Question 1

Figure 6-7 
-Refer to Figure 6-7. Suppose a price floor of $8 is imposed on this market. As a result,

Accepted Answer

A)  buyers' total expenditure on the good decreases by $20.
B)  the supply curve shifts to the left; quantity sold is now 30 units and the price is $8.
C)  the quantity of the good demanded decreases by 10 units.
D)  the price of the good continues to serve as the rationing mechanism.E) All of the above
F) C) and D)

Question 2

A tax on the buyers of cameras encourages

Accepted Answer

A)  sellers to supply a smaller quantity at every price.
B)  buyers to demand a smaller quantity at every price.
C)  sellers to supply a larger quantity at every price.
D)  Both a)  and b)  are correct.E) A) and C)
F) None of the above

Question 3

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 4

Table 6-6 
-Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set ...

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) None of the above
F) A) and C)

Question 6

Table 6-6 
-Refer to Table 6-6. If the government set a price ceiling at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $4 woul...

Question 7

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-1
Panel (a) 
Panel (b)   
-Refer to Figure 6-1. The price ceiling shown in panel (a)

Accepted Answer

A)  is not binding.
B)  creates a surplus.
C)  creates a shortage.
D)  Both a)  and b)  are correct.E) B) and C)
F) A) and D)

Question 9

If the government removes a binding price ceiling from a market, then the price paid by buyers will

Accepted Answer

A)  increase, and the quantity sold in the market will increase.
B)  increase, and the quantity sold in the market will decrease.
C)  decrease, and the quantity sold in the market will increase.
D)  decrease, and the quantity sold in the market will decrease.E) A) and C)
F) A) and B)

Question 10

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) B) and C)
F) B) and D)

Question 11

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $4.

Accepted Answer

A) True 
 B)False

Question 12

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Accepted Answer

A) True 
 B)False

Question 13

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

Accepted Answer

A)  not change, and the price received by sellers will not change.
B)  not change, and the price received by sellers will decrease.
C)  decrease, and the price received by sellers will not change.
D)  decrease, and the price received by sellers will decrease.E) A) and B)
F) B) and C)

Question 14

Scenario 6-1
Suppose that demand in the market for good X is given by the equation  and that supply in the market for good X is given by the equation 
-Refer to Scenario 6-1. If the government set a price floor at $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at...

Question 15

Figure 6-32 
-Refer to Figure 6-32. If the government set a price ceiling at $80, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $80 wou...

Question 16

A tax on buyers shifts the demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 17

The goal of rent control is to help the poor by making housing more affordable.

Accepted Answer

A) True 
 B)False

Question 18

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Accepted Answer

A) True 
 B)False

Question 19

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Accepted Answer

A)  both taxes would fall more heavily on the buyers than on the sellers.
B)  the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers.
C)  the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers.
D)  both taxes would fall more heavily on the sellers than on the buyers.E) None of the above
F) All of the above

Question 20

Table 6-1 
-Refer to Table 6-1. Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?

Accepted Answer

A)  0 units
B)  400 units
C)  1200 units
D)  1600 unitsE) B) and C)
F) B) and D)

Exam 6: Supply, Demand, and Government Policies

A tax on the buyers of cameras encourages

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A binding price ceiling causes quantity demanded to be less than quantity supplied.

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A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

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A tax on buyers shifts the demand curve to the right.

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Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

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Figure 6-7 -Refer to Figure 6-7. Suppose a price floor of $8 is imposed on this market. As a result,

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Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $80, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set at $80 wou...View AnswerShow Answer

The quantity sold in a market will increase if the government

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Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. The price ceiling shown in panel (a)

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The goal of rent control is to help the poor by making housing more affordable.

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Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. If the government set a price floor at $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price floor set at...View AnswerShow Answer

Table 6-6 -Refer to Table 6-6. If the government set a price ceiling at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set at $4 woul...View AnswerShow Answer

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

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

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Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?

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

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Table 6-6 -Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set ...View AnswerShow Answer

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $4.

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If the government removes a binding price ceiling from a market, then the price paid by buyers will

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Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Correct AnswerverifiedShow Answer

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A price ceiling set at $80 wou...
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A price floor set at...
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A price ceiling set at $4 woul...
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A price ceiling set ...
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