Question 1

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets,then fewer airline tickets will be sold than at the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 2

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

Question 3

Figure 6-2
Panel (a) Panel (b)   
-Refer to Figure 6-2.A binding price floor is shown in

Accepted Answer

A)   both panel (a) and panel (b) .
B)   panel (a) but not panel (b) .
C)   panel (b) but not panel (a) .
D)   neither panel (a) nor panel (b) .E) C) and D)
F) All of the above

Question 4

Advocates of the minimum wage admit that it has some adverse effects,but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Accepted Answer

A) True 
 B)False

Question 5

Rent control may lead to lower rents for those who find housing,but the quality of the housing may also be lower.

Accepted Answer

A) True 
 B)False

Question 6

If the demand curve is very inelastic and the supply curve is very elastic 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 7

Suppose that in a particular market,the supply curve is highly elastic and the demand 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) All of the above
F) None of the above

Question 8

A binding minimum wage creates unemployment.

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-11 
-Refer to Figure 6-11.The price paid by buyers after the tax is imposed is

Accepted Answer

A)   $2.50.
B)   $3.50.
C)   $5.00.
D)   $6.00.E) B) and D)
F) All of the above

Question 10

If the government removes a tax on a good,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 decrease.
C)   decrease and the price received by sellers will increase.
D)   decrease and the price received by sellers will decrease.E) B) and C)
F) All of the above

Question 11

Table 6-2
 
-Refer to Table 6-2.Which of the following statements is correct?

Accepted Answer

A)   A price floor set at $20 will be binding and will result in a surplus of 50 units.
B)   A price floor set at $20 will be binding and will result in a surplus of 100 units.
C)   A price floor set at $20 will be binding and will result in a surplus of 250 units.
D)   A price floor set at $20 will not be binding.E) B) and C)
F) A) and D)

Question 12

A binding price floor will reduce a firm's total revenue

Accepted Answer

A)   always.
B)   when demand is elastic.
C)   when demand is inelastic.
D)   never.E) None of the above
F) C) and D)

Question 13

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Accepted Answer

A) True 
 B)False

Question 14

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 15

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) All of the above
F) A) and D)

Question 16

Which of the following is not correct?

Accepted Answer

A)   Some states in the U.S.mandate minimum wages above the federal level.
B)   Most European nations have minimum-wage laws.
C)   The U.S.minimum wage is significantly higher than the minimum wages in France and the United Kingdom.
D)   The U.S.Congress first instituted a minimum wage with the Fair Labor Standards Act.E) A) and D)
F) B) and D)

Question 17

A tax on sellers increases supply.

Accepted Answer

A) True 
 B)False

Question 18

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

Question 19

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 20

If a tax is levied on the sellers of a product,then there will be a(n)

Accepted Answer

A)   downward shift of the demand curve.
B)   upward shift of the demand curve.
C)   movement up and to the left along the demand curve.
D)   movement down and to the right along the demand curve.E) B) and C)
F) A) and D)

Exam 6: Supply, Demand, and Government Policies

If the government removes a tax on a good,then the price paid by buyers will

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Table 6-2 -Refer to Table 6-2.Which of the following statements is correct?

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

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

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A tax on sellers increases supply.

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Rent control may lead to lower rents for those who find housing,but the quality of the housing may also be lower.

Correct AnswerverifiedShow Answer

If the demand curve is very inelastic and the supply curve is very elastic 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

Figure 6-11 -Refer to Figure 6-11.The price paid by buyers after the tax is imposed is

Correct AnswerverifiedShow Answer

A binding price floor will reduce a firm's total revenue

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Correct AnswerverifiedShow Answer

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

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

If a tax is levied on the sellers of a product,then there will be a(n)

Correct AnswerverifiedShow Answer

A binding minimum wage creates unemployment.

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Which of the following is not correct?

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If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets,then fewer airline tickets will be sold than at the market equilibrium.

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

Figure 6-2 Panel (a) Panel (b) -Refer to Figure 6-2.A binding price floor is shown in

Correct AnswerverifiedShow Answer

Advocates of the minimum wage admit that it has some adverse effects,but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Correct AnswerverifiedShow Answer

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