Question 1

After a binding price floor becomes effective, a

Accepted Answer

A)  smaller quantity of the good is bought and sold.
B)  a larger quantity of the good is demanded.
C)  a smaller quantity of the good is supplied.
D)  All of the above are correct.E) None of the above
F) B) and C)

Question 2

Figure 6-1
Panel (a) 
Panel (b)   
-Refer to Figure 6-1. In which panel(s)  of the figure would there be a shortage of the good at the price ceiling?

Accepted Answer

A)  panel (a)  only
B)  panel (b)  only
C)  both panel (a)  and panel (b) 
D)  neither panel (a)  nor panel (b) E) A) and B)
F) A) and C)

Question 3

Since the FICA tax is split equally between employers and employees, we can conclude that the incidence of this tax is also equally shared.
​

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would not interfere with market equilibria?

Accepted Answer

A)  a minimum wage
B)  a rent control
C)  a non-binding price floor
D)  a binding price ceilingE) None of the above
F) A) and B)

Question 5

When a tax is placed on the sellers of cell phones, the size of the cell phone market

Accepted Answer

A)  and the effective price received by sellers both increase.
B)  increases, but the effective price received by sellers decreases.
C)  decreases, but the effective price received by sellers increases.
D)  and the effective price received by sellers both decrease.E) B) and C)
F) A) and B)

Question 6

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 7

​Figure 6-32 
-​Refer to Figure 6-32. Which of following statements is true based upon the conditions in the market?

Accepted Answer

A)  ​a shortage will develop when a price ceiling is imposed at a price of $10.
B)  ​a surplus will develop when a price floor is imposed at a price of $8.
C)  ​a surplus will develop when a price floor is imposed at a price of $12.
D)  ​a shortage will develop when a price ceiling is imposed at a price of $14.E) A) and B)
F) All of the above

Question 8

The price paid by buyers 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)  imposes a binding price ceiling in that market.E) C) and D)
F) A) and C)

Question 9

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

Accepted Answer

A)  imposes a binding price floor in that market.
B)  decreases a binding price ceiling in that market.
C)  decreases a tax on the good sold in that market.
D)  increases a binding price floor in that market.E) C) and D)
F) B) and C)

Question 10

Figure 6-16 
-Refer to Figure 6-16. In this market, a minimum wage of $7.25 is

Accepted Answer

A)  binding and creates a labor shortage.
B)  binding and creates unemployment.
C)  nonbinding and creates a labor shortage.
D)  nonbinding and creates neither a labor shortage nor unemployment.E) A) and C)
F) C) and D)

Question 11

When a binding price ceiling is imposed on a market to benefit buyers,

Accepted Answer

A)  every buyer in the market benefits.
B)  every buyer and seller in the market benefits.
C)  every buyer who wants to buy the good will be able to do so, but only if he waits in long lines.
D)  some buyers will not be able to buy any amount of the good.E) All of the above
F) C) and D)

Question 12

The quantity sold in a market will increase if the government

Accepted Answer

A)  decreases a binding price floor in that market.
B)  decreases a binding price ceiling in that market.
C)  increases a tax on the good sold in that market.
D)  More than one of the above is correct.E) B) and C)
F) A) and D)

Question 13

A price ceiling caused the gasoline shortage of 1973 in the United States.

Accepted Answer

A) True 
 B)False

Question 14

The rationing mechanisms that develop under binding price floors are usually efficient.

Accepted Answer

A) True 
 B)False

Question 15

A price floor is

Accepted Answer

A)  a legal minimum on the price at which a good can be sold.
B)  often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor.
C)  a source of inefficiency in a market.
D)  All of the above are correct.E) A) and D)
F) B) and C)

Question 16

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

Accepted Answer

A price floor set at $2 would ...

Question 17

Price ceilings are typically imposed to benefit sellers.

Accepted Answer

A) True 
 B)False

Question 18

Figure 6-35 
-Refer to Figure 6-35. A price ceiling set at $30 would create a shortage of 20 units.

Accepted Answer

A) True 
 B)False

Question 19

When a tax is imposed on the buyers of a good, the demand curve shifts

Accepted Answer

A)  upward by the amount of the tax.
B)  downward by the amount of the tax.
C)  upward by less than the amount of the tax.
D)  downward by less than the amount of the tax.E) A) and B)
F) B) and D)

Question 20

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...

Exam 6: Supply, Demand, and Government Policies

A price floor is

Correct AnswerverifiedShow Answer

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

The price paid by buyers in a market will increase if the government

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

Correct AnswerverifiedA price floor set at $2 would ...View AnswerShow Answer

When a binding price ceiling is imposed on a market to benefit buyers,

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Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $7.25 is

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Since the FICA tax is split equally between employers and employees, we can conclude that the incidence of this tax is also equally shared. ​

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When a tax is imposed on the buyers of a good, the demand curve shifts

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

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The quantity sold in a market will increase if the government

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Price ceilings are typically imposed to benefit sellers.

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​Figure 6-32 -​Refer to Figure 6-32. Which of following statements is true based upon the conditions in the market?

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After a binding price floor becomes effective, a

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Figure 6-35 -Refer to Figure 6-35. A price ceiling set at $30 would create a shortage of 20 units.

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When a tax is placed on the sellers of cell phones, the size of the cell phone market

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The rationing mechanisms that develop under binding price floors are usually efficient.

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Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

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Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

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Which of the following would not interfere with market equilibria?

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A price ceiling caused the gasoline shortage of 1973 in the United States.

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Buyers wil...
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A price floor set at $2 would ...
View Answer

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Since the FICA tax is split equally between employers and employees, we can conclude that the incidence of this tax is also equally shared.

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Figure 6-32 -Refer to Figure 6-32. Which of following statements is true based upon the conditions in the market?

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