Question 1

Minimum-wage laws dictate

Accepted Answer

A)   the exact wage that firms must pay workers.
B)   a maximum wage that firms may pay workers.
C)   a minimum wage that firms may pay workers.
D)   both a minimum wage and a maximum wage that firms may pay workers.E) A) and C)
F) B) and C)

Question 2

Table 6-1
 
-Refer to Table 6-1. Which of the following price ceilings would be binding in this market?

Accepted Answer

A)   $80
B)   $70
C)   $60
D)   $50E) A) and B)
F) A) and C)

Question 3

If the government removes a binding price floor from a market, then the price paid by buyers will

Accepted Answer

A)   increase, and the quantity sold in the market will increase.
B)   increase, and the quantity sold in the market will decrease.
C)   decrease, and the quantity sold in the market will increase.
D)   decrease, and the quantity sold in the market will decrease.E) A) and D)
F) None of the above

Question 4

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

Accepted Answer

A)   $6.
B)   $8.
C)   $14.
D)   $24.E) None of the above
F) A) and C)

Question 5

Which of the following is not a rationing mechanism used by landlords in cities with rent control?

Accepted Answer

A)   waiting lists
B)   race
C)   price
D)   bribesE) B) and D)
F) A) and C)

Question 6

Figure 6-1
Panel (a)  Panel (b) 
  
-Refer to Figure 6-1. In which panel(s)  of the figure would there be a shortage of the good at the price ceiling?

Accepted Answer

A)   panel (a)  only
B)   panel (b)  only
C)   both panel (a)  and panel (b) 
D)   neither panel (a)  nor panel (b) E) B) and D)
F) B) and C)

Question 7

Figure 6-35 
-Refer to Figure 6-35. A price ceiling set at $70 would create a shortage of 40 units.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-29
Suppose the government imposes a $2 on this market. 
-Refer to Figure 6-29. The buyers will bear a higher share of the tax burden than sellers if the demand is

Accepted Answer

A)   D1, and the supply is S1.
B)   D2, and the supply is S1.
C)   D1, and the supply is S2.
D)   D2, and the supply is S2.E) B) and D)
F) B) and C)

Question 9

When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market

Accepted Answer

A)   and the price paid by buyers both decrease.
B)   decreases, but the price paid by buyers increases.
C)   increases, but the price paid by buyers decreases.
D)   and the price paid by buyers both increase.E) A) and B)
F) A) and C)

Question 10

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 unitsE) B) and D)
F) B) and C)

Question 11

When a tax is placed on the buyers of cell phones, the size of the cell phone market

Accepted Answer

A)   and the effective price received by sellers both decrease.
B)   decreases, but the effective price received by sellers increases.
C)   increases, but the effective price received by sellers decreases.
D)   and the effective price received by sellers both increase.E) B) and C)
F) A) and B)

Question 12

A price ceiling set below the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 13

If a price floor is not binding, then it will have no effect on the market.

Accepted Answer

A) True 
 B)False

Question 14

When a payroll tax is enacted, the wage received by workers

Accepted Answer

A)   falls, and the wage paid by firms rises.
B)   falls, and the wage paid by firms falls.
C)   rises, and the wage paid by firms falls.
D)   rises, and the wage paid by firms rises.E) A) and C)
F) C) and D)

Question 15

In the short run, rent control causes the quantity supplied

Accepted Answer

A)   and quantity demanded to fall.
B)   to fall and quantity demanded to rise.
C)   to rise and quantity demanded to fall.
D)   and quantity demanded to rise.E) None of the above
F) All of the above

Question 16

Which of the following is not correct?

Accepted Answer

A)   The economy contains many labor markets for different types of workers.
B)   The impact of the minimum wage depends on the skill and experience of the worker.
C)   The minimum wage is binding for workers with high skills and much experience.
D)   The minimum wage is not binding when the equilibrium wage is above the minimum wage.E) A) and B)
F) C) and D)

Question 17

Figure 6-33 
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the sellers in this market?

Accepted Answer

The burden...

Question 18

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

Accepted Answer

A)   $0.50.
B)   $1.50.
C)   $3.00.
D)   $5.00.E) A) and B)
F) All of the above

Question 19

Policymakers use taxes

Accepted Answer

A)   to raise revenue for public purposes but not to influence market outcomes.
B)   both to raise revenue for public purposes and to influence market outcomes.
C)   when they realize that price controls alone are insufficient to correct market inequities.
D)   only in those markets in which the burden of the tax falls clearly on the sellers.E) C) and D)
F) A) and B)

Question 20

When a binding price floor is imposed on a market for a good, some people who want to sell the good cannot do so.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Table 6-1 -Refer to Table 6-1. Which of the following price ceilings would be binding in this market?

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When a binding price floor is imposed on a market for a good, some people who want to sell the good cannot do so.

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Minimum-wage laws dictate

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

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If the government removes a binding price floor from a market, then the price paid by buyers will

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When a payroll tax is enacted, the wage received by workers

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Which of the following is not a rationing mechanism used by landlords in cities with rent control?

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A price ceiling set below the equilibrium price is binding.

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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 per-unit burden of the tax on buyers is

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Figure 6-35 -Refer to Figure 6-35. A price ceiling set at $70 would create a shortage of 40 units.

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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?

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Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

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When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market

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Which of the following is not correct?

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Policymakers use taxes

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If a price floor is not binding, then it will have no effect on the market.

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Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the sellers in this market?

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Figure 6-29 Suppose the government imposes a $2 on this market. -Refer to Figure 6-29. The buyers will bear a higher share of the tax burden than sellers if the demand is

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In the short run, rent control causes the quantity supplied

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When a tax is placed on the buyers of cell phones, the size of the cell phone market

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The burden...
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