Question 1

Table 6-2
 
-Refer to Table 6-2.A price ceiling set at $5 will

Accepted Answer

A)   be binding and will result in a shortage of 50 units.
B)   be binding and will result in a shortage of 75 units.
C)   be binding and will result in a shortage of 125 units.
D)   not be binding.E) A) and D)
F) B) and C)

Question 2

Figure 6-16
 
-Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

Accepted Answer

A)   less than 25 units
B)   25 units
C)   between 25 units and 50 units
D)   greater than 50 unitsE) A) and D)
F) A) and C)

Question 3

Figure 6-26
 
-Refer to Figure 6-26.A price ceiling set at $70 would create a shortage of 40 units.

Accepted Answer

A) True 
 B)False

Question 4

The U.S.Congress first instituted a minimum wage in

Accepted Answer

A)   1776.
B)   1812.
C)   1938.
D)   1975.E) A) and C)
F) C) and D)

Question 5

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

Accepted Answer

A)   not shift.
B)   shift up.
C)   shift down.
D)   become flatter.E) C) and D)
F) All of the above

Question 6

Suppose that the demand for lava lamps is elastic,and the supply of lava lamps is inelastic.A tax of $2 per lamp levied on lava lamps will increase the price paid by buyers of lava lamps by

Accepted Answer

A)   less than $1.
B)   $1.
C)   between $1 and $2.
D)   $2.E) All of the above
F) B) and D)

Question 7

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) A) and B)
F) A) and C)

Question 8

Price floors are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 9

One economist has argued that rent control is "the best way to destroy a city,other than bombing." Why would an economist say this?

Accepted Answer

A)   He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people.
B)   He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city.
C)   He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted.
D)   He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.E) All of the above
F) A) and D)

Question 10

A tax imposed on the buyers of a good will

Accepted Answer

A)   raise both the price buyers pay and the effective price sellers receive.
B)   raise the price buyers pay and lower the effective price sellers receive.
C)   lower the price buyers pay and raise the effective price sellers receive.
D)   lower both the price buyers pay and the effective price sellers receive.E) A) and D)
F) A) and C)

Question 11

A tax on the sellers of coffee mugs

Accepted Answer

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

Question 12

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 13

One common example of a price ceiling is rent control.

Accepted Answer

A) True 
 B)False

Question 14

In the 1970s,long lines at gas stations in the United States were primarily a result of the fact that

Accepted Answer

A)   OPEC raised the price of crude oil in world markets.
B)   U.S. gasoline producers raised the price of gasoline.
C)   the U.S. government maintained a price ceiling on gasoline.
D)   Americans typically commuted long distances.E) B) and C)
F) All of the above

Question 15

A surplus results when a

Accepted Answer

A)   nonbinding price floor is imposed on a market.
B)   nonbinding price floor is removed from a market.
C)   binding price floor is imposed on a market.
D)   binding price floor is removed from a market.E) B) and D)
F) A) and D)

Question 16

A tax on buyers increases the size of a market.

Accepted Answer

A) True 
 B)False

Question 17

Because the supply and demand of housing are inelastic in the short run,the initial shortage caused by rent control is large.

Accepted Answer

A) True 
 B)False

Question 18

Figure 6-20
 
-Refer to Figure 6-20.In the after-tax equilibrium,government collects

Accepted Answer

A)   $1,440 in tax revenue; of this amount, $960 represents a burden on buyers and $480 represents a burden on sellers.
B)   $1,440 in tax revenue; of this amount, $720 represents a burden on buyers and $720 represents a burden on sellers.
C)   $1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers.
D)   $1,680 in tax revenue; of this amount, $840 represents a burden on buyers and $840 represents a burden on sellers.E) A) and B)
F) A) and C)

Question 19

The wedge between the buyers' price and the sellers' price is the same,regardless of whether the tax is levied on buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 20

Figure 6-16
 
-Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)   $5
B)   between $5 and $10
C)   between $10 and $14
D)   $14E) C) and D)
F) All of the above

Exam 6: Supply, Demand, And Government Policies.

Suppose that the demand for lava lamps is elastic,and the supply of lava lamps is inelastic.A tax of $2 per lamp levied on lava lamps will increase the price paid by buyers of lava lamps by

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In the 1970s,long lines at gas stations in the United States were primarily a result of the fact that

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One common example of a price ceiling is rent control.

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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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Figure 6-16 -Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

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A tax on buyers increases the size of a market.

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Price floors are typically imposed to benefit buyers.

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Figure 6-20 -Refer to Figure 6-20.In the after-tax equilibrium,government collects

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Figure 6-26 -Refer to Figure 6-26.A price ceiling set at $70 would create a shortage of 40 units.

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Table 6-2 -Refer to Table 6-2.A price ceiling set at $5 will

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The U.S.Congress first instituted a minimum wage in

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A surplus results when a

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A tax on the sellers of coffee mugs

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

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One economist has argued that rent control is "the best way to destroy a city,other than bombing." Why would an economist say this?

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A tax imposed on the buyers of a good will

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Figure 6-16 -Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

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Because the supply and demand of housing are inelastic in the short run,the initial shortage caused by rent control is large.

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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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The wedge between the buyers' price and the sellers' price is the same,regardless of whether the tax is levied on buyers or sellers.

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