Question 1

Figure 6-5 
-Refer to Figure 6-5.If the horizontal line on the graph represents a price ceiling,then the price ceiling is

Accepted Answer

A)   binding and creates a surplus of 40 units of the good.
B)   binding and creates a surplus of 90 units of the good.
C)   not binding but creates a surplus of 40 units of the good.
D)   not binding,and there will be no surplus or shortage of the good.

Question 2

When free markets ration goods with prices,it is both efficient and impersonal.

Accepted Answer

A) True 
 B)False

Question 3

A price floor set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 4

If the demand curve is very inelastic and the supply curve is very elastic in a market,then the sellers will bear a greater burden of a tax imposed on the market,even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-19 
-Refer to Figure 6-19.The effective price received by sellers after the tax is imposed is

Accepted Answer

A)   $3.
B)   $4.
C)   $5.
D)   $7.

Question 6

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

Accepted Answer

A)   $2
B)   $3
C)   $4
D)   $5

Question 7

A tax on the sellers of coffee mugs

Accepted Answer

A)   increases the size of the coffee mug market.
B)   decreases the size of the coffee mug market.
C)   has no effect on the size of the coffee mug market.
D)   may increase,decrease,or have no effect on the size of the coffee mug market.

Question 8

Figure 6-2 
-Refer to Figure 6-2.The price ceiling

Accepted Answer

A)   causes a shortage of 45 units of the good.
B)   makes it necessary for sellers to ration the good.
C)   is not binding because it is set below the equilibrium price.
D)   Both a) and b) are correct.

Question 9

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Accepted Answer

A) True 
 B)False

Question 10

A tax on buyers shifts the demand curve and the supply curve.

Accepted Answer

A) True 
 B)False

Question 11

When a free market for a good reaches equilibrium,anyone who is willing and able to pay the market price can buy the good.

Accepted Answer

A) True 
 B)False

Question 12

The effects of rent control in the long run include lower rents and lower-quality housing.

Accepted Answer

A) True 
 B)False

Question 13

When a binding price floor is imposed on a market,

Accepted Answer

A)   price no longer serves as a rationing device.
B)   the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor.
C)   all sellers benefit.
D)   All of the above are correct.

Question 14

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

Accepted Answer

A)   a shortage of wheat.
B)   equilibrium in the market.
C)   a surplus of wheat.
D)   lines of people waiting to buy wheat.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Figure 6-11 
-Refer to Figure 6-11.If the government imposes a price ceiling at $3,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.

Question 17

A tax on the buyers of personal computer external hard drives encourages

Accepted Answer

A)   sellers to supply a smaller quantity at every price.
B)   buyers to demand a smaller quantity at every price.
C)   buyers to demand a larger quantity at every price.
D)   Both a) and b) are correct.

Question 18

The quantity sold in a market will increase if the government

Accepted Answer

A)   decreases a binding price floor in that market.
B)   increases a binding price ceiling in that market.
C)   decreases a tax on the good sold in that market.
D)   More than one of the above is correct.

Question 19

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.

Question 20

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i) supply is more elastic than the demand.
(ii) demand in more elastic than the supply.
(iii) tax is placed on the sellers of the product.
(iv) 
Tax is placed on the buyers of the product.

Accepted Answer

A)   (i) only
B)   (ii) only
C)   (i) and (iv) only
D)   (ii) and (iii) only

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?

Correct AnswerverifiedShow Answer

If the demand curve is very inelastic and the supply curve is very elastic in a market,then the sellers will bear a greater burden of a tax imposed on the market,even if the tax is imposed on the buyers.

Correct AnswerverifiedShow Answer

A tax on the buyers of personal computer external hard drives encourages

Correct AnswerverifiedShow Answer

When free markets ration goods with prices,it is both efficient and impersonal.

Correct AnswerverifiedShow Answer

The effects of rent control in the long run include lower rents and lower-quality housing.

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Figure 6-11 -Refer to Figure 6-11.If the government imposes a price ceiling at $3,it would be

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A binding price ceiling causes quantity demanded to be less than quantity supplied.

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A price floor set above the equilibrium price is not binding.

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A tax on the sellers of coffee mugs

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Figure 6-19 -Refer to Figure 6-19.The effective price received by sellers after the tax is imposed is

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Figure 6-5 -Refer to Figure 6-5.If the horizontal line on the graph represents a price ceiling,then the price ceiling is

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Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i) supply is more elastic than the demand. (ii) demand in more elastic than the supply. (iii) tax is placed on the sellers of the product. (iv) Tax is placed on the buyers of the product.

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A tax on buyers shifts the demand curve and the supply curve.

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When a free market for a good reaches equilibrium,anyone who is willing and able to pay the market price can buy the good.

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When a binding price floor is imposed on a market,

Correct AnswerverifiedShow Answer

The quantity sold in a market will increase if the government

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

Correct AnswerverifiedShow Answer

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

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Figure 6-2 -Refer to Figure 6-2.The price ceiling

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

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