Question 1

Under rent control, tenants can expect

Accepted Answer

A)   lower rent and higher quality housing.
B)   lower rent and lower quality housing.
C)   higher rent and a shortage of rental housing.
D)   higher rent and a surplus of rental housing.E) A) and B)
F) B) and C)

Question 2

The price paid by buyers in a market will decrease if the government

Accepted Answer

A)   imposes a binding price floor in that market.
B)   increases a binding price ceiling in that market.
C)   increases a tax on the good sold in that market.
D)   decreases a binding price floor in that market.E) B) and C)
F) C) and D)

Question 3

A tax imposed on the sellers of a good will raise the

Accepted Answer

A)   price paid by buyers and lower the equilibrium quantity.
B)   price paid by buyers and raise the equilibrium quantity.
C)   effective price received by sellers and lower the equilibrium quantity.
D)   effective price received by sellers and raise the equilibrium quantity.E) B) and C)
F) C) and D)

Question 4

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The tax burden fall...

Question 5

Figure 6-22 
-Refer to Figure 6-22. The amount of the tax per unit is

Accepted Answer

A)   $2.00.
B)   $1.50.
C)   $3.00.
D)   $0.50.E) A) and B)
F) A) and C)

Question 6

The minimum wage has its greatest impact on the market for teenage labor.

Accepted Answer

A) True 
 B)False

Question 7

A binding price ceiling i)  causes a surplus.
Ii)  causes a shortage.
Iii)  is set at a price above the equilibrium price.
Iv)  is set at a price below the equilibrium price.

Accepted Answer

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

Question 8

An example of a price floor is

Accepted Answer

A)   the regulation of gasoline prices in the U.S. in the 1970s.
B)   rent control.
C)   the minimum wage.
D)   any restriction on price that leads to a shortage.E) A) and B)
F) All of the above

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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) A) and D)
F) C) and D)

Question 11

If a nonbinding price floor 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) A) and B)
F) B) and C)

Question 12

Figure 6-13
This figure shows the market demand and market supply curves for good X. 
-Refer to Figure 6-13. If the government imposes a price floor of $3 on this market, then there will be

Accepted Answer

A)   no surplus.
B)   a surplus of 10 units.
C)   a surplus of 15 units.
D)   a surplus of 20 units.E) A) and B)
F) A) and C)

Question 13

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

Accepted Answer

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

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A payroll tax is a

Accepted Answer

A)   fixed number of dollars that every firm must pay to the government for each worker that the firm hires.
B)   tax that each firm must pay to the government before the firm can hire workers and operate its business.
C)   tax on the wages that firms pay their workers.
D)   tax on all wages above the minimum wage.E) A) and B)
F) All of the above

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

A tax on the buyers of sofas

Accepted Answer

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

Question 18

After a binding price floor becomes effective, a

Accepted Answer

A)   smaller quantity of the good is bought and sold.
B)   a larger quantity of the good is demanded.
C)   a smaller quantity of the good is supplied.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 19

Figure 6-2 
-Refer to Figure 6-2. The price ceiling causes quantity

Accepted Answer

A)   supplied to exceed quantity demanded by 45 units.
B)   supplied to exceed quantity demanded by 85 units.
C)   demanded to exceed quantity supplied by 45 units.
D)   demanded to exceed quantity supplied by 85 units.E) B) and C)
F) C) and D)

Question 20

Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

Accepted Answer

A)   less than $10
B)   $10.
C)   between $10 and $20.
D)   $20.E) None of the above
F) B) and D)

Exam 6: Supply, Demand, and Government Policies

The minimum wage has its greatest impact on the market for teenage labor.

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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, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

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

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price floor of $3 on this market, then there will be

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A tax on the buyers of sofas

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An example of a price floor is

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A binding price ceiling i) causes a surplus. Ii) causes a shortage. Iii) is set at a price above the equilibrium price. Iv) is set at a price below the equilibrium price.

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A tax imposed on the sellers of a good will raise the

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Under rent control, tenants can expect

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Figure 6-22 -Refer to Figure 6-22. The amount of the tax per unit is

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A payroll tax is a

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

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In a competitive market free of government regulation,

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

Correct AnswerverifiedShow Answer

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Correct Answerverified The tax burden fall...View AnswerShow Answer

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

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The price paid by buyers in a market will decrease if the government

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After a binding price floor becomes effective, a

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

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Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

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Figure 6-2 -Refer to Figure 6-2. The price ceiling causes quantity

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With a $6 tax per unit, the bu...
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The tax burden fall...
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