Question 1

Minimum-wage laws dictate the

Accepted Answer

A)   average price employers must pay for labor.
B)   highest price employers may pay for labor.
C)   lowest price employers may pay for labor.
D)   the highest and lowest prices employers may pay for labor.E) A) and B)
F) A) and C)

Question 2

Which of the following is not a short-run effect of rent control on the housing market?

Accepted Answer

A)   reduced rents
B)   a large shortage
C)   a small increase in quantity demanded
D)   a small decrease in quantity suppliedE) B) and C)
F) A) and D)

Question 3

Figure 6-6 
-Refer to Figure 6-6. Which of the following price ceilings would be binding in this market?

Accepted Answer

A)   $8
B)   $6
C)   $12
D)   $10E) B) and C)
F) A) and C)

Question 4

Renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments.

Accepted Answer

A) True 
 B)False

Question 5

The tax burden will fall most heavily on buyers of the good when the demand curve

Accepted Answer

A)   is relatively steep, and the supply curve is relatively flat.
B)   is relatively flat, and the supply curve is relatively steep.
C)   and the supply curve are both relatively flat.
D)   and the supply curve are both relatively steep.E) C) and D)
F) A) and B)

Question 6

Figure 6-25 
-Refer to Figure 6-25. The burden of the tax on buyers is

Accepted Answer

A)   $1 per unit.
B)   $1.50 per unit.
C)   $2 per unit.
D)   $3 per unit.E) B) and C)
F) All of the above

Question 7

Table 6-1
 
-Refer to Table 6-1. Suppose the government imposes a price ceiling of $70 on this market. What will be the size of the shortage in this market?

Accepted Answer

A)   0 units
B)   400 units
C)   600 units
D)   1000 unitsE) A) and B)
F) A) and C)

Question 8

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Accepted Answer

A) True 
 B)False

Question 9

Advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Accepted Answer

A) True 
 B)False

Question 10

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 B)
F) B) and C)

Question 11

If a tax is levied on the buyers of a product, then the demand curve will

Accepted Answer

A)   not shift.
B)   shift down.
C)   shift up.
D)   become flatter.E) B) and D)
F) B) and C)

Question 12

Figure 6-25 
-Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

Accepted Answer

A)   $150
B)   $180
C)   $250
D)   $300E) A) and B)
F) A) and C)

Question 13

Figure 6-20 
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)   $5
B)   between $5 and $10
C)   between $10 and $14
D)  
D)   $14E) A) and D)
F) B) and C)

Question 14

Figure 6-33 
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. What price will buyers pay for the good after the tax is imposed?

Accepted Answer

Buyers wil...

Question 15

A tax on sellers shifts the supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 16

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) B) and D)
F) None of the above

Question 17

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

Question 18

If a binding price floor is imposed on the video game market, then

Accepted Answer

A)   the demand for video games will decrease.
B)   the supply of video games will increase.
C)   a surplus of video games will develop.
D)   All of the above are correct.E) All of the above
F) None of the above

Question 19

If a tax is levied on the sellers of a product, then there will be a(n)

Accepted Answer

A)   downward shift of the demand curve.
B)   upward shift of the demand curve.
C)   decrease in quantity demanded.
D)   increase in quantity demanded.E) C) and D)
F) B) and D)

Question 20

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a (i)  binding price ceiling.
(ii)  non-binding price ceiling.
(iii)  binding price floor.
(iv)  non-binding price floor.

Accepted Answer

A)   (i)  only
B)   (ii)  only
C)   (i)  and (iv)  only
D)   (ii)  and (iii)  onlyE) B) and C)
F) None of the above

Exam 6: Supply, Demand, and Government Policies

Advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off.

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Figure 6-6 -Refer to Figure 6-6. Which of the following price ceilings would be binding in this market?

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Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price ceiling of $70 on this market. What will be the size of the shortage in this market?

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If a tax is levied on the sellers of a product, then there will be a(n)

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Renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments.

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Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a (i) binding price ceiling. (ii) non-binding price ceiling. (iii) binding price floor. (iv) non-binding price floor.

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A tax on sellers shifts the supply curve to the left.

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Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

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Minimum-wage laws dictate the

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Figure 6-25 -Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

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Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. What price will buyers pay for the good after the tax is imposed?

Correct AnswerverifiedBuyers wil...View AnswerShow Answer

If a tax is levied on the buyers of a product, then the demand curve will

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If a binding price floor is imposed on the video game market, then

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Which of the following is not a short-run effect of rent control on the housing market?

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A tax on sellers and an increase in input prices affect the supply curve in the same way.

Correct AnswerverifiedShow Answer

The tax burden will fall most heavily on buyers of the good when the demand curve

Correct AnswerverifiedShow Answer

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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Figure 6-25 -Refer to Figure 6-25. The burden of the tax on buyers is

Correct AnswerverifiedShow Answer

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

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

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Buyers wil...
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