Question 1

A legal minimum on the price at which a good can be sold is called a

Accepted Answer

A)   price subsidy.
B)   price floor.
C)   tax.
D)   price ceiling.E) All of the above
F) C) and D)

Question 2

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 D)
F) A) and C)

Question 3

When free markets ration goods with prices, it is both efficient and impersonal.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)   increases a binding price floor in that market.
B)   increases 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) All of the above
F) B) and C)

Question 5

Which of the following statements is correct?

Accepted Answer

A)   A tax levied on buyers will never be partially paid by sellers.
B)   Who actually pays a tax depends on the price elasticities of supply and demand.
C)   Government can decide who actually pays a tax.
D)   A tax levied on sellers always will be passed on completely to buyers.E) C) and D)
F) A) and C)

Question 6

How is the burden of a tax divided?

Accepted Answer

A)   (i)  and (ii)  only
B)   (iv)  only
C)   (i) , (ii) , and (iii)  only
D)   (i) , (ii) , and (iv)  onlyE) C) and D)
F) B) and D)

Question 7

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

States in the U.S. may mandate minimum wages above the federal level.

Accepted Answer

A) True 
 B)False

Question 10

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A)   buyers will bear a greater burden of the tax than the sellers.
B)   sellers will bear a greater burden of the tax than the buyers.
C)   buyers and sellers are likely to share the burden of the tax equally.
D)   buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.E) B) and C)
F) C) and D)

Question 11

To say that a price ceiling is nonbinding is to say that the price ceiling

Accepted Answer

A)   results in a surplus.
B)   is set above the equilibrium price.
C)   causes quantity demanded to exceed quantity supplied.
D)   All of the above are correct.E) A) and B)
F) A) and D)

Question 12

If a price floor is not binding, then it will have no effect on the market.

Accepted Answer

A) True 
 B)False

Question 13

When a free market for a good reaches equilibrium, anyone who is willing and able to pay the market price can buy the good.

Accepted Answer

A) True 
 B)False

Question 14

A tax of $1 on sellers always increases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 15

If the supply curve is more price elastic than the demand curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

Accepted Answer

The buyers will bear...

Question 16

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A)   no sellers actually benefit.
B)   some sellers benefit, but no sellers are harmed.
C)   some sellers benefit, and some sellers are harmed.
D)   all sellers benefit.E) B) and C)
F) A) and D)

Question 17

All buyers benefit from a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 18

A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

If the government removes a binding price ceiling from a market, then the price received by sellers will

Accepted Answer

A)   decrease, and the quantity sold in the market will decrease.
B)   decrease, and the quantity sold in the market will increase.
C)   increase, and the quantity sold in the market will decrease.
D)   increase, and the quantity sold in the market will increase.E) A) and B)
F) A) and C)

Exam 6: Supply, Demand, and Government Policies

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

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A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

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Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

Correct AnswerverifiedShow Answer

When a binding price floor is imposed on a market to benefit sellers,

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Price ceilings are typically imposed to benefit buyers.

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

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Which of the following statements is correct?

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How is the burden of a tax divided?

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If the supply curve is more price elastic than the demand curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

Correct AnswerverifiedThe buyers will bear...View AnswerShow Answer

All buyers benefit from a binding price ceiling.

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When free markets ration goods with prices, it is both efficient and impersonal.

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If a price ceiling is not binding, then

Correct AnswerverifiedShow Answer

If the government removes a binding price ceiling from a market, then the price received by sellers will

Correct AnswerverifiedShow Answer

A tax of $1 on sellers always increases the equilibrium price by $1.

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If a price floor is not binding, then it will have no effect on the market.

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

Correct AnswerverifiedShow Answer

When a free market for a good reaches equilibrium, anyone who is willing and able to pay the market price can buy the good.

Correct AnswerverifiedShow Answer

A legal minimum on the price at which a good can be sold is called a

Correct AnswerverifiedShow Answer

To say that a price ceiling is nonbinding is to say that the price ceiling

Correct AnswerverifiedShow Answer

States in the U.S. may mandate minimum wages above the federal level.

Correct AnswerverifiedShow Answer

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The buyers will bear...
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