Question 1

Figure 6-22 
-Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

Accepted Answer

A)   $80.
B)   $60.
C)   $15.
D)   $45.E) B) and D)
F) C) and D)

Question 2

Which of the following causes a surplus of a good?

Accepted Answer

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

Question 3

Figure 6-13
This figure shows the market demand and market supply curves for good X. 
-Refer to Figure 6-13. Which of the following statements is not correct?

Accepted Answer

A)   A price ceiling set at $4 would be binding, but a price ceiling set at $6 would not be binding.
B)   A price floor set at $7 would be binding, but a price floor set at $4 would not be binding.
C)   A price ceiling set at $3.50 would result in a surplus.
D)   A price floor set at $6.50 would result in a surplus.E) B) and C)
F) None of the above

Question 4

Figure 6-7 
-Refer to Figure 6-7. For a price floor to be binding in this market, it would have to be set at

Accepted Answer

A)   any price below $7.
B)   any price below $3.
C)   any price below $9.
D)   any price above $7.E) B) and C)
F) A) and D)

Question 5

A minimum wage that is set above a market's equilibrium wage will result in an excess

Accepted Answer

A)   demand for labor, that is, unemployment.
B)   demand for labor, that is, a shortage of workers.
C)   supply of labor, that is, unemployment.
D)   supply of labor, that is, a shortage of workers.E) A) and B)
F) A) and C)

Question 6

Figure 6-19 
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)   less than 50 units
B)   50 units
C)   between 50 units and 100 units
D)   greater than 100 unitsE) A) and B)
F) B) and D)

Question 7

States in the U.S. may mandate minimum wages above the federal level.

Accepted Answer

A) True 
 B)False

Question 8

When OPEC raised the price of crude oil in the 1970s, it caused the United States'

Accepted Answer

A)   nonbinding price floor on gasoline to become binding.
B)   binding price floor on gasoline to become nonbinding.
C)   nonbinding price ceiling on gasoline to become binding.
D)   binding price ceiling on gasoline to become nonbinding.E) A) and D)
F) B) and D)

Question 9

When a tax is levied on buyers of tea,

Accepted Answer

A)   buyers of tea and sellers of tea both are made worse off.
B)   buyers of tea are made worse off, and the well-being of sellers is unaffected.
C)   buyers of tea are made worse off, and sellers of tea are made better off.
D)   the well-being of both buyers of tea and sellers of tea is unaffected.E) C) and D)
F) None of the above

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-3
Panel a)  Panel b) 
  
-Refer to Figure 6-3. A binding price floor is shown in

Accepted Answer

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

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) B) and D)

Question 13

A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

Accepted Answer

A) True 
 B)False

Question 14

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

Question 15

A binding price ceiling causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 16

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market.
 
-Refer to Table 6-4. How many units of the good are sold after the imposition of the price floor?

Accepted Answer

A)   3
B)   9
C)   15
D)   18E) A) and C)
F) A) and B)

Question 17

You have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia. George, who is one of your advisors, says that the best way to avoid a shortage of oranges is to take no action at all. Charles, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop. Otto, a third advisor, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Which of your three advisors is most likely to have studied economics?

Accepted Answer

A)   George
B)   Charles
C)   Otto
D)   Apparently, all three advisors have studied economics, but their views on positive economics are different.E) A) and B)
F) A) and C)

Question 18

Define a price ceiling.

Accepted Answer

A price ceiling is a...

Question 19

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 D)
F) A) and C)

Question 20

Figure 6-3
Panel a)  Panel b) 
  
-Refer to Figure 6-3. A nonbinding price floor is shown in

Accepted Answer

A)   both panel a)  and panel b) .
B)   panel a)  only.
C)   panel b)  only.
D)   neither panel a)  nor panel b) .E) None of the above
F) All of the above

Exam 6: Supply, Demand, and Government Policies

Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. A binding price floor is shown in

Correct Answer
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Define a price ceiling.

Correct Answer
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A price ceiling is a...
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Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Correct Answer
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Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. A nonbinding price floor is shown in

Correct Answer
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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

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

Correct Answer
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Figure 6-22 -Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

Correct Answer
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If a price ceiling is not binding, then

Correct Answer
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When a tax is levied on buyers of tea,

Correct Answer
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When OPEC raised the price of crude oil in the 1970s, it caused the United States'

Correct Answer
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Which of the following causes a surplus of a good?

Correct Answer
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States in the U.S. may mandate minimum wages above the federal level.

Correct Answer
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A minimum wage that is set above a market's equilibrium wage will result in an excess

Correct Answer
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Figure 6-7 -Refer to Figure 6-7. For a price floor to be binding in this market, it would have to be set at

Correct Answer
verified

A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

Correct Answer
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A binding price ceiling causes a shortage in the market.

Correct Answer
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Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following statements is not correct?

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

Correct Answer
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Exam 6: Supply, Demand, and Government Policies

Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. A binding price floor is shown in

Correct AnswerverifiedShow Answer

Define a price ceiling.

Correct AnswerverifiedA price ceiling is a...View AnswerShow Answer

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Correct AnswerverifiedShow Answer

Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. A nonbinding price floor is shown in

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow 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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-22 -Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

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If a price ceiling is not binding, then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a tax is levied on buyers of tea,

Correct AnswerverifiedShow Answer

When OPEC raised the price of crude oil in the 1970s, it caused the United States'

Correct AnswerverifiedShow Answer

Which of the following causes a surplus of a good?

Correct AnswerverifiedShow Answer

States in the U.S. may mandate minimum wages above the federal level.

Correct AnswerverifiedShow Answer

A minimum wage that is set above a market's equilibrium wage will result in an excess

Correct AnswerverifiedShow Answer

Figure 6-7 -Refer to Figure 6-7. For a price floor to be binding in this market, it would have to be set at

Correct AnswerverifiedShow Answer

A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

Correct AnswerverifiedShow Answer

A binding price ceiling causes a shortage in the market.

Correct AnswerverifiedShow Answer

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following statements is not correct?

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

Correct AnswerverifiedShow Answer

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A price ceiling is a...
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