Question 1

The goal of rent control is to

Accepted Answer

A)   facilitate controlled economic experiments in urban areas.
B)   help landlords by assuring them a low vacancy rate for their apartments.
C)   help the poor by assuring them an adequate supply of apartments.
D)   help the poor by making housing more affordable.E) B) and D)
F) B) and C)

Question 2

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

Question 3

Figure 6-26 
-Refer to Figure 6-26. The amount of the tax per unit is

Accepted Answer

A)   $4.
B)   $8.
C)   $14.
D)   $10.E) All of the above
F) B) and D)

Question 4

If a nonbinding price floor is imposed on a market, then the

Accepted Answer

A)   quantity sold in the market will decrease.
B)   quantity sold in the market will stay the same.
C)   price in the market will increase.
D)   price in the market will decrease.E) A) and C)
F) All of the above

Question 5

Table 6-6 
-Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set ...

Question 6

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.E) All of the above
F) B) and C)

Question 7

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, what price will buyers pay per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un...

Question 8

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

Question 9

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

Accepted Answer

A)   binding price ceiling that creates a shortage.
B)   non-binding price ceiling that creates a shortage.
C)   binding price floor that creates a surplus.
D)   non-binding price floor that creates a surplus.E) B) and D)
F) A) and B)

Question 10

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Accepted Answer

A)   less than one-third.
B)   between one-third and one-half.
C)   between one-half and two-thirds.
D)   greater than two-thirds.E) A) and C)
F) B) and C)

Question 11

Figure 6-14 
-Refer to Figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Accepted Answer

A)   binding and creates a shortage of 20 units of the good.
B)   binding and creates a shortage of 40 units of the good.
C)   not binding but creates a shortage of 40 units of the good.
D)   not binding, and there will be no surplus or shortage of the good.E) B) and C)
F) A) and B)

Question 12

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

Accepted Answer

A)   the payment by government of a fraction of a poor family's rent.
B)   higher taxes on rental income earned by landlords.
C)   a policy that prevents landlords from evicting tenants.
D)   a policy that allows government to confiscate residential property for the purpose of commercial development.E) A) and D)
F) All of the above

Question 13

Figure 6-11 
-Refer to Figure 6-11. If the government imposes a price floor at $10, it would be

Accepted Answer

A)   binding if market demand is Demand A or Demand B.
B)   non-binding if market demand is Demand A or Demand B.
C)   binding if market demand is Demand A and non-binding if market demand is Demand B.
D)   non-binding if market demand is Demand A and binding if market demand is Demand B.E) A) and B)
F) A) and C)

Question 14

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

Question 15

A tax burden falls more heavily on the side of the market that

Accepted Answer

A)   has a fewer number of participants.
B)   is more inelastic.
C)   is closer to unit elastic.
D)   is less inelastic.E) B) and C)
F) A) and B)

Question 16

Which of the following would not interfere with market equilibria?

Accepted Answer

A)   a minimum wage
B)   a rent control
C)   a non-binding price floor
D)   a binding price ceilingE) All of the above
F) B) and D)

Question 17

To be binding, a price ceiling must be set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 18

Congress intended that

Accepted Answer

A)   the entire FICA tax be paid by workers.
B)   the entire FICA tax be paid by firms.
C)   one-quarter of the FICA tax be paid by workers, and three-quarters be paid by firms.
D)   half the FICA tax be paid by workers, and half be paid by firms.E) B) and C)
F) C) and D)

Question 19

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Accepted Answer

A)   upward by exactly $1.50.
B)   upward by less than $1.50.
C)   downward by exactly $1.50.
D)   downward by less than $1.50.E) A) and B)
F) C) and D)

Question 20

A price ceiling set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

The goal of rent control is to

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Figure 6-14 -Refer to Figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

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Figure 6-11 -Refer to Figure 6-11. If the government imposes a price floor at $10, it would be

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Which of the following is correct?

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Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

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

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Which of the following would not interfere with market equilibria?

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

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If a nonbinding price floor is imposed on a market, then the

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An alternative to rent-control laws that would not reduce the quantity of housing supplied is

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Figure 6-26 -Refer to Figure 6-26. The amount of the tax per unit is

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A tax burden falls more heavily on the side of the market that

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

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The proportion of minimum-wage earners who are in families with incomes below the poverty line is

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Congress intended that

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A price ceiling set above the equilibrium price causes a surplus in the market.

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To be binding, a price ceiling must be set above the equilibrium price.

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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, what price will buyers pay per unit after the tax is imposed?

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

Table 6-6 -Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set ...View AnswerShow Answer

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

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With a $6 tax per un...
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A price ceiling set ...
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