Question 1

Which of the following statements about the effects of rent control is correct?

Accepted Answer

A)  The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments.
B)  The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments.
C)  In the long run, rent control leads to a shortage of apartments and an improvement in the quality of available apartments.
D)  The effects of rent control are very noticeable to the public in the short run because the primary effects of rent control occur very quickly.E) A) and B)
F) None of the above

Question 2

In a competitive market free of government regulation,

Accepted Answer

A)  price adjusts until quantity demanded is greater than quantity supplied.
B)  price adjusts until quantity demanded is less than quantity supplied.
C)  price adjusts until quantity demanded equals quantity supplied.
D)  supply adjusts to meet demand at every price.E) B) and C)
F) All of the above

Question 3

Which of the following is not a function of prices in a market system?

Accepted Answer

A)  Prices have the crucial job of balancing supply and demand.
B)  Prices send signals to buyers and sellers to help them make rational economic decisions.
C)  Prices coordinate economic activity.
D)  Prices ensure an equal distribution of goods and services among consumers.E) A) and D)
F) B) and C)

Question 4

Figure 6-17 
-Refer to Figure 6-17. The price that buyers pay after the tax is imposed is

Accepted Answer

A)  $8.00.
B)  $9.00.
C)  $10.50.
D)  $12.00.E) All of the above
F) None of the above

Question 5

Figure 6-5 
-Refer to Figure 6-5. Suppose the market is initially in equilibrium. Then the government imposes a price control, as represented by the horizontal line on the graph. If the price control is a price floor, then the price control

Accepted Answer

A)  causes the quantity demanded to decrease by 50 units, relative to the initial equilibrium.
B)  causes the quantity supplied to increase by 40 units, relative to the initial equilibrium.
C)  results in some firms being more successful than others in selling their goods.
D)  All of the above are correct.E) All of the above
F) B) and D)

Question 6

Figure 6-3
 
-Refer to Figure 6-3. A binding 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) A) and D)
F) A) and B)

Question 7

The rationing mechanisms that develop under binding price floors are usually efficient.

Accepted Answer

A) True 
 B)False

Question 8

If the government removes a binding price ceiling from a market, then the price paid by buyers will

Accepted Answer

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

Question 9

Figure 6-21 
-Refer to Figure 6-21. How much tax revenue does this tax generate for the government?

Accepted Answer

A)  $150
B)  $180
C)  $250
D)  $300E) None of the above
F) A) and D)

Question 10

Most labor economists believe that the supply of labor is

Accepted Answer

A)  less elastic than the demand, and, therefore, firms bear most of the burden of the payroll tax.
B)  less elastic than the demand, and, therefore, workers bear most of the burden of the payroll tax.
C)  more elastic than the demand, and, therefore, workers bear most of the burden of the payroll tax.
D)  more elastic than the demand, and, therefore, firms bear most of the burden of the payroll tax.E) All of the above
F) C) and D)

Question 11

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 12

Figure 6-11 
-Refer to Figure 6-11. Which of the following statements is not correct?

Accepted Answer

A)  A government-imposed price of $9 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B.
B)  A government-imposed price of $15 would be a binding price ceiling if market demand is either Demand A or Demand B.
C)  A government-imposed price of $3 would be a binding price ceiling if market demand is either Demand A or Demand B.
D)  A government-imposed price of $12 would be a binding price floor if market demand is Demand A and a non-binding price ceiling if market demand is Demand B.E) A) and D)
F) B) and C)

Question 13

When a tax is imposed on the buyers of a good, the demand 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 C)
F) None of the above

Question 14

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Accepted Answer

A) True 
 B)False

Question 15

There are several criticisms of the minimum wage. Which of the following is not one of those criticisms? The minimum wage

Accepted Answer

A)  often hurts those people who it is intended to help.
B)  results in an excess supply of low-skilled labor.
C)  prevents some unskilled workers from getting needed on-the-job training.
D)  fails to raise the wage of any employed person.E) All of the above
F) None of the above

Question 16

If a nonbinding price ceiling is imposed on a market, then the

Accepted Answer

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

Question 17

Figure 6-12 1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. B) Buyers of gasoline paid a price of P1 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. C) Buyers of gasoline paid a price of P2 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, with no shortage of gasoline at that price. D) The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 6-12. Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

Accepted Answer

A)  Buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price.
B)  Buyers of gasoline paid a price of P1 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price.
C)  Buyers of gasoline paid a price of P2 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, with no shortage of gasoline at that price.
D)  The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973.E) A) and B)
F) All of the above

Question 18

When a binding price ceiling is imposed on a market to benefit buyers,

Accepted Answer

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

Question 19

Figure 6-6 
-Refer to Figure 6-6. If the government imposes a price ceiling of $8 on this market, then there will be

Accepted Answer

A)  no shortage.
B)  a shortage of 10 units.
C)  a shortage of 20 units.
D)  a shortage of 40 units.E) A) and B)
F) None of the above

Question 20

A tax on sellers increases supply.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

The rationing mechanisms that develop under binding price floors are usually efficient.

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Figure 6-3 -Refer to Figure 6-3. A binding price floor is shown in

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Which of the following statements about the effects of rent control is correct?

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Figure 6-11 -Refer to Figure 6-11. Which of the following statements is not correct?

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Most labor economists believe that the supply of labor is

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When a binding price ceiling is imposed on a market to benefit buyers,

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Price ceilings are typically imposed to benefit buyers.

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A tax on sellers increases supply.

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Which of the following is not a function of prices in a market system?

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Figure 6-12 -Refer to Figure 6-12. Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

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Figure 6-6 -Refer to Figure 6-6. If the government imposes a price ceiling of $8 on this market, then there will be

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When a tax is imposed on the buyers of a good, the demand curve shifts

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Figure 6-5 -Refer to Figure 6-5. Suppose the market is initially in equilibrium. Then the government imposes a price control, as represented by the horizontal line on the graph. If the price control is a price floor, then the price control

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If the government removes a binding price ceiling from a market, then the price paid by buyers will

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In a competitive market free of government regulation,

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Figure 6-21 -Refer to Figure 6-21. How much tax revenue does this tax generate for the government?

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If a nonbinding price ceiling is imposed on a market, then the

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There are several criticisms of the minimum wage. Which of the following is not one of those criticisms? The minimum wage

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When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

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Figure 6-17 -Refer to Figure 6-17. The price that buyers pay after the tax is imposed is

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