Question 1

Suppose the government has imposed a price ceiling on cellular phones.Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

Accepted Answer

A)   Cellular phones become more popular.
B)   Traditional land line phones become more expensive.
C)   The components used to produce cellular phones become more expensive.
D)   A technological advance makes cellular phone production less expensive.E) B) and C)
F) A) and D)

Question 2

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) All of the above
F) None of the above

Question 3

Price is the rationing mechanism in a free,competitive market.

Accepted Answer

A) True 
 B)False

Question 4

If a tax is levied on the buyers of sugar,then

Accepted Answer

A)   buyers will bear the entire burden of the tax.
B)   sellers will bear the entire burden of the tax.
C)   buyers and sellers will share the burden of the tax.
D)   the government will bear the entire burden of the tax.E) All of the above
F) A) and B)

Question 5

Figure 6-4 
-Refer to Figure 6-4.Which of the following price controls would cause a surplus of 20 units of the good?

Accepted Answer

A)   a price ceiling of $4
B)   a price ceiling of $5
C)   a price floor of $7
D)   a price floor of $8E) A) and C)
F) All of the above

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Table 6-1
 
-Refer to Table 6-1.Suppose the government imposes a price floor of $5 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 D)
F) None of the above

Question 8

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Accepted Answer

A) True 
 B)False

Question 9

Suppose that the demand for picture frames is inelastic and the supply of picture frames is elastic.A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Accepted Answer

A)   less than $0.50.
B)   $0.50.
C)   between $0.50 and $1.
D)   $1.E) B) and D)
F) B) and C)

Question 10

When a tax is placed on the buyers of a product,

Accepted Answer

A)   buyers pay more and sellers receive more than they did before the tax.
B)   buyers pay more and sellers receive less than they did before the tax.
C)   buyers pay less and sellers receive more than they did before the tax.
D)   buyers pay less and sellers receive less than they did before the tax.E) None of the above
F) All of the above

Question 11

The Earned Income Tax Credit is an example of

Accepted Answer

A)   a minimum-wage law.
B)   a price ceiling.
C)   a wage subsidy.
D)   a rent subsidy.E) B) and C)
F) A) and D)

Question 12

Suppose there is currently a tax of $50 per ticket on airline tickets.Sellers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then

Accepted Answer

A)   the demand curve will shift upward by $20,and the effective price received by sellers will increase by $20.
B)   the demand curve will shift upward by $20,and the effective price received by sellers will increase by less than $20.
C)   the supply curve will shift downward by $20,and the price paid by buyers will decrease by $20.
D)   the supply curve will shift downward by $20,and the price paid by buyers will decrease by less than $20.E) A) and D)
F) None of the above

Question 13

A tax on sellers shifts the supply curve but not the demand curve.

Accepted Answer

A) True 
 B)False  True

Question 14

Which of the following is not a short-run effect of rent control on the housing market?

Accepted Answer

A)   reduced rents
B)   a large shortage
C)   a small increase in quantity demanded
D)   a small decrease in quantity suppliedE) B) and D)
F) A) and B)

Question 15

Taxes levied on sellers and taxes levied on buyers are equivalent.

Accepted Answer

A) True 
 B)False

Question 16

A tax on the sellers of TVs

Accepted Answer

A)   leads sellers to supply a smaller quantity at every price.
B)   leads buyers to demand a smaller quantity at every price.
C)   leads sellers to supply a larger quantity at every price.
D)   Both (a) and (b) are correct.E) All of the above
F) B) and C)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Workers with high skills and much experience are not typically affected by the minimum wage.

Accepted Answer

A) True 
 B)False  True

Question 19

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.How many units of the good are sold after the imposition of the price floor?

Accepted Answer

A)   3
B)   9
C)   15
D)   18E) A) and B)
F) C) and D) A

Question 20

Figure 6-11 
-Refer to Figure 6-11.The effective price sellers receive after the tax is imposed is

Accepted Answer

A)   $2.50.
B)   $3.50.
C)   $5.00.
D)   $6.00.E) All of the above
F) None of the above

Exam 6: Supply, Demand, and Government Policies

Suppose the government has imposed a price ceiling on cellular phones.Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

Correct Answer
verified

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

Correct Answer
verified

Price is the rationing mechanism in a free,competitive market.

Correct Answer
verified

If a tax is levied on the buyers of sugar,then

Correct Answer
verified

Figure 6-4 -Refer to Figure 6-4.Which of the following price controls would cause a surplus of 20 units of the good?

Correct Answer
verified

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

Correct Answer
verified

Table 6-1 -Refer to Table 6-1.Suppose the government imposes a price floor of $5 on this market.What will be the size of the surplus in this market?

Correct Answer
verified

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Correct Answer
verified

Suppose that the demand for picture frames is inelastic and the supply of picture frames is elastic.A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Correct Answer
verified

When a tax is placed on the buyers of a product,

Correct Answer
verified

The Earned Income Tax Credit is an example of

Correct Answer
verified

Suppose there is currently a tax of $50 per ticket on airline tickets.Sellers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then

Correct Answer
verified

A tax on sellers shifts the supply curve but not the demand curve.

Correct Answer
verified
True

Which of the following is not a short-run effect of rent control on the housing market?

Correct Answer
verified

Taxes levied on sellers and taxes levied on buyers are equivalent.

Correct Answer
verified

A tax on the sellers of TVs

Correct Answer
verified

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

Correct Answer
verified

Workers with high skills and much experience are not typically affected by the minimum wage.

Correct Answer
verified
True

Correct Answer
verified
A

Figure 6-11 -Refer to Figure 6-11.The effective price sellers receive after the tax is imposed is

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

Suppose the government has imposed a price ceiling on cellular phones.Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Price is the rationing mechanism in a free,competitive market.

Correct AnswerverifiedShow Answer

If a tax is levied on the buyers of sugar,then

Correct AnswerverifiedShow Answer

Figure 6-4 -Refer to Figure 6-4.Which of the following price controls would cause a surplus of 20 units of the good?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 6-1 -Refer to Table 6-1.Suppose the government imposes a price floor of $5 on this market.What will be the size of the surplus in this market?

Correct AnswerverifiedShow Answer

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Correct AnswerverifiedShow Answer

Suppose that the demand for picture frames is inelastic and the supply of picture frames is elastic.A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Correct AnswerverifiedShow Answer

When a tax is placed on the buyers of a product,

Correct AnswerverifiedShow Answer

The Earned Income Tax Credit is an example of

Correct AnswerverifiedShow Answer

Suppose there is currently a tax of $50 per ticket on airline tickets.Sellers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then

Correct AnswerverifiedShow Answer

A tax on sellers shifts the supply curve but not the demand curve.

Correct AnswerverifiedTrue

Which of the following is not a short-run effect of rent control on the housing market?

Correct AnswerverifiedShow Answer

Taxes levied on sellers and taxes levied on buyers are equivalent.

Correct AnswerverifiedShow Answer

A tax on the sellers of TVs

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Workers with high skills and much experience are not typically affected by the minimum wage.

Correct AnswerverifiedTrue

Correct AnswerverifiedA

Figure 6-11 -Refer to Figure 6-11.The effective price sellers receive after the tax is imposed is

Correct AnswerverifiedShow Answer

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True

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True

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A

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