Question 1

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A)   no sellers actually benefit.
B)   some sellers benefit, but no sellers are harmed.
C)   some sellers benefit, and some sellers are harmed.
D)   all sellers benefit.E) B) and C)
F) All of the above

Question 2

A nonbinding price ceiling (i)  causes a surplus.
(ii)  causes a shortage.
(iii)  is set at a price above the equilibrium price.
(iv)  is set at a price below the equilibrium price.

Accepted Answer

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

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A price floor set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 5

A tax on the buyers of cereal will increase the price of cereal paid by buyers,

Accepted Answer

A)   decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal.
B)   decrease the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal.
C)   increase the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal.
D)   increase the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal.E) B) and C)
F) A) and D)

Question 6

A payroll tax is a

Accepted Answer

A)   fixed number of dollars that every firm must pay to the government for each worker that the firm hires.
B)   tax that each firm must pay to the government before the firm can hire workers and operate its business.
C)   tax on the wages that firms pay their workers.
D)   tax on all wages above the minimum wage.E) B) and C)
F) None of the above

Question 7

When a free market for a good reaches equilibrium, anyone who is willing and able to pay the market price can buy the good.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,

Accepted Answer

A)   a smaller quantity of the good is bought and sold.
B)   a smaller quantity of the good is demanded.
C)   a larger quantity of the good is supplied.
D)   the price rises above the previous equilibrium.E) B) and C)
F) A) and B)

Question 9

A binding price floor may not help all sellers, but it does not hurt any sellers.

Accepted Answer

A) True 
 B)False

Question 10

Suppose the equilibrium price of a physical examination ("physical")  by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,

Accepted Answer

A)   the quantity of physicals demanded increases.
B)   there is shortage of physicals.
C)   the quantity of physicals supplied decreases.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 11

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Accepted Answer

A) True 
 B)False

Question 12

If a price ceiling is not binding, then

Accepted Answer

A)   the equilibrium price is above the price ceiling.
B)   the equilibrium price is below the price ceiling.
C)   it has no legal enforcement mechanism.
D)   None of the above is correct because all price ceilings must be binding.E) C) and D)
F) A) and B)

Question 13

In "Venezuela Versus the Market," the price control placed on coffee

Accepted Answer

A)   created a shortage of coffee.
B)   resulted in higher profits for coffee growers.
C)   increased coffee exports to other countries.
D)   increased the amount of land and coffee used in production.E) C) and D)
F) All of the above

Question 14

Figure 6-25 
-Refer to Figure 6-25. The equilibrium price in the market before the tax is imposed is

Accepted Answer

A)   $1.
B)   $2.
C)   $5.
D)   $6.E) B) and C)
F) All of the above

Question 15

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

Accepted Answer

A)   shift up.
B)   shift down.
C)   become flatter.
D)   not shift.E) A) and C)
F) A) and D)

Question 16

If the supply curve is more price elastic than the demand curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.

Accepted Answer

When the supply curve is more price elas...

Question 17

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

Accepted Answer

A price floor set at...

Question 18

Suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the

Accepted Answer

A)   demand is more inelastic than the supply.
B)   supply is more inelastic than the demand.
C)   government has required that buyers remit the tax payments.
D)   government has required that sellers remit the tax payments.E) None of the above
F) C) and D)

Question 19

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A)   every seller in the market benefits.
B)   all buyers and sellers benefit.
C)   every seller who wants to sell the good will be able to do so, but only if he appeals to the personal biases of the buyers.
D)   some sellers will not be able to sell any amount of the good.E) A) and B)
F) A) and C)

Question 20

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) None of the above

Exam 6: Supply, Demand, and Government Policies

When a binding price floor is imposed on a market to benefit sellers,

Correct AnswerverifiedShow Answer

A payroll tax is a

Correct AnswerverifiedShow Answer

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Correct AnswerverifiedShow Answer

A tax on the sellers of coffee mugs

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-25 -Refer to Figure 6-25. The equilibrium price in the market before the tax is imposed is

Correct AnswerverifiedShow Answer

A tax on the buyers of cereal will increase the price of cereal paid by buyers,

Correct AnswerverifiedShow Answer

When a free market for a good reaches equilibrium, anyone who is willing and able to pay the market price can buy the good.

Correct AnswerverifiedShow Answer

Suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the

Correct AnswerverifiedShow Answer

A price floor set above the equilibrium price is not binding.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A binding price floor may not help all sellers, but it does not hurt any sellers.

Correct AnswerverifiedShow Answer

If a price ceiling is not binding, then

Correct AnswerverifiedShow Answer

If the supply curve is more price elastic than the demand curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.

Correct AnswerverifiedWhen the supply curve is more price elas...View AnswerShow Answer

A nonbinding price ceiling (i) causes a surplus. (ii) causes a shortage. (iii) is set at a price above the equilibrium price. (iv) is set at a price below the equilibrium price.

Correct AnswerverifiedShow Answer

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

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

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,

Correct AnswerverifiedShow Answer

When a binding price floor is imposed on a market to benefit sellers,

Correct AnswerverifiedShow Answer

In "Venezuela Versus the Market," the price control placed on coffee

Correct AnswerverifiedShow Answer

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
When the supply curve is more price elas...
View Answer

Correct Answer
verified

Correct Answer
verified
A price floor set at...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified