Question 1

The quantity sold in a market will decrease if the government

Accepted Answer

A)   decreases a binding price floor in that market.
B)   decreases 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) None of the above
F) All of the above

Question 2

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

Accepted Answer

A)   0 percent.
B)   1 to 3 percent.
C)   5 to 7 percent.
D)   10 percent.E) B) and D)
F) A) and C)

Question 3

A price floor set below the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not correct?

Accepted Answer

A)   In a 2006 survey of Ph.D.economists,47 percent favored eliminating the minimum wage.
B)   In a 2006 survey of Ph.D.economists,14 percent would maintain the minimum wage at its current level.
C)   In a 2006 survey of Ph.D.economists,38 percent would increase the minimum wage.
D)   In a 2006 survey of Ph.D.economists,10 percent would decrease the minimum wage.E) All of the above
F) A) and B)

Question 5

The minimum wage has its greatest impact on the market for teenage labor.

Accepted Answer

A) True 
 B)False

Question 6

When OPEC raised the price of crude oil in the 1970s,it caused the

Accepted Answer

A)   demand for gasoline to increase.
B)   demand for gasoline to decrease.
C)   supply of gasoline to increase.
D)   supply of gasoline to decrease.E) A) and D)
F) A) and C)

Question 7

When a binding price floor is imposed on a market,

Accepted Answer

A)   price no longer serves as a rationing device.
B)   the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor.
C)   only some sellers benefit.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 8

In a free market,the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-3 
-Refer to Figure 6-3.If the government imposes a price floor of $6 on this market,then there will be a

Accepted Answer

A)   surplus of 0.
B)   surplus of 20.
C)   surplus of 30.
D)   surplus of 40.E) C) and D)
F) None of the above

Question 10

If a tax is levied on the buyers of a product,then there will be a(n)

Accepted Answer

A)   upward shift of the demand curve.
B)   downward shift of the demand curve.
C)   movement up and to the left along the demand curve.
D)   movement down and to the right along the demand curve.E) A) and B)
F) None of the above

Question 11

Figure 6-11 
-Refer to Figure 6-11.Suppose the same supply and demand curves apply and a tax of the same amount per unit as shown here is imposed.Now,however,the buyers of the good,rather than the sellers,are required to pay the tax to the government.Now,relative to the case depicted in the figure,

Accepted Answer

A)   the burden on buyers will be larger and the burden on sellers will be smaller.
B)   the burden on buyers will be smaller and the burden on sellers will be larger.
C)   the burden on buyers will be the same and the burden on sellers will be the same.
D)   The relative burdens in the two cases cannot be determined without further information.E) A) and B)
F) A) and C)

Question 12

Which of the following statements is correct concerning the burden of a tax imposed on candles?

Accepted Answer

A)   Buyers bear the entire burden of the tax.
B)   Sellers bear the entire burden of the tax.
C)   Buyers and sellers share the burden of the tax.
D)   We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination.E) A) and D)
F) A) and C)

Question 13

A binding price ceiling may not help all consumers,but it does not hurt any consumers.

Accepted Answer

A) True 
 B)False

Question 14

Since half of the FICA tax is paid by firms and the other half is paid by workers,the burden of the tax must fall equally on firms and workers.

Accepted Answer

A) True 
 B)False

Question 15

A tax imposed on the sellers of a good will

Accepted Answer

A)   raise the price paid by buyers and lower the equilibrium quantity.
B)   raise the price paid by buyers and raise the equilibrium quantity.
C)   raise the effective price received by sellers and lower the equilibrium quantity.
D)   raise the effective price received by sellers and raise the equilibrium quantity.E) B) and D)
F) None of the above

Question 16

A price ceiling is binding when it is set

Accepted Answer

A)   above the equilibrium price,causing a shortage.
B)   above the equilibrium price,causing a surplus.
C)   below the equilibrium price,causing a shortage.
D)   below the equilibrium price,causing a surplus.E) A) and D)
F) A) and C)

Question 17

A binding price floor may not help all sellers,but it does not hurt any sellers.

Accepted Answer

A) True 
 B)False

Question 18

Table 6-1
 
-Refer to Table 6-1.Suppose the government imposes a price ceiling of $5 on this market.What will be the size of the shortage in this market?

Accepted Answer

A)   0 units
B)   2 units
C)   8 units
D)   10 unitsE) All of the above
F) None of the above

Question 19

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)   decreases a binding price ceiling in that market.
C)   decreases a tax on the good sold in that market.
D)   None of the above is correct.E) A) and B)
F) C) and D)

Question 20

The impact of the minimum wage depends on the skill and experience of the worker.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

The quantity sold in a market will decrease if the government

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

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Figure 6-3 -Refer to Figure 6-3.If the government imposes a price floor of $6 on this market,then there will be a

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Figure 6-11 -Refer to Figure 6-11.Suppose the same supply and demand curves apply and a tax of the same amount per unit as shown here is imposed.Now,however,the buyers of the good,rather than the sellers,are required to pay the tax to the government.Now,relative to the case depicted in the figure,

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A binding price ceiling may not help all consumers,but it does not hurt any consumers.

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When a binding price floor is imposed on a market,

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When OPEC raised the price of crude oil in the 1970s,it caused the

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A binding price floor may not help all sellers,but it does not hurt any sellers.

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

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In a free market,the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

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The impact of the minimum wage depends on the skill and experience of the worker.

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If a tax is levied on the buyers of a product,then there will be a(n)

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The minimum wage has its greatest impact on the market for teenage labor.

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Which of the following is not correct?

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A price floor set below the equilibrium price causes a surplus in the market.

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Since half of the FICA tax is paid by firms and the other half is paid by workers,the burden of the tax must fall equally on firms and workers.

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Which of the following statements is correct concerning the burden of a tax imposed on candles?

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A tax imposed on the sellers of a good will

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A price ceiling is binding when it is set

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Table 6-1 -Refer to Table 6-1.Suppose the government imposes a price ceiling of $5 on this market.What will be the size of the shortage in this market?

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