Question 1

Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

Accepted Answer

A)  Cellular phones become less popular.
B)  Traditional land line phones become more expensive.
C)  The components used to produce cellular phones become less expensive.
D)  Firms expect the price of cellular phones to fall in the future.E) B) and C)
F) C) and D)

Question 2

Figure 6-19 
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)  $3
B)  between $3 and $5
C)  between $5 and $7
D)  $7E) C) and D)
F) A) and B)

Question 3

To be binding, a price floor must be set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 4

The primary effect of rent control in the short run is to reduce rents.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)  A price ceiling set at $6 would be binding, but a price ceiling set at $12 would not be binding.
B)  A price floor set at $14 would be binding, but a price floor 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 $6 would result in a shortage.E) C) and D)
F) None of the above

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-26 
-Refer to Figure 6-26. The per-unit burden of the tax is

Accepted Answer

A)  $2 for buyers and $6 for sellers.
B)  $4 for buyers and $4 for sellers.
C)  $6 for buyers and $2 for sellers.
D)  $8 for buyers and $0 for sellers.E) B) and D)
F) A) and D)

Question 8

The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-26 
-Refer to Figure 6-26. The amount of the tax per unit is

Accepted Answer

A)  $4.
B)  $8.
C)  $14.
D)  $10.E) None of the above
F) A) and C)

Question 10

A tax on buyers shifts the demand curve and the supply curve.

Accepted Answer

A) True 
 B)False

Question 11

When a tax is placed on the sellers of a product, the

Accepted Answer

A)  size of the market decreases.
B)  effective price received by sellers decreases, and the price paid by buyers increases.
C)  supply of the product decreases.
D)  All of the above are correct.E) B) and D)
F) B) and C)

Question 12

Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?

Accepted Answer

A)  an accumulation of dirt in the interior of rental cars
B)  poor engine maintenance in rental cars
C)  free gasoline given to people as an incentive to a rent a car
D)  slow replacement of old rental cars with newer onesE) B) and D)
F) C) and D)

Question 13

In an unregulated labor market, the wage adjusts to balance labor supply and labor demand.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.

Accepted Answer

A) True 
 B)False

Question 15

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

Accepted Answer

A)  the payment by government of a fraction of a poor family's rent.
B)  higher taxes on rental income earned by landlords.
C)  a policy that prevents landlords from evicting tenants.
D)  a policy that allows government to confiscate residential property for the purpose of commercial development.E) A) and B)
F) C) and D)

Question 16

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

Accepted Answer

A) True 
 B)False

Question 17

You receive a paycheck from your employer, and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare)  tax. Which of the following statements is correct?

Accepted Answer

A)  This type of tax is an example of a payback tax.
B)  Your employer is required by law to pay $400 to match the $400 deducted from your check.
C)  The $400 that you paid is the true burden of the tax that falls on you, the employee.
D)  All of the above are correct.E) A) and D)
F) B) and C)

Question 18

When a tax is imposed in a market, it will​

Accepted Answer

A)  ​alter the behavior of buyers.
B)  ​alter the behavior of sellers.
C)  ​have no effect on the behavior or either buyers or sellers.
D)  ​affect the behavior of both buyers and sellers.E) C) and D)
F) All of the above

Question 19

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 B)
F) A) and C)

Question 20

Price controls

Accepted Answer

A)  always produce a fair outcome.
B)  always produce an efficient outcome.
C)  can generate inequities of their own.
D)  All of the above are correct.E) A) and D)
F) C) and D)

Exam 6: Supply, Demand, and Government Policies

Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?

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A tax on buyers shifts the demand curve and the supply curve.

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The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

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In an unregulated labor market, the wage adjusts to balance labor supply and labor demand.

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

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An alternative to rent-control laws that would not reduce the quantity of housing supplied is

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Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

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Price controls

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You receive a paycheck from your employer, and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

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Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

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A tax on the sellers of coffee mugs

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Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

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Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.

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The primary effect of rent control in the short run is to reduce rents.

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When a tax is imposed in a market, it will​

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a tax is placed on the sellers of a product, the

Correct AnswerverifiedShow Answer

Figure 6-26 -Refer to Figure 6-26. The per-unit burden of the tax is

Correct AnswerverifiedShow Answer

To be binding, a price floor must be set above the equilibrium price.

Correct AnswerverifiedShow Answer

Figure 6-26 -Refer to Figure 6-26. The amount of the tax per unit is

Correct AnswerverifiedShow Answer

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When a tax is imposed in a market, it will

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