Question 1

Figure 6-25 
-Refer to Figure 6-25. The burden of the tax on sellers is

Accepted Answer

A)   $1 per unit.
B)   $1.50 per unit.
C)   $2 per unit.
D)   $3 per unit.E) B) and C)
F) A) and B)

Question 2

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

Accepted Answer

A)   the payment by government of a fraction of a poor family's rent.
B)   higher taxes on rental income earned by landlords.
C)   a policy that prevents landlords from evicting tenants.
D)   a policy that allows government to confiscate residential property for the purpose of commercial development.E) All of the above
F) None of the above

Question 3

Figure 6-10 
-Refer to Figure 6-10. A price ceiling set at

Accepted Answer

A)   $6 will be binding and will result in a shortage of 10 units.
B)   $6 will be binding and will result in a shortage of 6 units.
C)   $16 will be binding and will result in a shortage of 10 units.
D)   $16 will be binding and will result in a shortage of 4 units.E) A) and B)
F) A) and C)

Question 4

A tax on golf clubs will cause buyers of golf clubs to pay a higher price, sellers of golf clubs to receive a lower price, and fewer golf clubs to be sold.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A price ceiling set at $4 woul...

Question 6

A nonbinding price floor (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)   (iii)  only
B)   (iv)  only
C)   (i)  and (iii)  only
D)   (ii)  and (iv)  onlyE) None of the above
F) A) and B)

Question 7

Workers with high skills and much experience are not typically affected by the minimum wage.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

Accepted Answer

With a $6 tax per unit, the bu...

Question 9

The tax incidence

Accepted Answer

A)   is the manner in which the burden of a tax is shared among participants in a market.
B)   can be shifted to the buyer by imposing the tax on the buyers of a product in a market.
C)   can be shifted to the seller by imposing the tax on the sellers of a product in a market.
D)   All of the above are correct.E) A) and B)
F) A) and D)

Question 10

After a binding price floor becomes effective, a

Accepted Answer

A)   smaller quantity of the good is bought and sold.
B)   a larger quantity of the good is demanded.
C)   a smaller quantity of the good is supplied.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 11

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) A) and B)
F) B) and D)

Question 12

Figure 6-23
 
-Refer to Figure 6-23. The price paid by buyers after the tax is imposed is

Accepted Answer

A)   $3.
B)   $4.
C)   $5.
D)   $6.E) A) and C)
F) All of the above

Question 13

Figure 6-32 
-Refer to Figure 6-32. If the government set a price ceiling at $50, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set ...

Question 14

If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would

Accepted Answer

A)   increase by more than $1,000.
B)   increase by exactly $1,000.
C)   increase by less than $1,000.
D)   decrease by an indeterminate amount.E) A) and B)
F) A) and C)

Question 15

Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.

Accepted Answer

A) True 
 B)False

Question 16

The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

Accepted Answer

A) True 
 B)False

Question 17

In response to a shortage caused by the imposition of a binding price ceiling on a market,

Accepted Answer

A)   price will no longer be the mechanism that rations scarce resources.
B)   long lines of buyers may develop.
C)   sellers could ration the good or service according to their own personal biases.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 18

If the government levies a $0.25 tax per MP3 music file downloaded on buyers of MP3 music files, then the price received by sellers of MP3 music files would

Accepted Answer

A)   decrease by more than $0.25.
B)   decrease by exactly $0.25.
C)   decrease by less than $0.25.
D)   increase by an indeterminate amount.E) B) and C)
F) A) and B)

Question 19

Figure 6-12 
-Refer to Figure 6-12. When the price ceiling applies in this market, and the supply curve for gasoline shifts from S1 to S2, the resulting quantity of gasoline that is bought and sold is

Accepted Answer

A)   less than Q3.
B)   Q3.
C)   between Q1 and Q3.
D)   at least Q1.E) A) and B)
F) All of the above

Question 20

Which of the following observations would be consistent with the imposition of a binding price floor on a market? After the price floor becomes effective,

Accepted Answer

A)   a smaller quantity of the good is bought and sold.
B)   a larger quantity of the good is demanded.
C)   a smaller quantity of the good is supplied.
D)   the price falls below the equilibrium price.E) None of the above
F) B) and C)

Exam 6: Supply, Demand, and Government Policies

Figure 6-10 -Refer to Figure 6-10. A price ceiling set at

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The tax incidence

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A nonbinding price floor (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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In the housing market, supply and demand are

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Figure 6-23 -Refer to Figure 6-23. The price paid by buyers after the tax is imposed is

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The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

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Which of the following observations would be consistent with the imposition of a binding price floor on a market? After the price floor becomes effective,

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Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market, and the supply curve for gasoline shifts from S1 to S2, the resulting quantity of gasoline that is bought and sold is

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If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would

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Workers with high skills and much experience are not typically affected by the minimum wage.

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After a binding price floor becomes effective, a

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Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

Correct AnswerverifiedWith a $6 tax per unit, the bu...View AnswerShow Answer

Figure 6-25 -Refer to Figure 6-25. The burden of the tax on sellers is

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Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $50, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set ...View AnswerShow Answer

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

Correct AnswerverifiedA price ceiling set at $4 woul...View AnswerShow Answer

A tax on golf clubs will cause buyers of golf clubs to pay a higher price, sellers of golf clubs to receive a lower price, and fewer golf clubs to be sold.

Correct AnswerverifiedShow Answer

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

Correct AnswerverifiedShow Answer

In response to a shortage caused by the imposition of a binding price ceiling on a market,

Correct AnswerverifiedShow Answer

If the government levies a $0.25 tax per MP3 music file downloaded on buyers of MP3 music files, then the price received by sellers of MP3 music files would

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Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.

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With a $6 tax per unit, the bu...
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A price ceiling set ...
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A price ceiling set at $4 woul...
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