Question 1

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-15 
-Refer to Figure 6-15.Suppose a tax of $5 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)   $5
B)   between $5 and $10
C)   between $10 and $14
D)   $14E) All of the above
F) B) and C)

Question 3

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

Accepted Answer

A)   the buyers will bear a greater burden of the tax than the sellers.
B)   the sellers will bear a greater burden of the tax than the buyers.
C)   the buyers and sellers are likely to share the burden of the tax equally.
D)   the 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) B) and D)
F) All of the above

Question 4

Figure 6-1
Panel (a) Panel (b)   
-Refer to Figure 6-1.The situation in panel (a) may be described as one in which

Accepted Answer

A)   the price ceiling is not binding.
B)   the price ceiling really functions as a price floor.
C)   a surplus of the good will be observed.
D)   Both (b) and (c) are correct.E) A) and C)
F) A) and B)

Question 5

A binding minimum wage

Accepted Answer

A)   alters both the quantity demanded and quantity supplied of labor.
B)   affects only the quantity of labor demanded;it does not affect the quantity of labor supplied.
C)   has no effect on the quantity of labor demanded or the quantity of labor supplied.
D)   causes only temporary unemployment,since the market will adjust and eliminate any temporary surplus of workers.E) B) and D)
F) B) and C)

Question 6

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

Question 7

Table 6-1
 
-Refer to Table 6-1.Suppose the government imposes a price floor of $1 on this market.What will be the size of the surplus in this market?

Accepted Answer

A)   0 units
B)   2 units
C)   8 units
D)   10 unitsE) A) and B)
F) A) and C)

Question 8

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-5 
-Refer to Figure 6-5.If the government imposes a price floor of $5 on this market,then the result is a

Accepted Answer

A)   surplus of 0 units of the good.
B)   surplus of 20 units of the good.
C)   surplus of 30 units of the good.
D)   surplus of 55 units of the good.E) None of the above
F) B) and D)

Question 10

A tax on sellers shifts the supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 11

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

Question 12

Which of the following was not a result of the luxury tax imposed by Congress in 1990?

Accepted Answer

A)   The larger part of the tax burden fell on sellers.
B)   A larger part of the tax burden fell on the middle class than on the rich.
C)   Even the wealthy demanded fewer luxury goods.
D)   The tax was never repealed or even modified.E) None of the above
F) A) and B)

Question 13

You have responsibility for economic policy in the country of Freedonia.Recently,the neighboring country of Sylvania has cut off all exports of oranges to Freedonia.Harpo,who is one of your advisors,suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges.Chico,another one of your advisors,argues that without a binding price floor,a shortage will certainly develop.Zeppo,a third advisor,says that the best way to avoid a shortage of oranges is to take no action at all.Which of your three advisors is most likely to have studied economics?

Accepted Answer

A)   Harpo
B)   Chico
C)   Zeppo
D)   Apparently,all three advisors have studied economics,but their views on positive economics are different.E) B) and D)
F) B) and C)

Question 14

Figure 6-5 
-Refer to Figure 6-5.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) A) and B)
F) A) and C)

Question 15

Figure 6-12 
-Refer to Figure 6-12.For every unit of the good that is sold,

Accepted Answer

A)   sellers are required to send one dollar to the government and buyers are required to send two dollars to the government.
B)   sellers are required to send two dollars to the government and buyers are required to send one dollar to the government.
C)   sellers are required to send three dollars to the government and buyers are required to send nothing to the government.
D)   sellers are required to send nothing to the government and buyers are required to send two dollars to the government.E) A) and B)
F) A) and D)

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

In the United States,before OPEC increased the price of crude oil in 1973,there was

Accepted Answer

A)   no price ceiling on gasoline.
B)   a nonbinding price ceiling on gasoline.
C)   a binding price ceiling on gasoline.
D)   a nonbinding price floor on gasoline.E) All of the above
F) A) and C)

Question 19

All buyers benefit from a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 20

One common example of a price ceiling is rent control.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Figure 6-12 -Refer to Figure 6-12.For every unit of the good that is sold,

Correct Answer
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A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded.

Correct Answer
verified

Which of the following was not a result of the luxury tax imposed by Congress in 1990?

Correct Answer
verified

Figure 6-5 -Refer to Figure 6-5.The price of the good would continue to serve as the rationing mechanism if

Correct Answer
verified

A binding minimum wage

Correct Answer
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Figure 6-15 -Refer to Figure 6-15.Suppose a tax of $5 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

Correct Answer
verified

In the United States,before OPEC increased the price of crude oil in 1973,there was

Correct Answer
verified

One common example of a price ceiling is rent control.

Correct Answer
verified

Correct Answer
verified

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Correct Answer
verified

When policymakers set prices by legal decree,they

Correct Answer
verified

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

Correct Answer
verified

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1.The situation in panel (a) may be described as one in which

Correct Answer
verified

Table 6-1 -Refer to Table 6-1.Suppose the government imposes a price floor of $1 on this market.What will be the size of the surplus in this market?

Correct Answer
verified

Figure 6-5 -Refer to Figure 6-5.If the government imposes a price floor of $5 on this market,then the result is a

Correct Answer
verified

Price ceilings are typically imposed to benefit buyers.

Correct Answer
verified

A tax on sellers shifts the supply curve to the left.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

All buyers benefit from a binding price ceiling.

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

Figure 6-12 -Refer to Figure 6-12.For every unit of the good that is sold,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following was not a result of the luxury tax imposed by Congress in 1990?

Correct AnswerverifiedShow Answer

Figure 6-5 -Refer to Figure 6-5.The price of the good would continue to serve as the rationing mechanism if

Correct AnswerverifiedShow Answer

A binding minimum wage

Correct AnswerverifiedShow Answer

Figure 6-15 -Refer to Figure 6-15.Suppose a tax of $5 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

Correct AnswerverifiedShow Answer

In the United States,before OPEC increased the price of crude oil in 1973,there was

Correct AnswerverifiedShow Answer

One common example of a price ceiling is rent control.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Correct AnswerverifiedShow Answer

When policymakers set prices by legal decree,they

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

Correct AnswerverifiedShow Answer

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1.The situation in panel (a) may be described as one in which

Correct AnswerverifiedShow Answer

Table 6-1 -Refer to Table 6-1.Suppose the government imposes a price floor of $1 on this market.What will be the size of the surplus in this market?

Correct AnswerverifiedShow Answer

Figure 6-5 -Refer to Figure 6-5.If the government imposes a price floor of $5 on this market,then the result is a

Correct AnswerverifiedShow Answer

Price ceilings are typically imposed to benefit buyers.

Correct AnswerverifiedShow Answer

A tax on sellers shifts the supply curve to the left.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

All buyers benefit from a binding price ceiling.

Correct AnswerverifiedShow Answer

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