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Scenario 6-1 Suppose that demand in the market for good X is given by the equation Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. What are the equilibrium price and quantity in the market for good X? and that supply in the market for good X is given by the equation Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. What are the equilibrium price and quantity in the market for good X? -Refer to Scenario 6-1. What are the equilibrium price and quantity in the market for good X?

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The equilibrium pric...

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Figure 6-8 Figure 6-8 -Refer to Figure 6-8. When a certain price control is imposed on this market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P1 dollars per unit for that quantity and sellers are willing and able to accept a minimum of P2 dollars per unit for that quantity. If P1 - P2 = $3, then the price control is A) a price ceiling of $2.00. B) a price ceiling of $5.00. C) a price floor of $5.00. D) either a price ceiling of $2.00 or a price floor of $5.00. -Refer to Figure 6-8. When a certain price control is imposed on this market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P1 dollars per unit for that quantity and sellers are willing and able to accept a minimum of P2 dollars per unit for that quantity. If P1 - P2 = $3, then the price control is


A) a price ceiling of $2.00.
B) a price ceiling of $5.00.
C) a price floor of $5.00.
D) either a price ceiling of $2.00 or a price floor of $5.00.

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When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

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A binding price ceil...

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Figure 6-19 Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed? A) $3 B) between $3 and $5 C) between $5 and $7 D) $7 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?


A) $3
B) between $3 and $5
C) between $5 and $7
D) $7

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Advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off.

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Figure 6-25 Figure 6-25 -Refer to Figure 6-25. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. After the sellers are required to pay the tax, relative to the case depicted in the graph, the burden on buyers will be A) larger, and the burden on sellers will be smaller. B) smaller, and the burden on sellers will be larger. C) the same, and the burden on sellers will be the same. D) The relative burdens in the two cases cannot be determined without further information. -Refer to Figure 6-25. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. After the sellers are required to pay the tax, relative to the case depicted in the graph, the burden on buyers will be


A) larger, and the burden on sellers will be smaller.
B) smaller, and the burden on sellers will be larger.
C) the same, and the burden on sellers will be the same.
D) The relative burdens in the two cases cannot be determined without further information.

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Which of the following is not an example of a public policy?


A) rent-control laws
B) minimum-wage laws
C) taxes
D) equilibrium laws

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The price paid by buyers in a market will increase if the government


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) imposes a binding price ceiling in that market.

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Figure 6-2 Figure 6-2 -Refer to Figure 6-2. The price ceiling A) causes a shortage of 40 units. B) is not binding, because it is set above the equilibrium price. C) causes a shortage of 45 units. D) causes a shortage of 85 units. -Refer to Figure 6-2. The price ceiling


A) causes a shortage of 40 units.
B) is not binding, because it is set above the equilibrium price.
C) causes a shortage of 45 units.
D) causes a shortage of 85 units.

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When OPEC raised the price of crude oil in the 1970s, it caused the


A) demand for gasoline to increase.
B) demand for gasoline to decrease.
C) supply of gasoline to increase.
D) supply of gasoline to decrease.

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Figure 6-7 Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good? A) a price ceiling set at $6 B) a price ceiling set at $5 C) a price floor set at $9 D) a price floor set at $8 -Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?


A) a price ceiling set at $6
B) a price ceiling set at $5
C) a price floor set at $9
D) a price floor set at $8

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An example of a price floor is


A) the regulation of gasoline prices in the U.S. in the 1970s.
B) rent control.
C) the minimum wage.
D) any restriction on price that leads to a shortage.

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Figure 6-4 Figure 6-4 -Refer to Figure 6-4. Which of the following statements is not correct? A) When the price is $10, quantity supplied equals quantity demanded. B) When the price is $6, there is a surplus of 8 units. C) When the price is $12, there is a surplus of 4 units. D) When the price is $16, quantity supplied exceeds quantity demanded by 12 units. -Refer to Figure 6-4. Which of the following statements is not correct?


A) When the price is $10, quantity supplied equals quantity demanded.
B) When the price is $6, there is a surplus of 8 units.
C) When the price is $12, there is a surplus of 4 units.
D) When the price is $16, quantity supplied exceeds quantity demanded by 12 units.

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

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

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A binding minimum wage


A) alters both the quantity demanded and quantity supplied of labor.
B) affects only the quantity of labor demanded; it does not affect the quantity of labor supplied.
C) has no effect on the quantity of labor demanded or the quantity of labor supplied.
D) causes only temporary unemployment because the market will adjust and eliminate any temporary surplus of workers.

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When a price floor is binding, is the price floor set above or below the market equilibrium price?

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A binding price floo...

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Minimum-wage laws benefit society by creating a surplus of labor.

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Which of the following is not correct?


A) Economists have two roles: scientist and policy adviser.
B) As scientists, economists develop and test theories to explain the world around them.
C) Economic policies rarely have effects that their architects did not intend or anticipate.
D) As policy advisers, economists use their theories to help change the world for the better.

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Table 6-1 Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price floor of $70 on this market. What will be the size of the surplus in this market? A) 0 units B) 400 units C) 600 units D) 1000 units -Refer to Table 6-1. Suppose the government imposes a price floor of $70 on this market. What will be the size of the surplus in this market?


A) 0 units
B) 400 units
C) 600 units
D) 1000 units

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