Question 1

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 2

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) B) and D)
F) All of the above

Question 3

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 4

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Accepted Answer

A)   demand curve will shift upward by $20, and the effective price received by sellers will increase by $20.
B)   demand curve will shift upward by $20, and the effective price received by sellers will increase by less than $20.
C)   supply curve will shift downward by $20, and the price paid by buyers will decrease by $20.
D)   supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20.E) A) and C)
F) None of the above

Question 5

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Accepted Answer

A) True 
 B)False

Question 6

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,

Accepted Answer

A)   quantity demanded decreases.
B)   quantity supplied increases.
C)   there is a surplus.
D)   All of the above are correct.E) B) and C)
F) All of the above

Question 7

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 8

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the buyers in this market?

Accepted Answer

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

Question 9

If a price floor is a binding constraint on a market, then

Accepted Answer

A)   the equilibrium price must be above the price floor.
B)   the quantity demanded must exceed the quantity supplied.
C)   sellers cannot sell all they want to sell at the price floor.
D)   buyers cannot buy all they want to buy at the price floor.E) C) and D)
F) A) and B)

Question 10

A tax on sellers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-21 
-Refer to Figure 6-21. What is the amount of the tax per unit?

Accepted Answer

A)   $1
B)   $2
C)   $3
D)   $4E) A) and D)
F) None of the above

Question 12

The burden of a luxury tax falls

Accepted Answer

A)   more on the rich than on the middle class.
B)   more on the poor than on the rich.
C)   more on the middle class than on the rich.
D)   equally on the rich, the middle class, and the poor.E) B) and C)
F) A) and B)

Question 13

Workers, rather than firms, bear most of the burden of the payroll tax.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-20 
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)   Buyers and sellers will share the burden of the tax equally.
B)   Buyers will bear more of the burden of the tax than sellers will.
C)   Sellers will bear more of the burden of the tax than buyers will.
D)   Any of the above is possible.E) None of the above
F) A) and C)

Question 15

Most labor economists believe that the supply of labor is much more elastic than the demand.

Accepted Answer

A) True 
 B)False

Question 16

The following table shows the demand and supply schedules in a particular market.
  If the government sets a price floor $2 above the equilibrium price, how many units will be sold in this market?

Accepted Answer

The equilibrium price is $3, so the pric...

Question 17

Figure 6-30
Panel a)  Panel b) 
   Panel c)  
-Refer to Figure 6-30. In which market will the tax burden be most equally divided between buyers and sellers?

Accepted Answer

A)   the market shown in panel a) .
B)   the market shown in panel b) .
C)   the market shown in panel c) .
D)   All of the above are correct.E) All of the above
F) A) and D)

Question 18

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Accepted Answer

A) True 
 B)False

Question 19

A $0.10 tax levied on the sellers of chocolate bars will cause the

Accepted Answer

A)   supply curve for chocolate bars to shift down by $0.10.
B)   supply curve for chocolate bars to shift up by $0.10.
C)   demand curve for chocolate bars to shift down by $0.10.
D)   demand curve for chocolate bars to shift up by $0.10.E) All of the above
F) A) and B)

Question 20

If a price floor is not binding, then

Accepted Answer

A)   the equilibrium price is above the price floor.
B)   the equilibrium price is below the price floor.
C)   there will be a surplus in the market.
D)   there will be a shortage in the market.E) A) and B)
F) A) and C)

Exam 6: Supply, Demand, and Government Policies

The following table shows the demand and supply schedules in a particular market. If the government sets a price floor $2 above the equilibrium price, how many units will be sold in this market?

Correct AnswerverifiedThe equilibrium price is $3, so the pric...View AnswerShow Answer

If a price floor is a binding constraint on a market, then

Correct AnswerverifiedShow Answer

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Correct AnswerverifiedShow Answer

Workers, rather than firms, bear most of the burden of the payroll tax.

Correct AnswerverifiedShow Answer

Figure 6-30 Panel a) Panel b) Panel c) -Refer to Figure 6-30. In which market will the tax burden be most equally divided between buyers and sellers?

Correct AnswerverifiedShow Answer

Figure 6-21 -Refer to Figure 6-21. What is the amount of the tax per unit?

Correct AnswerverifiedShow Answer

A price ceiling is binding when it is set

Correct AnswerverifiedShow Answer

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the buyers in this market?

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

If a price floor is not binding, then

Correct AnswerverifiedShow Answer

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,

Correct AnswerverifiedShow Answer

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

Correct AnswerverifiedShow Answer

The burden of a luxury tax falls

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Most labor economists believe that the supply of labor is much more elastic than the demand.

Correct AnswerverifiedShow Answer

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Correct AnswerverifiedShow Answer

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Correct AnswerverifiedShow Answer

A tax on sellers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Correct AnswerverifiedShow Answer

A $0.10 tax levied on the sellers of chocolate bars will cause the

Correct AnswerverifiedShow Answer

Correct Answer
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The equilibrium price is $3, so the pric...
View Answer

Correct Answer
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With a $6 tax per unit, the pr...
View Answer

Correct Answer
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