Question 1

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $4.

Accepted Answer

A) True 
 B)False

Question 2

A binding minimum wage tends to

Accepted Answer

A)   cause a labor surplus.
B)   cause unemployment.
C)   have the greatest impact in the market for teenage labor.
D)   All of the above are correct.E) None of the above
F) B) and C)

Question 3

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

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-29
Suppose the government imposes a $2 on this market. 
-Refer to Figure 6-29. 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 D)
F) All of the above

Question 6

If a binding price floor is imposed on the video game market, then

Accepted Answer

A)   the demand for video games will decrease.
B)   the supply of video games will increase.
C)   a surplus of video games will develop.
D)   All of the above are correct.E) B) and C)
F) All of the above

Question 7

The minimum wage has its greatest impact on the market for

Accepted Answer

A)   female labor.
B)   older labor.
C)   black labor.
D)   teenage labor.E) All of the above
F) B) and D)

Question 8

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

Accepted Answer

With a $6 tax per un...

Question 9

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 B)
F) B) and D)

Question 10

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $20 per ticket, then the

Accepted Answer

A)   demand curve will shift upward by $30, and the price paid by buyers will decrease by less than $30.
B)   demand curve will shift upward by $30, and the price paid by buyers will decrease by $30.
C)   supply curve will shift downward by $30, and the effective price received by sellers will increase by less than $30.
D)   supply curve will shift downward by $30, and the effective price received by sellers will increase by $30.E) A) and B)
F) C) and D)

Question 11

A price floor set above the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 12

In a free, competitive market, what is the rationing mechanism?

Accepted Answer

A)   seller bias
B)   buyer bias
C)   government law
D)   priceE) A) and B)
F) None of the above

Question 13

A nonbinding price ceiling i)  causes a surplus.
Ii)  causes a shortage.
Iii)  is set at a price above the equilibrium price.
Iv)  is set at a price below the equilibrium price.

Accepted Answer

A)   i)  only
B)   iii)  only
C)   i)  and iii)  only
D)   ii)  and iv)  onlyE) C) and D)
F) A) and B)

Question 14

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 B)
F) C) and D)

Question 15

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

Accepted Answer

A) True 
 B)False

Question 16

If a tax is imposed on a market with inelastic demand and elastic supply, then

Accepted Answer

A)   buyers will bear most of the burden of the tax.
B)   sellers will bear most of the burden of the tax.
C)   the burden of the tax will be shared equally between buyers and sellers.
D)   it is impossible to determine how the burden of the tax will be shared.E) None of the above
F) C) and D)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Buyers and sellers always share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 19

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Accepted Answer

A)   the demand for treadmills will increase.
B)   the supply of treadmills will decrease.
C)   a shortage of treadmills will develop.
D)   All of the above are correct.E) B) and D)
F) A) and B)

Question 20

Figure 6-31 
-Refer to Figure 6-31. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at...

Exam 6: Supply, Demand, and Government Policies

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

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

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Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

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

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

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A nonbinding price ceiling i) causes a surplus. Ii) causes a shortage. Iii) is set at a price above the equilibrium price. Iv) is set at a price below the equilibrium price.

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If a tax is imposed on a market with inelastic demand and elastic supply, then

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Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $20 per ticket, then the

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In the short run, rent control causes the quantity supplied

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A binding minimum wage tends to

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A price floor set above the equilibrium price is binding.

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The minimum wage has its greatest impact on the market for

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Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

Correct AnswerverifiedWith a $6 tax per un...View AnswerShow Answer

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $4.

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Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

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

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Buyers and sellers always share the burden of a tax equally.

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If a binding price floor is imposed on the video game market, then

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Figure 6-29 Suppose the government imposes a $2 on this market. -Refer to Figure 6-29. The buyers will bear a higher share of the tax burden than sellers if the demand is

Correct AnswerverifiedShow Answer

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Correct AnswerverifiedShow Answer

In a free, competitive market, what is the rationing mechanism?

Correct AnswerverifiedShow Answer

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A price floor set at...
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With a $6 tax per un...
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