Question 1

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

Question 2

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

Accepted Answer

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

Question 3

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

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

Question 5

Prices are inefficient rationing devices.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

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

Question 7

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

Accepted Answer

A)  no workers.
B)  only those workers who cannot find jobs.
C)  only those workers whose jobs would pay less than the minimum wage if it didn't exist.
D)  all workers.E) B) and C)
F) All of the above

Question 8

Which of the following is correct?
Price controls

Accepted Answer

A)  always help those they are designed to help.
B)  never help those they are designed to help.
C)  often hurt those they are designed to help.
D)  always hurt those they are designed to help.E) B) and D)
F) A) and D)

Question 9

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Accepted Answer

A) True 
 B)False

Question 10

A legal maximum on the price at which a good can be sold is called a price

Accepted Answer

A)  floor.
B)  subsidy.
C)  support.
D)  ceiling.E) A) and D)
F) C) and D)

Question 11

When government imposes a price ceiling or a price floor on a market,

Accepted Answer

A)  price no longer serves as a rationing device.
B)  efficiency in the market is enhanced.
C)  shortages and surpluses are eliminated.
D)  both buyers and sellers become better off.E) C) and D)
F) A) and C)

Question 12

Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages.The tax would shift

Accepted Answer

A)  demand,raising both the equilibrium price and quantity in the market for artificially-sweetened beverages.
B)  demand,lowering the equilibrium price and raising the equilibrium quantity in the market for artificially-sweetened beverages.
C)  supply,raising the equilibrium price and lowering the equilibrium quantity in the market for artificially-sweetened beverages.
D)  supply,lowering the equilibrium price and raising the equilibrium quantity in the market for artificially-sweetened beverages.E) A) and D)
F) A) and B)

Question 13

Figure 6-5

-Refer to Figure 6-5.Suppose the market is initially in equilibrium.Then the government imposes a price control,as represented by the horizontal line on the graph.If the price control is a price floor,then the price control

Accepted Answer

A)  causes the quantity demanded to decrease by 50 units,relative to the initial equilibrium.
B)  causes the quantity supplied to increase by 40 units,relative to the initial equilibrium.
C)  results in some firms being more successful than others in selling their goods.
D)  All of the above are correct.E) A) and B)
F) All of the above

Question 14

Most economists are in favor of price controls as a way of allocating resources in the economy.

Accepted Answer

A) True 
 B)False

Question 15

How is the burden of a tax divided?
(i) When the tax is levied on the sellers,the sellers bear a higher proportion of the tax burden.
(ii) When the tax is levied on the buyers,the buyers bear a higher proportion of the tax burden.
(iii) Regardless of whether the tax is levied on the buyers or the sellers,the buyers and sellers bear an equal proportion of the tax burden.
(iv) Regardless of whether the tax is levied on the buyers or the sellers,the buyers and sellers bear some proportion of the tax burden.

Accepted Answer

A)  (i) and (ii) only
B)  (iv) only
C)  (i) ,(ii) ,and (iii) only
D)  (i) ,(ii) ,and (iv) onlyE) A) and D)
F) B) and C)

Question 16

An example of a price floor is

Accepted Answer

A)  the regulation of gasoline prices in the U.S.in the 1970s.
B)  rent control.
C)  the minimum wage.
D)  any restriction on price that leads to a shortage.E) C) and D)
F) B) and D)

Question 17

Unlike minimum wage laws,wage subsidies

Accepted Answer

A)  discourage firms from hiring the working poor.
B)  cause unemployment.
C)  help only wealthy workers.
D)  raise the living standards of the working poor without creating unemployment.E) B) and C)
F) A) and D)

Question 18

A binding minimum wage creates a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 19

In a competitive market free of government regulation,

Accepted Answer

A)  price adjusts until quantity demanded is greater than quantity supplied.
B)  price adjusts until quantity demanded is less than quantity supplied.
C)  price adjusts until quantity demanded equals quantity supplied.
D)  supply adjusts to meet demand at every price.E) A) and B)
F) A) and D)

Question 20

Figure 6-20 
-Refer to Figure 6-20.What is the amount of the tax per unit?

Accepted Answer

A)  8
B)  6
C)  4
D)  2E) B) and C)
F) All of the above

Exam 6: Supply,demand,and Government Policies

Which of the following is correct? Price controls

Correct Answer
verified

When government imposes a price ceiling or a price floor on a market,

Correct Answer
verified

Most economists are in favor of price controls as a way of allocating resources in the economy.

Correct Answer
verified

Prices are inefficient rationing devices.

Correct Answer
verified

A legal maximum on the price at which a good can be sold is called a price

Correct Answer
verified

Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages.The tax would shift

Correct Answer
verified

Figure 6-20 -Refer to Figure 6-20.What is the amount of the tax per unit?

Correct Answer
verified

In a competitive market free of government regulation,

Correct Answer
verified

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

Correct Answer
verified

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Correct Answer
verified

Rent control

Correct Answer
verified

A binding minimum wage creates a surplus of labor.

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Unlike minimum wage laws,wage subsidies

Correct Answer
verified

An example of a price floor is

Correct Answer
verified

Figure 6-5 -Refer to Figure 6-5.Suppose the market is initially in equilibrium.Then the government imposes a price control,as represented by the horizontal line on the graph.If the price control is a price floor,then the price control

Correct Answer
verified

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

Correct Answer
verified

Which of the following would not interfere with market equilibria?

Correct Answer
verified

Exam 6: Supply,demand,and Government Policies

Which of the following is correct? Price controls

Correct AnswerverifiedShow Answer

When government imposes a price ceiling or a price floor on a market,

Correct AnswerverifiedShow Answer

Most economists are in favor of price controls as a way of allocating resources in the economy.

Correct AnswerverifiedShow Answer

Prices are inefficient rationing devices.

Correct AnswerverifiedShow Answer

A legal maximum on the price at which a good can be sold is called a price

Correct AnswerverifiedShow Answer

Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages.The tax would shift

Correct AnswerverifiedShow Answer

Figure 6-20 -Refer to Figure 6-20.What is the amount of the tax per unit?

Correct AnswerverifiedShow Answer

In a competitive market free of government regulation,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Correct AnswerverifiedShow Answer

Rent control

Correct AnswerverifiedShow Answer

A binding minimum wage creates a surplus of labor.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Unlike minimum wage laws,wage subsidies

Correct AnswerverifiedShow Answer

An example of a price floor is

Correct AnswerverifiedShow Answer

Figure 6-5 -Refer to Figure 6-5.Suppose the market is initially in equilibrium.Then the government imposes a price control,as represented by the horizontal line on the graph.If the price control is a price floor,then the price control

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following would not interfere with market equilibria?

Correct AnswerverifiedShow Answer

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