Question 1

A binding minimum wage creates a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 2

A binding minimum wage tends to

Accepted Answer

A)  cause a labor surplus.
B)  cause unemployment.
C)  have the greatest impact in the market for teenage labor.
D)  All of the above are correct.E) A) and C)
F) B) and C)

Question 3

States in the U.S. may mandate minimum wages above the federal level.

Accepted Answer

A) True 
 B)False

Question 4

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A)  every seller in the market benefits.
B)  all buyers and sellers benefit.
C)  every seller who wants to sell the good will be able to do so, but only if he appeals to the personal biases of the buyers.
D)  some sellers will not be able to sell any amount of the good.E) None of the above
F) C) and D)

Question 5

Figure 6-24 
-Refer to Figure 6-24. The price paid by buyers after the tax is imposed is

Accepted Answer

A)  $24.
B)  $21.
C)  $18.
D)  $16.E) A) and D)
F) All of the above

Question 6

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

Accepted Answer

A)  buyers of gasoline.
B)  sellers of gasoline.
C)  either buyers or sellers of gasoline.
D)  whichever side of the market is less elastic.E) B) and C)
F) C) and D)

Question 7

Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

Accepted Answer

A)  1 to 3 percent.
B)  5 to 7 percent.
C)  10 percent.
D)  None of the above is correct because studies show no decrease in teenage employment.E) A) and B)
F) A) and C)

Question 8

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

Accepted Answer

A)  increase by less than $5.
B)  increase by exactly $5.
C)  increase by more than $5.
D)  decrease by an indeterminate amount.E) None of the above
F) B) and C)

Question 9

Figure 6-14 
-Refer to Figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Accepted Answer

A)  binding and creates a shortage of 20 units of the good.
B)  binding and creates a shortage of 40 units of the good.
C)  not binding but creates a shortage of 40 units of the good.
D)  not binding, and there will be no surplus or shortage of the good.E) A) and B)
F) A) and C)

Question 10

If the government levies a $5 tax per MP3 player on buyers of MP3 players, then the price paid by buyers of MP3 players would likely

Accepted Answer

A)  increase by more than $5.
B)  increase by exactly $5.
C)  increase by less than $5.
D)  decrease.E) C) and D)
F) A) and D)

Question 11

Figure 6-25 
-Refer to Figure 6-25. The price that buyers pay after the tax is imposed is

Accepted Answer

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

Question 12

Figure 6-24 
-Refer to Figure 6-24. What is the amount of the tax per unit?

Accepted Answer

A)  $8
B)  $6
C)  $4
D)  $2E) A) and D)
F) All of the above

Question 13

Economic policies often have effects that their architects did not intend or anticipate.

Accepted Answer

A) True 
 B)False

Question 14

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.E) A) and D)
F) B) and C)

Question 15

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

Accepted Answer

A)  the payment by government of a fraction of a poor family's rent.
B)  higher taxes on rental income earned by landlords.
C)  a policy that prevents landlords from evicting tenants.
D)  a policy that allows government to confiscate residential property for the purpose of commercial development.E) A) and B)
F) A) and D)

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy.

Accepted Answer

A) True 
 B)False

Question 18

Figure 6-24 
-Refer to Figure 6-24. Which of the following statements is correct?

Accepted Answer

A)  The amount of the tax per unit is $6.
B)  The tax leaves the size of the market unchanged.
C)  The tax is levied on buyers of the good, rather than on sellers.
D)  All of the above are correct.E) All of the above
F) A) and D)

Question 19

A price floor is

Accepted Answer

A)  a legal minimum on the price at which a good can be sold.
B)  often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor.
C)  a source of inefficiency in a market.
D)  All of the above are correct.E) A) and D)
F) All of the above

Question 20

Which of the following is correct?

Accepted Answer

A)  Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage raises the average wage of teenagers by 10 percent.
B)  The drop in teenage employment caused by a 10 percent increase in the minimum wage is not significant.
C)  The minimum wage is more often binding for teenagers than for other members of the labor force.
D)  All firms consistently enforce minimum-wage laws.E) A) and B)
F) All of the above

Exam 6: Supply, Demand, and Government Policies

A price floor is

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

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Figure 6-24 -Refer to Figure 6-24. Which of the following statements is correct?

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The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy.

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A binding minimum wage tends to

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If the government wants to reduce the burning of fossil fuels, it should impose a tax on

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Figure 6-25 -Refer to Figure 6-25. The price that buyers pay after the tax is imposed is

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Figure 6-14 -Refer to Figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

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Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

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If the government levies a $5 tax per MP3 player on buyers of MP3 players, then the price paid by buyers of MP3 players would likely

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A binding minimum wage creates a surplus of labor.

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States in the U.S. may mandate minimum wages above the federal level.

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Which of the following is correct?

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Figure 6-24 -Refer to Figure 6-24. The price paid by buyers after the tax is imposed is

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An alternative to rent-control laws that would not reduce the quantity of housing supplied is

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If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

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When a binding price floor is imposed on a market to benefit sellers,

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Figure 6-24 -Refer to Figure 6-24. What is the amount of the tax per unit?

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

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Economic policies often have effects that their architects did not intend or anticipate.

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