Question 1

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Accepted Answer

A)   Improvements in production technology reduce the costs of producing laptop computers.
B)   The number of firms selling laptop computers decreases.
C)   Consumers' income decreases, and laptop computers are a normal good.
D)   The number of consumers buying laptop computers decreases.E) None of the above
F) C) and D)

Question 2

When free markets ration goods with prices, it is both efficient and impersonal.

Accepted Answer

A) True 
 B)False

Question 3

Buyers of a good bear the larger share of the tax burden when the i)  supply is more elastic than the demand for the product.
Ii)  demand in more elastic than the supply for the product.
Iii)  tax is placed on the sellers of the product.
Iv)  tax is placed on the buyers of the product.

Accepted Answer

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

Question 4

In an unregulated labor market, the wage adjusts to balance labor supply and labor demand.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-1
Panel a)  Panel b) 
  
-Refer to Figure 6-1. In which panels)  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) None of the above

Question 6

Figure 6-32 
-Refer to Figure 6-32. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

There woul...

Question 7

The tax incidence

Accepted Answer

A)   is the manner in which the burden of a tax is shared among participants in a market.
B)   can be shifted to the buyer by imposing the tax on the buyers of a product in a market.
C)   can be shifted to the seller by imposing the tax on the sellers of a product in a market.
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 8

FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-33 
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the sellers in this market?

Accepted Answer

The burden...

Question 10

When a binding price floor is imposed on a market,

Accepted Answer

A)   price no longer serves as a rationing device.
B)   the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor.
C)   only some sellers benefit.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 11

Figure 6-6 
-Refer to Figure 6-6. If the government imposes a price floor of $10 on this market, then there will be

Accepted Answer

A)   no surplus.
B)   a surplus of 20 units.
C)   a surplus of 30 units.
D)   a surplus of 10 units.E) C) and D)
F) A) and B)

Question 12

The impact of the minimum wage depends on the skill and experience of the worker.

Accepted Answer

A) True 
 B)False

Question 13

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

Question 14

Figure 6-26 
-Refer to Figure 6-26. The per-unit burden of the tax is

Accepted Answer

A)   $2 for buyers and $6 for sellers.
B)   $4 for buyers and $4 for sellers.
C)   $6 for buyers and $2 for sellers.
D)   $8 for buyers and $0 for sellers.E) B) and D)
F) C) and D)

Question 15

A price ceiling is binding when it is set

Accepted Answer

A)   above the equilibrium price, causing a shortage.
B)   above the equilibrium price, causing a surplus.
C)   below the equilibrium price, causing a shortage.
D)   below the equilibrium price, causing a surplus.E) B) and C)
F) A) and B)

Question 16

Figure 6-3
Panel a)  Panel b) 
  
-Refer to Figure 6-3. In panel b) , there will be

Accepted Answer

A)   a shortage.
B)   equilibrium in the market.
C)   a surplus.
D)   lines of people waiting to buy the good.E) None of the above
F) A) and B)

Question 17

A price ceiling set below the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 18

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 19

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) C) and D)

Question 20

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

Exam 6: Supply, Demand, and Government Policies

Figure 6-26 -Refer to Figure 6-26. The per-unit burden of the tax is

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

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If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

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The impact of the minimum wage depends on the skill and experience of the worker.

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When free markets ration goods with prices, it is both efficient and impersonal.

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

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When a binding price floor is imposed on a market,

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The tax incidence

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A price ceiling set below the equilibrium price is binding.

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

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Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedThere woul...View AnswerShow Answer

Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. In panel b) , there will be

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Figure 6-6 -Refer to Figure 6-6. If the government imposes a price floor of $10 on this market, then there will be

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FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

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

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Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

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In an unregulated labor market, the wage adjusts to balance labor supply and labor demand.

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A price ceiling is binding when it is set

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Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the sellers in this market?

Correct AnswerverifiedThe burden...View AnswerShow Answer

Buyers of a good bear the larger share of the tax burden when the i) supply is more elastic than the demand for the product. Ii) demand in more elastic than the supply for the product. Iii) tax is placed on the sellers of the product. Iv) tax is placed on the buyers of the product.

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There woul...
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The burden...
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