Question 1

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

Accepted Answer

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

Question 2

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Accepted Answer

A)   demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20.
B)   demand curve will shift upward by $20, and the price paid by buyers will decrease by $20.
C)   supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20.
D)   supply curve will shift downward by $20, and the effective price received by sellers will increase by $20.E) B) and C)
F) B) and D)

Question 3

When policymakers set prices by legal decree, they

Accepted Answer

A)   are usually following the advice of mainstream economists.
B)   improve the organization of economic activity.
C)   obscure the signals that normally guide the allocation of society's resources.
D)   are demonstrating a willingness to sacrifice fairness for the sake of a gain in efficiency.E) All of the above
F) None of the above

Question 4

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

Accepted Answer

A)   imposes 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)   decreases a binding price floor in that market.E) C) and D)
F) All of the above

Question 5

A $0.10 tax levied on the sellers of chocolate bars will cause the

Accepted Answer

A)   supply curve for chocolate bars to shift down by $0.10.
B)   supply curve for chocolate bars to shift up by $0.10.
C)   demand curve for chocolate bars to shift down by $0.10.
D)   demand curve for chocolate bars to shift up by $0.10.E) A) and B)
F) All of the above

Question 6

Figure 6-29
Suppose the government imposes a $2 on this market. 
-Refer to Figure 6-29. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2,

Accepted Answer

A)   buyers bear a higher burden of the tax in the short run than in the long run.
B)   sellers bear a higher burden of the tax in the short run than in the long run.
C)   buyers and sellers bear an equal burden of the tax in both the short run and long run.
D)   buyers and sellers bear an equal burden of the tax in the short run, but buyers bear a higher burden of the tax in the long run.E) B) and D)
F) None of the above

Question 7

A tax on buyers decreases demand.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is correct? Price controls

Accepted Answer

A)   always help those they are designed to help.
B)   never help those they are designed to help.
C)   often hurt those they are designed to help.
D)   always hurt those they are designed to help.E) All of the above
F) B) and C)

Question 9

As rationing mechanisms, prices

Accepted Answer

A)   and long lines are efficient.
B)   are efficient, but long lines are inefficient.
C)   are inefficient, but long lines are efficient.
D)   and long lines are inefficient.E) None of the above
F) A) and B)

Question 10

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is correct?

Accepted Answer

A)   Rent control and the minimum wage are both examples of price ceilings.
B)   Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor.
C)   Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling.
D)   Rent control and the minimum wage are both examples of price floors.E) B) and C)
F) A) and B)

Question 12

Which of the following is not a result of rent control?

Accepted Answer

A)   fewer new apartments offered for rent
B)   less maintenance provided by landlords
C)   bribery
D)   higher quality housingE) C) and D)
F) B) and D)

Question 13

In a competitive market free of government regulation,

Accepted Answer

A)   price adjusts until quantity demanded is greater than quantity supplied.
B)   price adjusts until quantity demanded is less than quantity supplied.
C)   price adjusts until quantity demanded equals quantity supplied.
D)   supply adjusts to meet demand at every price.E) A) and C)
F) A) and B)

Question 14

Figure 6-22 
-Refer to Figure 6-22. Buyers pay how much of the tax per unit?

Accepted Answer

A)   $0.50.
B)   $1.50.
C)   $3.00.
D)   $5.00.E) A) and D)
F) B) and C)

Question 15

Figure 6-7 
-Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?

Accepted Answer

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 $8E) C) and D)
F) A) and B)

Question 16

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Accepted Answer

A)   a binding price floor
B)   a binding price ceiling
C)   a tax on the good
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 17

Figure 6-9 
-Refer to Figure 6-9. At which price would a price floor be nonbinding?

Accepted Answer

A)   $8
B)   $7
C)   $6
D)   $9E) C) and D)
F) A) and B)

Question 18

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would

Accepted Answer

A)   shift the supply curve upward by less than 50 cents.
B)   raise the equilibrium price by 50 cents.
C)   create a 50-cent tax burden each for buyers and sellers.
D)   discourage market activity.E) None of the above
F) A) and C)

Question 19

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Accepted Answer

A)   demand curve will shift upward by $20, and the effective price received by sellers will increase by $20.
B)   demand curve will shift upward by $20, and the effective price received by sellers will increase by less than $20.
C)   supply curve will shift downward by $20, and the price paid by buyers will decrease by $20.
D)   supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20.E) A) and B)
F) A) and C)

Question 20

Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

Accepted Answer

A)   The effective price received by sellers is $0.40 per bottle less than it was before the tax.
B)   Sixty percent of the burden of the tax falls on sellers.
C)   This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Exam 6: Supply, Demand, and Government Policies

Which of the following is correct? Price controls

Correct Answer
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Which of the following is not a result of rent control?

Correct Answer
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The price paid by buyers in a market will decrease if the government

Correct Answer
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Figure 6-9 -Refer to Figure 6-9. At which price would a price floor be nonbinding?

Correct Answer
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As rationing mechanisms, prices

Correct Answer
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Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?

Correct Answer
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Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would

Correct Answer
verified

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Correct Answer
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In a competitive market free of government regulation,

Correct Answer
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A $0.10 tax levied on the sellers of chocolate bars will cause the

Correct Answer
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Which of the following causes the price paid by buyers to be different than the price received by sellers?

Correct Answer
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Figure 6-22 -Refer to Figure 6-22. Buyers pay how much of the tax per unit?

Correct Answer
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When policymakers set prices by legal decree, they

Correct Answer
verified

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

Correct Answer
verified

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Correct Answer
verified

Correct Answer
verified

Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

Correct Answer
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A tax on buyers decreases demand.

Correct Answer
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Which of the following is correct?

Correct Answer
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Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

Which of the following is correct? Price controls

Correct AnswerverifiedShow Answer

Which of the following is not a result of rent control?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-9 -Refer to Figure 6-9. At which price would a price floor be nonbinding?

Correct AnswerverifiedShow Answer

As rationing mechanisms, prices

Correct AnswerverifiedShow Answer

Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?

Correct AnswerverifiedShow Answer

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would

Correct AnswerverifiedShow Answer

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Correct AnswerverifiedShow Answer

In a competitive market free of government regulation,

Correct AnswerverifiedShow Answer

A $0.10 tax levied on the sellers of chocolate bars will cause the

Correct AnswerverifiedShow Answer

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Correct AnswerverifiedShow Answer

Figure 6-22 -Refer to Figure 6-22. Buyers pay how much of the tax per unit?

Correct AnswerverifiedShow Answer

When policymakers set prices by legal decree, they

Correct AnswerverifiedShow Answer

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

Correct AnswerverifiedShow Answer

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

A tax on buyers decreases demand.

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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