Question 1

Will a binding price floor result in a shortage or a surplus in the market?

Accepted Answer

A binding price floo...

Question 2

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

Accepted Answer

With a $6 tax per unit, the bu...

Question 3

Figure 6-26 
-Refer to Figure 6-26. How much tax revenue does this tax produce for the government?

Accepted Answer

A)  $480
B)  $640
C)  $360
D)  $120E) All of the above
F) None of the above

Question 4

Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

Accepted Answer

A)  An increase in the price of flour, which is used to make bread.
B)  A decrease in the price of lunch meat.
C)  A decrease in the price of unsliced bread, which people consider a substitute for sliced bread.
D)  An decrease in the price of peanut butter and jelly.E) B) and C)
F) A) and D)

Question 5

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

Question 6

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.

Accepted Answer

A) True 
 B)False

Question 7

​A shortage is eliminated when

Accepted Answer

A)  ​a binding price ceiling is removed.
B)  ​a binding price ceiling is enacted.
C)  ​a nonbinding price ceiling is repealed.
D)  ​a nonbinding price ceiling is imposed.E) A) and B)
F) All of the above

Question 8

Figure 6-23 
-Refer to Figure 6-23. How much tax revenue does this tax produce for the government?

Accepted Answer

A)  $18.
B)  $30.
C)  $6.
D)  $36.E) A) and B)
F) B) and C)

Question 9

If the government removes a binding price floor from a market, then the price paid by buyers will

Accepted Answer

A)  increase, and the quantity sold in the market will increase.
B)  increase, and the quantity sold in the market will decrease.
C)  decrease, and the quantity sold in the market will increase.
D)  decrease, and the quantity sold in the market will decrease.E) All of the above
F) B) and C)

Question 10

Figure 6-31  ​
-Refer to Figure 6-31. Suppose that a price ceiling is imposed in this market at a price of $30 and market demand for the good subsequently increases. This would

Accepted Answer

A)  ​decrease the size of the surplus.
B)  ​decrease the size of the shortage.
C)  ​increase the size of the surplus.
D)  ​increase the size of the shortage.E) A) and C)
F) A) and B)

Question 11

Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

Accepted Answer

A) True 
 B)False

Question 12

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

Question 13

The price received by sellers 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)  increases a tax on the good sold in that market.
D)  imposes a binding price ceiling in that market.E) B) and D)
F) A) and B)

Question 14

A binding minimum wage creates a shortage of labor.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

Accepted Answer

A)  Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans.
B)  The number of farmers selling soybeans decreases.
C)  Consumers' income increases, and soybeans are a normal good.
D)  The number of consumers buying soybeans increases.E) A) and D)
F) B) and D)

Question 17

Which of the following is not a rationing mechanism used by landlords in cities with rent control?

Accepted Answer

A)  waiting lists
B)  race
C)  price
D)  bribesE) C) and D)
F) B) and C)

Question 18

In response to a shortage caused by the imposition of a binding price ceiling on a market,

Accepted Answer

A)  price will no longer be the mechanism that rations scarce resources.
B)  long lines of buyers may develop.
C)  sellers could ration the good or service according to their own personal biases.
D)  All of the above are correct.E) B) and C)
F) B) and D)

Question 19

Table 6-2 
-Refer to Table 6-2. A price ceiling set at $20 will

Accepted Answer

A)  be binding and will result in a shortage of 75 units.
B)  be binding and will result in a shortage of 200 units.
C)  be binding and will result in a shortage of 125 units.
D)  not be binding.E) B) and C)
F) A) and B)

Question 20

Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the

Accepted Answer

A)  demand is more inelastic than the supply.
B)  supply is more inelastic than the demand.
C)  government has required that buyers remit the tax payments.
D)  government has required that sellers remit the tax payments.E) C) and D)
F) B) and D)

Exam 6: Supply, Demand, and Government Policies

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

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Will a binding price floor result in a shortage or a surplus in the market?

Correct AnswerverifiedA binding price floo...View AnswerShow Answer

​A shortage is eliminated when

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A binding minimum wage creates a shortage of labor.

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Figure 6-26 -Refer to Figure 6-26. How much tax revenue does this tax produce for the government?

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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 6-31 ​ -Refer to Figure 6-31. Suppose that a price ceiling is imposed in this market at a price of $30 and market demand for the good subsequently increases. This would

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

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If the government removes a binding price floor from a market, then the price paid by buyers will

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

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Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

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Under rent control, bribery is a mechanism to

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Figure 6-23 -Refer to Figure 6-23. How much tax revenue does this tax produce for the government?

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Table 6-2 -Refer to Table 6-2. A price ceiling set at $20 will

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Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

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Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the

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Which of the following is not a rationing mechanism used by landlords in cities with rent control?

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Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

Correct AnswerverifiedWith a $6 tax per unit, the bu...View AnswerShow Answer

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

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In response to a shortage caused by the imposition of a binding price ceiling on a market,

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A binding price floo...
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A shortage is eliminated when

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Figure 6-31 -Refer to Figure 6-31. Suppose that a price ceiling is imposed in this market at a price of $30 and market demand for the good subsequently increases. This would

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With a $6 tax per unit, the bu...
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