Question 1

Which of the following observations would be consistent with the imposition of a binding price floor on a market? After the price floor becomes effective,

Accepted Answer

A)   a smaller quantity of the good is bought and sold.
B)   a larger quantity of the good is demanded.
C)   a smaller quantity of the good is supplied.
D)   the price falls below the equilibrium price.

Question 2

Figure 6-22 
-Refer to Figure 6-22. Buyers pay how much of the tax per unit?

Accepted Answer

A)   $0.50.
B)   $1.50.
C)   $3.00.
D)   $5.00.

Question 3

Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

Accepted Answer

A) True 
 B)False

Question 4

Not all sellers benefit from a binding price floor.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-23
 
-Refer to Figure 6-23. The price paid by buyers after the tax is imposed is

Accepted Answer

A)   $3.
B)   $4.
C)   $5.
D)   $6.

Question 6

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 $6
B)   a price ceiling set at $5
C)   a price floor set at $9
D)   a price floor set at $8

Question 7

The imposition of a binding price floor on a market

Accepted Answer

A)   causes quantity demanded to be greater than quantity supplied.
B)   causes quantity demanded to be less than quantity supplied.
C)   causes quantity demanded to be equal to quantity supplied.
D)   causes a decrease in demand.

Question 8

A binding price floor causes quantity supplied to be less than quantity demanded.

Accepted Answer

A) True 
 B)False

Question 9

A tax on sellers increases supply.

Accepted Answer

A) True 
 B)False

Question 10

Figure 6-13
This figure shows the market demand and market supply curves for good X. 
-Refer to Figure 6-13. If the government imposes a price ceiling of $4 on this market, then there will be

Accepted Answer

A)   no shortage.
B)   a shortage of 5 units.
C)   a shortage of 10 units.
D)   a shortage of 20 units.

Question 11

Price floors are typically imposed to benefit sellers.

Accepted Answer

A) True 
 B)False

Question 12

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market.
 
-Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is

Accepted Answer

A)   $2.
B)   $3.
C)   $4.
D)   $5.

Question 13

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 14

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

Accepted Answer

A) True 
 B)False

Question 15

Table 6-1
 
-Refer to Table 6-1. Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?

Accepted Answer

A)   0 units
B)   400 units
C)   1200 units
D)   1600 units

Question 16

A key lesson from the payroll tax is that the

Accepted Answer

A)   tax is a tax solely on workers.
B)   tax is a tax solely on firms that hire workers.
C)   tax eliminates any wedge that might exist between the wage that firms pay and the wage that workers receive.
D)   true burden of a tax cannot be legislated.

Question 17

Which of the following is correct?

Accepted Answer

A)   Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage raises the average wage of teenagers by 10 percent.
B)   The drop in teenage employment caused by a 10 percent increase in the minimum wage is not significant.
C)   The minimum wage is more often binding for teenagers than for other members of the labor force.
D)   All firms consistently enforce minimum-wage laws.

Question 18

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Accepted Answer

A) True 
 B)False

Question 19

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

Accepted Answer

A)   He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people.
B)   He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city.
C)   He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted.
D)   He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.

Question 20

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.

Exam 6: Supply, Demand, and Government Policies

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

Correct Answer
verified

A key lesson from the payroll tax is that the

Correct Answer
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A tax on sellers increases supply.

Correct Answer
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Not all sellers benefit from a binding price floor.

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

Correct Answer
verified

Figure 6-22 -Refer to Figure 6-22. Buyers pay how much of the tax per unit?

Correct Answer
verified

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price ceiling of $4 on this market, then there will be

Correct Answer
verified

Price floors are typically imposed to benefit sellers.

Correct Answer
verified

Which of the following is correct?

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
verified

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?

Correct Answer
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The imposition of a binding price floor on a market

Correct Answer
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Which of the following observations would be consistent with the imposition of a binding price floor on a market? After the price floor becomes effective,

Correct Answer
verified

Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a surplus of 20 units of the good?

Correct Answer
verified

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Correct Answer
verified

Correct Answer
verified

A binding price floor causes quantity supplied to be less than quantity demanded.

Correct Answer
verified

Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

Correct Answer
verified

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

Correct Answer
verified

Figure 6-23 -Refer to Figure 6-23. The price paid by buyers after the tax is imposed is

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

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

Correct AnswerverifiedShow Answer

A key lesson from the payroll tax is that the

Correct AnswerverifiedShow Answer

A tax on sellers increases supply.

Correct AnswerverifiedShow Answer

Not all sellers benefit from a binding price floor.

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

Figure 6-22 -Refer to Figure 6-22. Buyers pay how much of the tax per unit?

Correct AnswerverifiedShow Answer

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price ceiling of $4 on this market, then there will be

Correct AnswerverifiedShow Answer

Price floors are typically imposed to benefit sellers.

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?

Correct AnswerverifiedShow Answer

The imposition of a binding price floor on a market

Correct AnswerverifiedShow Answer

Which of the following observations would be consistent with the imposition of a binding price floor on a market? After the price floor becomes effective,

Correct AnswerverifiedShow Answer

Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a surplus of 20 units of the good?

Correct AnswerverifiedShow Answer

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A binding price floor causes quantity supplied to be less than quantity demanded.

Correct AnswerverifiedShow Answer

Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

Correct AnswerverifiedShow Answer

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

Correct AnswerverifiedShow Answer

Figure 6-23 -Refer to Figure 6-23. The price paid by buyers after the tax is imposed is

Correct AnswerverifiedShow Answer

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