Question 1

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $4.

Accepted Answer

A) True 
 B)False

Question 2

A binding minimum wage tends to

Accepted Answer

A)   cause a labor surplus.
B)   cause unemployment.
C)   have the greatest impact in the market for teenage labor.
D)   All of the above are correct.

Question 3

Define a price floor.

Accepted Answer

A price floor is a l...

Question 4

The imposition of a binding price ceiling on a market causes

Accepted Answer

A)   quantity demanded to be greater than quantity supplied.
B)   quantity demanded to be less than quantity supplied.
C)   quantity demanded to be equal to quantity supplied.
D)   the price of the good to be greater than its equilibrium price.

Question 5

Workers, rather than firms, bear most of the burden of the payroll tax.

Accepted Answer

A) True 
 B)False

Question 6

Figure 6-22 
-Refer to Figure 6-22. The equilibrium price in the market before the tax is imposed is

Accepted Answer

A)   $3.50.
B)   $5.00.
C)   $2.00.
D)   $1.50.

Question 7

Figure 6-20 
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)   $5
B)   between $5 and $10
C)   between $10 and $14
D)  d. $14

Question 8

Figure 6-12 
-Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Accepted Answer

A)   the market price will increase to P3.
B)   a surplus will occur at the new market price of P2.
C)   the market price will stay at P1.
D)   a shortage will occur at the new market price of P2.

Question 9

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

Accepted Answer

A) True 
 B)False

Question 10

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.

Question 11

Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor.

Accepted Answer

A) True 
 B)False

Question 12

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Accepted Answer

A) True 
 B)False

Question 13

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.

Question 14

Price controls are usually enacted

Accepted Answer

A)   as a means of raising revenue for public purposes.
B)   when policymakers believe that the market price of a good or service is unfair to buyers or sellers.
C)   when policymakers tax a good.
D)   All of the above are correct.

Question 15

Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

Accepted Answer

A) True 
 B)False

Question 16

In "Venezuela Versus the Market," the long lines and shortages are caused by

Accepted Answer

A)   declining world energy prices.
B)   unfettered capitalism.
C)   price floors that are intended to make food more affordable for the poor.
D)   price ceilings that are intended to make food more affordable for the poor.

Question 17

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

Accepted Answer

A)   is not binding.
B)   creates a surplus.
C)   creates a shortage.
D)   Both a)  and b)  are correct.

Question 18

Scenario 6-2
Suppose demand for a product is given by the equation  and supply for the product is given by the equation 
-Refer to Scenario 6-2. Suppose the government sets a price floor at $13 for this product. Initially, is this price floor binding? Suppose that for some reason demand were to decrease to  Would the $13 price floor be binding after the shift in the demand curve? If so, what is the size of the resulting shortage/surplus?

Accepted Answer

Initially the price floor is not binding...

Question 19

Figure 6-18
The vertical distance between points A and B represents the tax in the market. 
-Refer to Figure 6-18. The amount of the tax per unit is

Accepted Answer

A)   $6.
B)   $8.
C)   $14.
D)   $18.

Question 20

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

Accepted Answer

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

Exam 6: Supply, Demand, and Government Policies

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The amount of the tax per unit is

Correct Answer
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Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

Correct Answer
verified

In a competitive market free of government regulation,

Correct Answer
verified

Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor.

Correct Answer
verified

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $4.

Correct Answer
verified

Workers, rather than firms, bear most of the burden of the payroll tax.

Correct Answer
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Correct Answer
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Initially the price floor is not binding...
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Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Correct Answer
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If a tax is levied on the buyers of a product, then the demand curve will

Correct Answer
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Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Correct Answer
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Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

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

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

Correct Answer
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Price controls are usually enacted

Correct Answer
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If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Correct Answer
verified

Define a price floor.

Correct Answer
verified
A price floor is a l...
View Answer

A binding minimum wage tends to

Correct Answer
verified

In "Venezuela Versus the Market," the long lines and shortages are caused by

Correct Answer
verified

The imposition of a binding price ceiling on a market causes

Correct Answer
verified

Figure 6-22 -Refer to Figure 6-22. The equilibrium price in the market before the tax is imposed is

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The amount of the tax per unit is

Correct AnswerverifiedShow Answer

Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

Correct AnswerverifiedShow Answer

In a competitive market free of government regulation,

Correct AnswerverifiedShow Answer

Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor.

Correct AnswerverifiedShow Answer

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $4.

Correct AnswerverifiedShow Answer

Workers, rather than firms, bear most of the burden of the payroll tax.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedInitially the price floor is not binding...View AnswerShow Answer

Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Correct AnswerverifiedShow Answer

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Price controls are usually enacted

Correct AnswerverifiedShow Answer

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Correct AnswerverifiedShow Answer

Define a price floor.

Correct AnswerverifiedA price floor is a l...View AnswerShow Answer

A binding minimum wage tends to

Correct AnswerverifiedShow Answer

In "Venezuela Versus the Market," the long lines and shortages are caused by

Correct AnswerverifiedShow Answer

The imposition of a binding price ceiling on a market causes

Correct AnswerverifiedShow Answer

Figure 6-22 -Refer to Figure 6-22. The equilibrium price in the market before the tax is imposed is

Correct AnswerverifiedShow Answer

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Initially the price floor is not binding...
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A price floor is a l...
View Answer

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