one dollar to the government.
C)   three dollars to the government,and buyers are required to send nothing to the government.
D)   nothing to the government,and buyers are required to send two dollars to the government.E) A) and D)
F) None of the above

Question 12

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Accepted Answer

A) True 
 B)False

Question 13

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 $4
B)   a price ceiling set at $5
C)   a price floor set at $7
D)   a price floor set at $8E) A) and D)
F) None of the above

Question 14

Suppose there is currently a tax of $50 per ticket on airline tickets.Sellers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then the

Accepted Answer

A)   demand curve will shift upward by $20,and the price paid by buyers will decrease by less than $20.
B)   demand curve will shift upward by $20,and the price paid by buyers will decrease by $20.
C)   supply curve will shift downward by $20,and the effective price received by sellers will increase by less than $20.
D)   supply curve will shift downward by $20,and the effective price received by sellers will increase by $20.E) All of the above
F) A) and D)

Question 15

To say that a price ceiling is nonbinding is to say that the price ceiling

Accepted Answer

A)   results in a surplus.
B)   is set above the equilibrium price.
C)   causes quantity demanded to exceed quantity supplied.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 16

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) None of the above
F) A) and B)

Question 17

Figure 6-19 
-Refer to Figure 6-19.How much tax revenue does this tax produce for the government?

Accepted Answer

A)   $24
B)   $30
C)   $32
D)   $56E) A) and C)
F) C) and D)

Question 18

In the housing market,supply and demand are

Accepted Answer

A)   more elastic in the short run than in the long run,and so rent control leads to a larger shortage of apartments in the short run than in the long run.
B)   more elastic in the short run than in the long run,and so rent control leads to a larger shortage of apartments in the long run than in the short run.
C)   more elastic in the long run than in the short run,and so rent control leads to a larger shortage of apartments in the short run than in the long run.
D)   more elastic in the long run than in the short run,and so rent control leads to a larger shortage of apartments in the long run than in the short run.E) A) and B)
F) All of the above

Question 19

Suppose the government has imposed a price floor on the market for soybeans.Which of the following events could transform the price floor from one that is not binding into one that is binding?

Accepted Answer

A)   Farmers use improved,draught-resistant seeds,which lowers the cost of growing soybeans.
B)   The number of farmers selling soybeans decreases.
C)   Consumers' income increases,and soybeans are a normal good.
D)   The number of consumers buying soybeans increases.E) A) and D)
F) B) and D)

Question 20

States in the U.S.may mandate minimum wages above the federal level.

Accepted Answer

A) True 
 B)False

Exam 6: Supply,demand,and Government Policies

A binding price floor causes a shortage in the market.

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A tax imposed on the buyers of a good will raise the

Correct AnswerverifiedShow Answer

Figure 6-8 -Refer to Figure 6-8.The price of the good would continue to serve as the rationing mechanism if

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Lawmakers can decide whether the buyers or the sellers must send a tax to the government,but they cannot legislate the true burden of a tax.

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In the housing market,supply and demand are

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Figure 6-19 -Refer to Figure 6-19.How much tax revenue does this tax produce for the government?

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

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States in the U.S.may mandate minimum wages above the federal level.

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

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A tax on sellers reduces the size of a market.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a price floor is not binding,then it will have no effect on the market.

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Suppose there is currently a tax of $50 per ticket on airline tickets.Sellers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then the

Correct AnswerverifiedShow Answer

Figure 6-19 -Refer to Figure 6-19.For every unit of the good that is sold,sellers are required to send

Correct AnswerverifiedShow Answer

To say that a price ceiling is nonbinding is to say that the price ceiling

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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?

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

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Suppose the government has imposed a price floor on the market for soybeans.Which of the following events could transform the price floor from one that is not binding into one that is binding?

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When policymakers set prices by legal decree,they

Correct AnswerverifiedShow Answer

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Correct AnswerverifiedShow Answer

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