Question 1

The price received by sellers in a market will increase if the government decreases a

Accepted Answer

A)   binding price floor in that market.
B)   binding price ceiling in that market.
C)   tax on the good sold in that market.
D)   None of the above is correct.E) B) and C)
F) A) and B)

Question 2

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 3

Figure 6-9 
-Refer to Figure 6-9. At which price would a price ceiling be binding?

Accepted Answer

A)   $8
B)   $5
C)   $6
D)   $7E) C) and D)
F) A) and C)

Question 4

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,

Accepted Answer

A)   quantity demanded decreases.
B)   quantity supplied increases.
C)   there is a surplus.
D)   All of the above are correct.E) A) and C)
F) B) and C)

Question 5

Figure 6-8 
-Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

Accepted Answer

A)   a price ceiling of $3 is imposed.
B)   a price ceiling of $5 is imposed.
C)   a price floor of $5 is imposed.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 6

Table 6-6 
-Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

Accepted Answer

A price floor must be set abov...

Question 7

Figure 6-27
This figure shows the market demand and market supply curves for good Z. 
-Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)   less than 8 units
B)   8 units
C)   between 8 units and 10 units
D)   greater than 10 unitsE) B) and D)
F) None of the above

Question 8

Figure 6-17
This figure shows the market demand and market supply curves for good Y 
-Refer to Figure 6-17. A government-imposed price of $24 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) A) and C)
F) A) and D)

Question 9

A tax on buyers will shift the

Accepted Answer

A)   demand curve upward by the amount of the tax.
B)   demand curve downward by the amount of the tax.
C)   supply curve upward by the amount of the tax.
D)   supply curve downward by the amount of the tax.E) None of the above
F) All of the above

Question 10

Buyers of a good bear the larger share of the tax burden when the

Accepted Answer

A)   (i)  only
B)   (ii)  only
C)   (i)  and (iii)  only
D)   (i)  and (iv)  onlyE) None of the above
F) All of the above

Question 11

A binding price ceiling causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 12

After a binding price floor becomes effective, a

Accepted Answer

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)   All of the above are correct.E) C) and D)
F) B) and D)

Question 13

Table 6-5 
-Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus (or shortage)  in this market?

Accepted Answer

A)   0 units
B)   30 units
C)   45 units
D)   75 unitsE) None of the above
F) A) and B)

Question 14

Figure 6-3
Panel (a)  Panel (b)   
-Refer to Figure 6-3. In panel (b) , there will be

Accepted Answer

A)   a shortage.
B)   equilibrium in the market.
C)   a surplus.
D)   lines of people waiting to buy the good.E) B) and C)
F) A) and C)

Question 15

A binding minimum wage creates a surplus of labor.

Accepted Answer

A) True 
 B)False

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) All of the above
F) C) and D)

Question 17

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Accepted Answer

A) True 
 B)False

Question 18

Figure 6-19 
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)   less than 50 units
B)   50 units
C)   between 50 units and 100 units
D)   greater than 100 unitsE) None of the above
F) All of the above

Question 19

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Accepted Answer

A)   Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole.
B)   Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling.
C)   Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling.
D)   Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling.E) A) and B)
F) A) and C)

Question 20

Figure 6-5 
-Refer to Figure 6-5. Suppose the market is initially in equilibrium. Then the government imposes a price control, as represented by the horizontal line on the graph. If the price control is a price floor, then the price control

Accepted Answer

A)   causes the quantity demanded to decrease by 50 units, relative to the initial equilibrium.
B)   causes the quantity supplied to increase by 40 units, relative to the initial equilibrium.
C)   results in some firms being more successful than others in selling their goods.
D)   All of the above are correct.E) A) and C)
F) B) and D)

Exam 6: Supply, Demand, and Government Policies

The price received by sellers in a market will increase if the government decreases a

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After a binding price floor becomes effective, a

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Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

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Table 6-6 -Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

Correct AnswerverifiedA price floor must be set abov...View AnswerShow Answer

Which of the following is not correct?

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Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

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Figure 6-9 -Refer to Figure 6-9. At which price would a price ceiling be binding?

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Figure 6-5 -Refer to Figure 6-5. Suppose the market is initially in equilibrium. Then the government imposes a price control, as represented by the horizontal line on the graph. If the price control is a price floor, then the price control

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Figure 6-3 Panel (a) Panel (b) -Refer to Figure 6-3. In panel (b) , there will be

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Buyers of a good bear the larger share of the tax burden when the

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Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

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A tax on buyers will shift the

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Figure 6-17 This figure shows the market demand and market supply curves for good Y -Refer to Figure 6-17. A government-imposed price of $24 in this market is an example of a

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Figure 6-8 -Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

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Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

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Table 6-5 -Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus (or shortage) in this market?

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Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

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Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,

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A binding price ceiling causes a shortage in the market.

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A binding minimum wage creates a surplus of labor.

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