Question 1

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)   $10
C)   $12
D)   $14E) A) and B)
F) A) and C)

Question 2

Figure 6-7 
-Refer to Figure 6-7.Which of the following price controls would cause a shortage of 20 units of the good?

Accepted Answer

A)   a price ceiling set at $4
B)   a price ceiling set at $5
C)   a price floor set at $7
D)   a price floor set at $8E) A) and D)
F) All of the above

Question 3

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) A) and C)

Question 4

Even though federal law mandates that workers and firms each pay half of the total FICA tax,the tax burden may not fall equally on workers and firms.

Accepted Answer

A) True 
 B)False

Question 5

A binding minimum wage creates a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 6

Figure 6-27 
-Refer to Figure 6-27.If the government places a $2 tax in the market,the buyer bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 7

The minimum wage,if it is binding,lowers the incomes of

Accepted Answer

A)   no workers.
B)   only those workers who become unemployed.
C)   only those workers who have jobs.
D)   all workers.E) B) and C)
F) A) and B)

Question 8

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

Question 9

Figure 6-3
This figure shows the market demand and market supply curves for good Z. 
-Refer to Figure 6-3.Suppose a tax of $6 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)   $16
B)   between $16 and $20
C)   between $20 and $22
D)   $22E) None of the above
F) C) and D)

Question 10

Workers with high skills and much experience are not typically affected by the minimum wage.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-6 
-Refer to Figure 6-6.Which of the following statements is correct?

Accepted Answer

A)   A price ceiling set at $12 would be binding,but a price ceiling set at $8 would not be binding.
B)   A price floor set at $8 would be binding,but a price ceiling set at $8 would not be binding.
C)   A price ceiling set at $9 would result in a surplus.
D)   A price floor set at $11 would result in a surplus.E) All of the above
F) B) and C)

Question 12

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)   movement up and to the left along the demand curve.
D)   movement down and to the right along the demand curve.E) A) and D)
F) B) and C)

Question 13

Figure 6-14
The vertical distance between points A and B represents the tax in the market. 
-Refer to Figure 6-14.The price that buyers pay after the tax is imposed is

Accepted Answer

A)   $8.
B)   $10.
C)   $16.
D)   $24.E) All of the above
F) B) and C)

Question 14

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i) 
Supply is more elastic than the demand.
(ii) 
Demand in more elastic than the supply.
(iii) 
Tax is placed on the sellers of the product.
(iv) 
Tax is placed on the buyers of the product.

Accepted Answer

A)   (i) only
B)   (ii) only
C)   (i) and (iv) only
D)   (ii) and (iii) onlyE) All of the above
F) C) and D)

Question 15

Rent control

Accepted Answer

A)   is an example of a price ceiling.
B)   leads to a larger shortage of apartments in the long run than in the short run.
C)   leads to lower rents and,in the long run,to lower-quality housing.
D)   All of the above are correct.E) All of the above
F) C) and D)

Question 16

When a tax is placed on the buyers of lemonade,the

Accepted Answer

A)   sellers bear the entire burden of the tax.
B)   buyers bear the entire burden of the tax.
C)   burden of the tax will be always be equally divided between the buyers and the sellers.
D)   burden of the tax will be shared by the buyers and the sellers,but the division of the burden is not always equal.E) A) and C)
F) All of the above

Question 17

The quantity sold in a market will increase if the government

Accepted Answer

A)   decreases 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)   More than one of the above is correct.E) A) and D)
F) A) and C)

Question 18

If the government removes a tax on a good,then the price paid by buyers will

Accepted Answer

A)   increase,and the price received by sellers will increase.
B)   increase,and the price received by sellers will decrease.
C)   decrease,and the price received by sellers will increase.
D)   decrease,and the price received by sellers will decrease.E) A) and B)
F) A) and C)

Question 19

Which of the following is correct? A tax burden

Accepted Answer

A)   falls more heavily on the side of the market that is more elastic.
B)   falls more heavily on the side of the market that is less elastic.
C)   falls more heavily on the side of the market that is closest to unit elastic.
D)   is distributed independently of the relative elasticities of supply and demand.E) C) and D)
F) B) and D)

Question 20

Rent control may lead to lower rents for those who find housing,but the quality of the housing may also be lower.

Accepted Answer

A) True 
 B)False

Exam 6: Supply,demand,and Government Policies

Under rent control,tenants can expect

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A binding minimum wage creates a surplus of labor.

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Figure 6-14 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-14.The price that buyers pay after the tax is imposed is

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Workers with high skills and much experience are not typically affected by the minimum wage.

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When a tax is placed on the buyers of lemonade,the

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Which of the following is correct? A tax burden

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Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i) Supply is more elastic than the demand. (ii) Demand in more elastic than the supply. (iii) Tax is placed on the sellers of the product. (iv) Tax is placed on the buyers of the product.

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

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Figure 6-7 -Refer to Figure 6-7.Which of the following price controls would cause a shortage of 20 units of the good?

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Figure 6-3 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-3.Suppose a tax of $6 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

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Rent control

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If the government removes a tax on a good,then the price paid by buyers will

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The minimum wage,if it is binding,lowers the incomes of

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Figure 6-27 -Refer to Figure 6-27.If the government places a $2 tax in the market,the buyer bears $1 of the tax burden.

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Figure 6-6 -Refer to Figure 6-6.Which of the following statements is correct?

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Even though federal law mandates that workers and firms each pay half of the total FICA tax,the tax burden may not fall equally on workers and firms.

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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

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The quantity sold in a market will increase if the government

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Rent control may lead to lower rents for those who find housing,but the quality of the housing may also be lower.

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