Question 1

Advocates of the minimum wage

Accepted Answer

A)   deny that the minimum wage produces any adverse effects.
B)   emphasize the benefits to teenagers of increases in the minimum wage.
C)   emphasize the low annual incomes of those who work for the minimum wage.
D)   All of the above are correct.E) B) and D)
F) None of the above

Question 2

Which of the following is not correct?

Accepted Answer

A)   Taxes levied on sellers and taxes levied on buyers are not equivalent.
B)   A tax places a wedge between the price that buyers pay and the price that sellers receive.
C)   The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax levied on buyers or sellers.
D)   In the new after-tax equilibrium, buyers and sellers share the burden of the tax.E) A) and D)
F) All of the above

Question 3

In the United States, before OPEC increased the price of crude oil in 1973, there was

Accepted Answer

A)   no price ceiling on gasoline.
B)   a nonbinding price ceiling on gasoline.
C)   a binding price ceiling on gasoline.
D)   a nonbinding price floor on gasoline.E) None of the above
F) A) and D)

Question 4

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 D)
F) B) and C)

Question 5

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

Accepted Answer

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

Question 6

If the government removes a binding price ceiling from a market, then the price paid by buyers will

Accepted Answer

A)   increase, and the quantity sold in the market will increase.
B)   increase, and the quantity sold in the market will decrease.
C)   decrease, and the quantity sold in the market will increase.
D)   decrease, and the quantity sold in the market will decrease.E) A) and C)
F) A) and B)

Question 7

Figure 6-16 
-Refer to Figure 6-16. In this market, a minimum wage of $7.25 is

Accepted Answer

A)   binding and creates a labor shortage.
B)   binding and creates unemployment.
C)   nonbinding and creates a labor shortage.
D)   nonbinding and creates neither a labor shortage nor unemployment.E) None of the above
F) A) and D)

Question 8

Figure 6-28 
-Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)   Buyers and sellers will share the burden of the tax equally.
B)   Buyers will bear more of the burden of the tax than sellers.
C)   Sellers will bear more of the burden of the tax than buyers.
D)   Any of the above is possible in this market.E) C) and D)
F) A) and D)

Question 9

A tax of $1 on sellers always increases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 10

The burden of a luxury tax falls

Accepted Answer

A)   more on the rich than on the middle class.
B)   more on the poor than on the rich.
C)   more on the middle class than on the rich.
D)   equally on the rich, the middle class, and the poor.E) A) and D)
F) A) and C)

Question 11

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

Accepted Answer

A)   decreases a binding price floor in that market.
B)   increases a binding price ceiling in that market.
C)   increases a tax on the good sold in that market.
D)   imposes a binding price ceiling in that market.E) All of the above
F) A) and C)

Question 12

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) C) and D)

Question 13

Figure 6-9 
-Refer to Figure 6-9. At which price would a price ceiling be nonbinding?

Accepted Answer

A)   $4
B)   $5
C)   $3
D)   $7E) A) and C)
F) A) and D)

Question 14

The price paid by buyers in a market will increase if the government

Accepted Answer

A)   decreases a binding price floor in that market.
B)   increases a binding price ceiling in that market.
C)   decreases a tax on the good sold in that market.
D)   imposes a binding price ceiling in that market.E) B) and D)
F) None of the above

Question 15

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 16

The Federal Insurance Contribution Act FICA)  tax is an example of an)

Accepted Answer

A)   payroll tax.
B)   sales tax.
C)   farm subsidy.
D)   income subsidy.E) A) and D)
F) All of the above

Question 17

A price floor is a legal minimum on the price at which a good or service can be sold.

Accepted Answer

A) True 
 B)False

Question 18

The quantity sold in a market will decrease if the government decreases a

Accepted Answer

A)   binding price floor in that market.
B)   binding price ceiling in that market.
C)   tax on the good sold in that market.
D)   All of the above are correct.E) None of the above
F) A) and D)

Question 19

Table 6-6
 
-Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

Accepted Answer

A price floor must be set abov...

Question 20

Figure 6-16 
-Refer to Figure 6-16. In this market, a minimum wage of $7.25 creates a labor

Accepted Answer

A)   shortage of 2,250 workers.
B)   shortage of 4,500 workers.
C)   surplus of 2,250 workers.
D)   surplus of 4,500 workers.E) A) and D)
F) A) and B)

Exam 6: Supply, Demand, and Government Policies

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

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The Federal Insurance Contribution Act FICA) tax is an example of an)

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Rent control

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If the government removes a binding price ceiling from a market, then the price paid by buyers will

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A price floor is a legal minimum on the price at which a good or service can be sold.

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The quantity sold in a market will decrease if the government decreases a

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Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

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A tax of $1 on sellers always increases the equilibrium price by $1.

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Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $7.25 creates a labor

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Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

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Advocates of the minimum wage

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Table 6-6 -Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

Correct AnswerverifiedA price floor must be set abov...View AnswerShow Answer

In the United States, before OPEC increased the price of crude oil in 1973, there was

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Figure 6-9 -Refer to Figure 6-9. At which price would a price ceiling be nonbinding?

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

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Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $7.25 is

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The price paid by buyers in a market will increase if the government

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

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Which of the following is not correct?

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The burden of a luxury tax falls

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A price floor must be set abov...
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