Question 1

A shortage results when

Accepted Answer

A)   a nonbinding price ceiling is imposed on a market.
B)   a nonbinding price ceiling is removed from a market.
C)   a binding price ceiling is imposed on a market.
D)   a binding price ceiling is removed from a market.E) B) and D)
F) A) and B)

Question 2

Figure 6-10 
-Refer to Figure 6-10.The amount of the tax per unit is

Accepted Answer

A)   $4.
B)   $5.
C)   $6.
D)   $10.E) A) and B)
F) A) and D)

Question 3

If a price ceiling is not binding,then

Accepted Answer

A)   there will be a surplus in the market.
B)   there will be a shortage in the market.
C)   the market will be less efficient than it would be without the price ceiling.
D)   there will be no effect on the market price or quantity sold.E) A) and B)
F) A) and C)

Question 4

When a tax is imposed on the sellers of a good,the supply curve shifts

Accepted Answer

A)   upward by the amount of the tax.
B)   downward by the amount of the tax.
C)   upward by less than the amount of the tax.
D)   downward by less than the amount of the tax.E) A) and B)
F) A) and C)

Question 5

A $2.00 tax levied on the buyers of lawnmowers will shift the demand curve

Accepted Answer

A)   upward by exactly $2.00.
B)   upward by less than $2.00.
C)   downward by exactly $2.00.
D)   downward by less than $2.00.E) A) and B)
F) None of the above

Question 6

A price floor set below the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 7

The long-run effects of rent controls are a good illustration of the principle that

Accepted Answer

A)   society faces a short-run tradeoff between unemployment and inflation.
B)   the cost of something is what you give up to get it.
C)   people respond to incentives.
D)   government can sometimes improve on market outcomes.E) None of the above
F) A) and D)

Question 8

Suppose buyers of liquor are required to send $1.00 to the government for every bottle of liquor they buy.Further,suppose this tax causes the effective price received by sellers of liquor to fall by $0.60 per bottle.Which of the following statements is correct?

Accepted Answer

A)   This tax causes the supply curve for liquor to shift upward by $1.00 at each quantity of liquor.
B)   The price paid by buyers is $0.40 per bottle more than it was before the tax.
C)   Sixty percent of the burden of the tax falls on buyers.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 9

Figure 6-11 
-Refer to Figure 6-11.How much tax revenue does this tax generate for the government?

Accepted Answer

A)   $75
B)   $125
C)   $175
D)   $300E) A) and C)
F) B) and C)

Question 10

If a tax is imposed on a market with inelastic demand and elastic supply,then

Accepted Answer

A)   buyers will bear most of the burden of the tax.
B)   sellers will bear most of the burden of the tax.
C)   the burden of the tax will be shared equally between buyers and sellers.
D)   it is impossible to determine how the burden of the tax will be shared.E) All of the above
F) C) and D)

Question 11

Figure 6-4 
-Refer to Figure 6-4.Suppose a price floor of $7 is imposed on this market.As a result,

Accepted Answer

A)   buyers' total expenditure on the good decreases by $20.
B)   the supply curve shifts to the left so as to now pass through the point (quantity = 40,price = $7) .
C)   the quantity of the good demanded decreases by 20 units.
D)   the price of the good continues to serve as the rationing mechanism.E) A) and B)
F) C) and D)

Question 12

In 2007,the U.S.minimum wage according to federal law was

Accepted Answer

A)   $4.25 per hour.
B)   $5.15 per hour.
C)   $5.75 per hour.
D)   $7.25 per hour.E) A) and D)
F) A) and C)

Question 13

Figure 6-7 
-Refer to Figure 6-7.Which of the following statements is correct?

Accepted Answer

A)   A price floor set at $6 will be binding and will result in a surplus of 8 units.
B)   A price floor set at $6 will be binding and will result in a surplus of 4 units.
C)   A price floor set at $16 will be binding and will result in a surplus of 12 units.
D)   A price floor set at $16 will be binding and will result in a surplus of 6 units.E) A) and C)
F) C) and D)

Question 14

A price ceiling set below the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

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

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

At the equilibrium price,the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Accepted Answer

A) True 
 B)False

Question 18

The minimum wage is more often binding for teenagers than for other members of the labor force.

Accepted Answer

A) True 
 B)False

Question 19

A tax on the sellers of popcorn

Accepted Answer

A)   increases the size of the popcorn market.
B)   decreases the size of the popcorn market.
C)   has no effect on the size of the popcorn market.
D)   may increase,decrease,or have no effect on the size of the popcorn market.E) B) and C)
F) A) and B)

Question 20

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Accepted Answer

A)   a binding price floor
B)   a binding price ceiling
C)   a tax on the good
D)   More than one of the above is correct.E) A) and C)
F) A) and D)

Exam 6: Supply, Demand, and Government Policies

At the equilibrium price,the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

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The long-run effects of rent controls are a good illustration of the principle that

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Figure 6-7 -Refer to Figure 6-7.Which of the following statements is correct?

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When a tax is imposed on the sellers of a good,the supply curve shifts

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The minimum wage is more often binding for teenagers than for other members of the labor force.

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A price floor set below the equilibrium price is binding.

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Suppose buyers of liquor are required to send $1.00 to the government for every bottle of liquor they buy.Further,suppose this tax causes the effective price received by sellers of liquor to fall by $0.60 per bottle.Which of the following statements is correct?

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Which of the following causes the price paid by buyers to be different than the price received by sellers?

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

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Figure 6-10 -Refer to Figure 6-10.The amount of the tax per unit is

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A shortage results when

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

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If a price ceiling is not binding,then

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If a tax is imposed on a market with inelastic demand and elastic supply,then

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A tax on the sellers of popcorn

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Figure 6-11 -Refer to Figure 6-11.How much tax revenue does this tax generate for the government?

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Figure 6-4 -Refer to Figure 6-4.Suppose a price floor of $7 is imposed on this market.As a result,

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A price ceiling set below the equilibrium price is binding.

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A $2.00 tax levied on the buyers of lawnmowers will shift the demand curve

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In 2007,the U.S.minimum wage according to federal law was

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