Question 1

A binding minimum wage creates a shortage of labor.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-7 
-Refer to Figure 6-7. For a price ceiling to be binding in this market, it would have to be set at

Accepted Answer

A)   any price below $7.
B)   any price above $3.
C)   any price below $9.
D)   any price above $7.

Question 3

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 4

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)   $50

Question 5

Figure 6-1
Panel a)  Panel b) 
  
-Refer to Figure 6-1. The price ceiling shown in panel b)

Accepted Answer

A)   is not binding.
B)   creates a surplus.
C)   creates a shortage.
D)   Both a)  and b)  are correct.

Question 6

To say that a price ceiling is binding is to say that the price ceiling

Accepted Answer

A)   results in a shortage.
B)   is set below the equilibrium price.
C)   causes quantity demanded to exceed quantity supplied.
D)   All of the above are correct.

Question 7

Unlike minimum wage laws, wage subsidies

Accepted Answer

A)   discourage firms from hiring the working poor.
B)   cause unemployment.
C)   help only wealthy workers.
D)   raise the living standards of the working poor without creating unemployment.

Question 8

The goal of rent control is to help the poor by making housing more affordable.

Accepted Answer

A) True 
 B)False

Question 9

Rent control policies tend to cause

Accepted Answer

A)   relatively smaller shortages in the short run than in the long run because supply and demand tends to be more elastic in the short run than in the long run.
B)   relatively larger shortages in the short run than in the long run because supply and demand tends to be more elastic in the short run than in the long run.
C)   relatively larger shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run.
D)   relatively smaller shortages in the short run than in the long run because supply and demand tends to be more inelastic in the short run than in the long run.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Accepted Answer

A)   upward by exactly $1.50.
B)   upward by less than $1.50.
C)   downward by exactly $1.50.
D)   downward by less than $1.50.

Question 12

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A)   buyers will bear a greater burden of the tax than the sellers.
B)   sellers will bear a greater burden of the tax than the buyers.
C)   buyers and sellers are likely to share the burden of the tax equally.
D)   buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

Question 13

Figure 6-31 
-Refer to Figure 6-31. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at...

Question 14

A shortage results when a

Accepted Answer

A)   nonbinding price ceiling is imposed on a market.
B)   nonbinding price ceiling is removed from a market.
C)   binding price ceiling is imposed on a market.
D)   binding price ceiling is removed from a market.

Question 15

Figure 6-19 
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Accepted Answer

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

Question 16

Figure 6-32 
-Refer to Figure 6-32. If the government set a price ceiling at $50, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set ...

Question 17

Figure 6-30
Panel a)  Panel b) 
   Panel c)  
-Refer to Figure 6-30. In which market will the tax burden be most equally divided between buyers and sellers?

Accepted Answer

A)   the market shown in panel a) .
B)   the market shown in panel b) .
C)   the market shown in panel c) .
D)   All of the above are correct.

Question 18

Figure 6-20 
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)   $5
B)   between $5 and $10
C)   between $10 and $14
D)   $14

Question 19

When government imposes a price ceiling or a price floor on a market,

Accepted Answer

A)   price no longer serves as a rationing device.
B)   efficiency in the market is enhanced.
C)   shortages and surpluses are eliminated.
D)   both buyers and sellers become better off.

Question 20

Under rent control, bribery is a mechanism to

Accepted Answer

A)   bring the total price of an apartment including the bribe)  closer to the equilibrium price.
B)   allocate housing to the poorest individuals in the market.
C)   force the total price of an apartment including the bribe)  to be less than the market price.
D)   allocate housing to the most deserving tenants.

Exam 6: Supply, Demand, and Government Policies

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

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To say that a price ceiling is binding is to say that the price ceiling

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A binding minimum wage creates a shortage of labor.

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The goal of rent control is to help the poor by making housing more affordable.

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A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Correct AnswerverifiedShow Answer

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

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Figure 6-1 Panel a) Panel b) -Refer to Figure 6-1. The price ceiling shown in panel b)

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Unlike minimum wage laws, wage subsidies

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Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price floor set at...View AnswerShow Answer

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

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Figure 6-30 Panel a) Panel b) Panel c) -Refer to Figure 6-30. In which market will the tax burden be most equally divided between buyers and sellers?

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Under rent control, bribery is a mechanism to

Correct AnswerverifiedShow Answer

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Correct AnswerverifiedShow Answer

A shortage results when a

Correct AnswerverifiedShow Answer

Rent control policies tend to cause

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When government imposes a price ceiling or a price floor on a market,

Correct AnswerverifiedShow Answer

Price ceilings are typically imposed to benefit buyers.

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Figure 6-7 -Refer to Figure 6-7. For a price ceiling to be binding in this market, it would have to be set at

Correct AnswerverifiedShow Answer

Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $50, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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A price floor set at...
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