Question 1

Price controls can generate inequities.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $6.

Accepted Answer

A) True 
 B)False

Question 3

Price controls

Accepted Answer

A)   always produce a fair outcome.
B)   always produce an efficient outcome.
C)   can generate inequities of their own.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 4

The minimum wage

Accepted Answer

A)   is an example of a price ceiling.
B)   has its greatest impact on middle-aged and immigrant workers.
C)   does not apply to unpaid internships.
D)   does not affect the quantity of labor demanded; it only affects the quantity of labor supplied.E) B) and C)
F) None of the above

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

In the housing market, supply and demand are

Accepted Answer

A)   more elastic in the short run than in the long run, and so rent control leads to a larger shortage of apartments in the short run than in the long run.
B)   more elastic in the short run than in the long run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.
C)   more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the short run than in the long run.
D)   more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.E) All of the above
F) B) and C)

Question 7

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Accepted Answer

A) True 
 B)False

Question 8

Scenario 6-1
Suppose that demand in the market for good X is given by the equation  and that supply in the market for good X is given by the equation 
-Refer to Scenario 6-1. If the government set a price floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at...

Question 9

The quantity sold 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)   decreases a tax on the good sold in that market.
D)   More than one of the above is correct.E) All of the above
F) B) and D)

Question 10

Figure 6-6 
-Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?

Accepted Answer

A)   a price ceiling set at $8
B)   a price ceiling set at $6
C)   a price floor set at $8
D)   a price floor set at $6E) B) and D)
F) All of the above

Question 11

Which of the following would not interfere with market equilibria?

Accepted Answer

A)   a minimum wage
B)   a rent control
C)   a non-binding price floor
D)   a binding price ceilingE) None of the above
F) C) and D)

Question 12

The minimum wage, if it is binding, lowers the incomes of

Accepted Answer

A)   no workers.
B)   only those workers who become unemployed.
C)   only those workers who have jobs.
D)   all workers.E) A) and D)
F) A) and C)

Question 13

In "Venezuela Versus the Market," the long lines and shortages are caused by

Accepted Answer

A)   declining world energy prices.
B)   unfettered capitalism.
C)   price floors that are intended to make food more affordable for the poor.
D)   price ceilings that are intended to make food more affordable for the poor.E) All of the above
F) C) and D)

Question 14

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) None of the above
F) All of the above

Question 15

Table 6-1
 
-Refer to Table 6-1. Suppose the government imposes a price floor of $30 on this market. What will be the size of the surplus in this market?

Accepted Answer

A)   0 units
B)   200 units
C)   1800 units
D)   2000 unitsE) B) and D)
F) C) and D)

Question 16

Figure 6-13
This figure shows the market demand and market supply curves for good X. 
-Refer to Figure 6-13. If the government imposes a price floor of $7 on this market, then there will be

Accepted Answer

A)   no surplus.
B)   a surplus of 10 units.
C)   a surplus of 15 units.
D)   a surplus of 20 units.E) B) and D)
F) All of the above

Question 17

When a tax is placed on the sellers of a product, buyers pay

Accepted Answer

A)   more, and sellers receive more than they did before the tax.
B)   more, and sellers receive less than they did before the tax.
C)   less, and sellers receive more than they did before the tax.
D)   less, and sellers receive less than they did before the tax.E) A) and B)
F) C) and D)

Question 18

If the supply curve is more price elastic than the demand curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

Accepted Answer

The buyers will bear...

Question 19

Over time, housing shortages caused by rent control

Accepted Answer

A)   increase, because the demand for and supply of housing are less elastic in the long run.
B)   increase, because the demand for and supply of housing are more elastic in the long run.
C)   decrease, because the demand for and supply of housing are less elastic in the long run.
D)   decrease, because the demand for and supply of housing are more elastic in the long run.E) C) and D)
F) B) and D)

Question 20

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

Accepted Answer

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

Exam 6: Supply, Demand, and Government Policies

In "Venezuela Versus the Market," the long lines and shortages are caused by

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

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Which of the following would not interfere with market equilibria?

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Figure 6-6 -Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?

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If the supply curve is more price elastic than the demand curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

Correct AnswerverifiedThe buyers will bear...View AnswerShow Answer

Price controls can generate inequities.

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The minimum wage, if it is binding, lowers the incomes of

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If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

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In the housing market, supply and demand are

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When a tax is placed on the sellers of a product, buyers pay

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Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $6.

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Over time, housing shortages caused by rent control

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

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Price controls

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Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. If the government set a price floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

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

The quantity sold in a market will increase if the government

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The minimum wage

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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.

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Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price floor of $30 on this market. What will be the size of the surplus in this market?

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Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price floor of $7 on this market, then there will be

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The buyers will bear...
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A price floor set at...
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