Question 1

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

Accepted Answer

With a $6 tax per unit, the bu...

Question 2

Will a binding price floor result in a shortage or a surplus in the market?

Accepted Answer

A binding price floo...

Question 3

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

Question 4

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Accepted Answer

A) True 
 B)False

Question 5

The tax burden will fall most heavily on sellers of the good when the demand curve

Accepted Answer

A)   is relatively steep, and the supply curve is relatively flat.
B)   is relatively flat, and the supply curve is relatively steep.
C)   and the supply curve are both relatively flat.
D)   and the supply curve are both relatively steep.E) B) and C)
F) A) and B)

Question 6

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 the

Accepted Answer

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

Question 7

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

Accepted Answer

A)   U.S. government regulations pertaining to the price of gasoline.
B)   the Organization of Petroleum Exporting Countries OPE
C)  .
C)   major oil companies operating in the U.S.
D)   consumers who bought gasoline frequently, even when their cars' gasoline tanks were nearly full.E) B) and C)
F) A) and B)

Question 8

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.

Accepted Answer

A) True 
 B)False

Question 9

Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because

Accepted Answer

A)   with rent control, the government guarantees landlords a minimum level of profit.
B)   they become resigned to the fact that many of their apartments are going to be vacant at any given time.
C)   with shortages and waiting lists, they have no incentive to maintain and improve their property.
D)   with rent control, it becomes the government's responsibility to maintain rental housing.E) None of the above
F) All of the above

Question 10

A binding minimum wage creates a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 11

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A)   every seller in the market benefits.
B)   all buyers and sellers benefit.
C)   every seller who wants to sell the good will be able to do so, but only if he appeals to the personal biases of the buyers.
D)   some sellers will not be able to sell any amount of the good.E) B) and C)
F) A) and B)

Question 12

If a price ceiling is not binding, then

Accepted Answer

A)   there will be a surplus in the market.
B)   there will be a shortage in the market.
C)   the market will be less efficient than it would be without the price ceiling.
D)   there will be no effect on the market price or quantity sold.E) B) and D)
F) All of the above

Question 13

Figure 6-32 
-Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at $55 would...

Question 14

Figure 6-25 
-Refer to Figure 6-25. The effective price that sellers receive after the tax is imposed is

Accepted Answer

A)   $5.
B)   $6.
C)   $7.
D)   $8.E) None of the above
F) B) and D)

Question 15

Figure 6-18
The vertical distance between points A and B represents the tax in the market. 
-Refer to Figure 6-18. The amount of the tax per unit is

Accepted Answer

A)   $6.
B)   $8.
C)   $14.
D)   $18.E) C) and D)
F) A) and D)

Question 16

The United States is the only country in the world with minimum-wage laws.

Accepted Answer

A) True 
 B)False

Question 17

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

Accepted Answer

A) True 
 B)False

Question 18

The presence of a price control in a market for a good or service usually is an indication that

Accepted Answer

A)   an insufficient quantity of the good or service was being produced in that market to meet the public's need.
B)   the usual forces of supply and demand were not able to establish an equilibrium price in that market.
C)   policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers.
D)   policymakers correctly believed that price controls would generate no inequities of their own once imposed.E) B) and C)
F) A) and B)

Question 19

Which of the following is not a result of rent control?

Accepted Answer

A)   fewer new apartments offered for rent
B)   less maintenance provided by landlords
C)   bribery
D)   higher quality housingE) B) and C)
F) None of the above

Question 20

If a tax is levied on the buyers of a product, then there will be an)

Accepted Answer

A)   upward shift of the demand curve.
B)   downward 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) A) and B)
F) A) and C)

Exam 6: Supply, Demand, and Government Policies

Figure 6-25 -Refer to Figure 6-25. The effective price that sellers receive after the tax is imposed is

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A binding minimum wage creates a surplus of labor.

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Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because

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The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

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The United States is the only country in the world with minimum-wage laws.

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If a tax is levied on the buyers of a product, then there will be an)

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Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

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Will a binding price floor result in a shortage or a surplus in the market?

Correct AnswerverifiedA binding price floo...View AnswerShow Answer

If a price ceiling is not binding, then

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The tax burden will fall most heavily on sellers of the good when the demand curve

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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, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

Correct AnswerverifiedWith a $6 tax per unit, the bu...View AnswerShow Answer

When a binding price floor is imposed on a market to benefit sellers,

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Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The amount of the tax per unit is

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The presence of a price control in a market for a good or service usually is an indication that

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A binding 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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Figure 6-32 -Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price floor set at $55 would...View AnswerShow Answer

Which of the following is not a result of rent control?

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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 the

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Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

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Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.

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A binding price floo...
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With a $6 tax per unit, the bu...
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A price floor set at $55 would...
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