Question 1

The minimum wage was instituted to ensure workers

Accepted Answer

A)   a middle-class standard of living.
B)   employment.
C)   a minimally adequate standard of living.
D)   unemployment compensation.E) B) and C)
F) All of the above

Question 2

Suppose the government imposes a 30-cent tax on the sellers of soft drinks. Which of the following is not correct? The tax would

Accepted Answer

A)   shift the supply curve upward by 30 cents.
B)   raise the equilibrium price by 30 cents.
C)   reduce the equilibrium quantity.
D)   discourage market activity.E) A) and C)
F) All of the above

Question 3

Figure 6-18
The vertical distance between points A and B represents the tax in the market. 
-Refer to Figure 6-18. The per-unit burden of the tax on buyers is

Accepted Answer

A)   $6.
B)   $8.
C)   $14.
D)   $24.E) B) and C)
F) A) and C)

Question 4

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Accepted Answer

A)   the actual tax incidence is unaffected by the legislated tax incidence.
B)   the employer now is required by law to pay more than 50 percent of the tax.
C)   the employee now is required by law to pay more than 50 percent of the tax.
D)   employers are no longer required by law to pay any portion of the tax.E) None of the above
F) C) and D)

Question 5

Using a supply and demand diagram, show a labor market with a binding minimum wage. Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

Accepted Answer

For this example, a $300 price ceiling w...

Question 6

Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift

Accepted Answer

A)   demand, raising both the equilibrium price and quantity in the market for artificially-sweetened beverages.
B)   demand, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially- sweetened beverages.
C)   supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially- sweetened beverages.
D)   supply, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially- sweetened beverages.E) C) and D)
F) A) and B)

Question 7

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un...

Question 8

Which of the following is not correct?

Accepted Answer

A)   The economy contains many labor markets for different types of workers.
B)   The impact of the minimum wage depends on the skill and experience of the worker.
C)   The minimum wage is binding for workers with high skills and much experience.
D)   The minimum wage is not binding when the equilibrium wage is above the minimum wage.E) B) and D)
F) A) and B)

Question 9

Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect

Accepted Answer

A)   most of the burden of the tax to fall on sellers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government.
B)   most of the burden of the tax to fall on buyers of cigarettes, regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government.
C)   the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government.
D)   a large percentage of smokers to quit smoking in response to the tax.E) A) and B)
F) A) and C)

Question 10

Figure 6-27
This figure shows the market demand and market supply curves for good Z. 
-Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)   $16
B)   between $16 and $20
C)   between $20 and $22
D)   $22E) None of the above
F) All of the above

Question 11

A minimum wage that is set below a market's equilibrium wage will

Accepted Answer

A)   result in an excess demand for labor, that is, unemployment.
B)   result in an excess demand for labor, that is, a shortage of workers.
C)   result in an excess supply of labor, that is, unemployment.
D)   have no impact on employment.E) B) and D)
F) A) and B)

Question 12

Table 6-5
 
-Refer to Table 6-5. Suppose the government imposes a price ceiling of $3 on this market. What will be the size of the shortage in this market?

Accepted Answer

A)   0 units
B)   30 units
C)   45 units
D)   75 unitsE) A) and B)
F) All of the above

Question 13

Figure 6-3
Panel a)  Panel b) 
  
-Refer to Figure 6-3. A nonbinding price floor is shown in

Accepted Answer

A)   both panel a)  and panel b) .
B)   panel a)  only.
C)   panel b)  only.
D)   neither panel a)  nor panel b) .E) B) and C)
F) C) and D)

Question 14

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

Accepted Answer

A) True 
 B)False

Question 15

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Accepted Answer

A) True 
 B)False

Question 16

Figure 6-8 
-Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

Accepted Answer

A)   a price ceiling of $3 is imposed.
B)   a price ceiling of $5 is imposed.
C)   a price floor of $5 is imposed.
D)   All of the above are correct.E) A) and D)
F) None of the above

Question 17

Figure 6-7 
-Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

Accepted Answer

A)   the quantity of the good supplied decreases by 20 units.
B)   the demand curve shifts to the left; quantity sold is now 30 units and the price is $5.
C)   buyers' total expenditure on the good decreases by $80.
D)   the price of the good continues to serve as the rationing mechanism.E) A) and B)
F) None of the above

Question 18

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 19

The economy contains many labor markets for different types of workers.

Accepted Answer

A) True 
 B)False

Question 20

Figure 6-17
This figure shows the market demand and market supply curves for good Y 
-Refer to Figure 6-17. A government-imposed price of $24 in this market is an example of a

Accepted Answer

A)   binding price ceiling that creates a shortage.
B)   non-binding price ceiling that creates a shortage.
C)   binding price floor that creates a surplus.
D)   non-binding price floor that creates a surplus.E) B) and D)
F) None of the above

Exam 6: Supply, Demand, and Government Policies

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

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The minimum wage was instituted to ensure workers

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Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. A nonbinding price floor is shown in

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Figure 6-8 -Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

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A minimum wage that is set below a market's equilibrium wage will

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Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

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Table 6-5 -Refer to Table 6-5. Suppose the government imposes a price ceiling of $3 on this market. What will be the size of the shortage in this market?

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Suppose the government imposes a 30-cent tax on the sellers of soft drinks. Which of the following is not correct? The tax would

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Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

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The economy contains many labor markets for different types of workers.

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Figure 6-17 This figure shows the market demand and market supply curves for good Y -Refer to Figure 6-17. A government-imposed price of $24 in this market is an example of a

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Using a supply and demand diagram, show a labor market with a binding minimum wage. Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

Correct AnswerverifiedFor this example, a $300 price ceiling w...View AnswerShow Answer

Figure 6-7 -Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

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Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The per-unit burden of the tax on buyers is

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Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift

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Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

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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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Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Correct AnswerverifiedWith a $6 tax per un...View AnswerShow Answer

Which of the following is not correct?

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Assume the demand for cigarettes is relatively inelastic, and the supply of cigarettes is relatively elastic. When cigarettes are taxed, we would expect

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For this example, a $300 price ceiling w...
View Answer

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With a $6 tax per un...
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