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Exam 6: Supply, Demand, and Government Policies

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Question 21

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Figure 6-12 -Refer to Figure 6-12. Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

A) Buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price.
B) Buyers of gasoline paid a price of P1 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price.
C) Buyers of gasoline paid a price of P2 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, with no shortage of gasoline at that price.
D) The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973.

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

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Question 22

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Define a price ceiling.

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A price ceiling is a...

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Question 23

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The true burden of a payroll tax has nothing to do with the percentage of the tax that employers are required to pay.

Table 6-6 -Refer to Table 6-6. If the government set a price floor at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $80, would there be a shortage or surplus, and how large would be the shortage/surplus?

When a free market for a good reaches equilibrium, anyone who is willing and able to sell at the market price can sell the good.

When policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources.

A large majority of economists favor eliminating the minimum wage.

Figure 6-21 -Refer to Figure 6-21. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. Acme is left with how much money?

A price ceiling set below the equilibrium price is nonbinding.

If a binding price floor is imposed on the video game market, then

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

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

When a tax is placed on the sellers of energy drinks, the

Figure 6-22 -Refer to Figure 6-22. The price paid by buyers after the tax is imposed is

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, the price paid by buyers will be

Which of the following is not correct?

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

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

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