Question 1

A nonbinding price ceiling (i) causes a surplus.
(ii) causes a shortage.
(iii) is set at a price above the equilibrium price.
(iv) 
Is set at a price below the equilibrium price.

Accepted Answer

A)   (i) only
B)   (iii) only
C)   (i) and (iii) only
D)   (ii) and (iv) onlyE) B) and D)
F) All of the above

Question 2

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) C) and D)

Question 3

Figure 6-5 
-Refer to Figure 6-5.If the horizontal line on the graph represents a price floor,then the price floor is

Accepted Answer

A)   binding and creates a shortage of 40 units of the good.
B)   binding and creates a surplus of 50 units of the good.
C)   binding and creates a surplus of 90 units of the good.
D)   not binding but creates a surplus of 40 units of the good.E) A) and D)
F) A) and B)

Question 4

A binding price floor will reduce a firm's total revenue

Accepted Answer

A)   always.
B)   when demand is elastic.
C)   when demand is inelastic.
D)   never.E) A) and B)
F) A) and C)

Question 5

A binding minimum wage creates a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 6

Figure 6-27 
-Refer to Figure 6-27.If the government places a $2 tax in the market,the seller bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 7

When a binding price ceiling is imposed on a market for a good,some people who want to buy the good cannot do so.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-3
 
-Refer to Figure 6-3.In panel (a) ,there will be

Accepted Answer

A)   a shortage of wheat.
B)   equilibrium in the market.
C)   a surplus of wheat.
D)   lines of people waiting to buy wheat.E) All of the above
F) C) and D)

Question 9

A legal minimum on the price at which a good can be sold is called a price

Accepted Answer

A)   subsidy.
B)   floor.
C)   support.
D)   ceiling.E) B) and C)
F) All of the above

Question 10

A tax of $1 on buyers always decreases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not correct?

Accepted Answer

A)   Taxes levied on sellers and taxes levied on buyers are not equivalent.
B)   A tax places a wedge between the price that buyers pay and the price that sellers receive.
C)   The wedge between the buyers' price and the sellers' price is the same,regardless of whether the tax is levied on buyers or sellers.
D)   In the new after-tax equilibrium,buyers and sellers share the burden of the tax.E) A) and D)
F) All of the above

Question 12

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) A) and C)
F) A) and B)

Question 13

If a tax is levied on the sellers of flour,then

Accepted Answer

A)   buyers will bear the entire burden of the tax.
B)   sellers will bear the entire burden of the tax.
C)   buyers and sellers will share the burden of the tax.
D)   the government will bear the entire burden of the tax.E) All of the above
F) B) and D)

Question 14

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

Accepted Answer

A)   sellers bear the entire burden of the tax.
B)   buyers bear the entire burden of the tax.
C)   burden of the tax will be always be equally divided between the buyers and the sellers.
D)   burden of the tax will be shared by the buyers and the sellers,but the division of the burden is not always equal.E) B) and C)
F) All of the above

Question 15

When a tax is placed on the sellers of cell phones,the size of the cell phone market

Accepted Answer

A)   and the price paid by buyers both increase.
B)   increases,but the price paid by buyers decreases.
C)   decreases,but the price paid by buyers increases.
D)   and the price paid by buyers both decrease.E) A) and D)
F) B) and D)

Question 16

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Accepted Answer

A) True 
 B)False

Question 17

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) B) and C)
F) B) and D)

Question 18

A tax imposed on the sellers of a good will

Accepted Answer

A)   raise both the price buyers pay and the effective price sellers receive.
B)   raise the price buyers pay and lower the effective price sellers receive.
C)   lower the price buyers pay and raise the effective price sellers receive.
D)   lower both the price buyers pay and the effective price sellers receive.E) None of the above
F) B) and C)

Question 19

Figure 6-19 
-Refer to Figure 6-19.How much tax revenue does this tax produce for the government?

Accepted Answer

A)   $24
B)   $30
C)   $32
D)   $56E) C) and D)
F) B) and D)

Question 20

Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

Accepted Answer

A) True 
 B)False

Exam 6: Supply,demand,and Government Policies

A tax imposed on the sellers of a good will

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Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

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When a tax is placed on the sellers of cell phones,the size of the cell phone market

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A binding price floor will reduce a firm's total revenue

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Which of the following is correct?

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Figure 6-3 -Refer to Figure 6-3.In panel (a) ,there will be

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

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Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

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A tax of $1 on buyers always decreases the equilibrium price by $1.

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If a tax is levied on the sellers of flour,then

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Which of the following is not correct?

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In a competitive market free of government regulation,

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Figure 6-19 -Refer to Figure 6-19.How much tax revenue does this tax produce for the government?

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Figure 6-27 -Refer to Figure 6-27.If the government places a $2 tax in the market,the seller bears $1 of the tax burden.

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When a binding price ceiling is imposed on a market for a good,some people who want to buy the good cannot do so.

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Figure 6-5 -Refer to Figure 6-5.If the horizontal line on the graph represents a price floor,then the price floor is

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A binding minimum wage creates a surplus of labor.

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Which of the following is correct? Price controls

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A legal minimum on the price at which a good can be sold is called a price

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A nonbinding price ceiling (i) causes a surplus. (ii) causes a shortage. (iii) is set at a price above the equilibrium price. (iv) Is set at a price below the equilibrium price.

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