Question 1

A binding price ceiling
(i) causes a surplus.
(ii) causes a shortage.
(iii) is set at a price above the equilibrium price.
(iv) is set at a price below the equilibrium price.

Accepted Answer

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

Question 2

You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare)  tax. Which of the following statements is correct?

Accepted Answer

A)  The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee.
B)  Your employer is required by law to pay $300 to match the $300 deducted from your check.
C)  This type of tax is an example of a payroll tax.
D)  All of the above are correct.E) B) and D)
F) A) and D)

Question 3

Figure 6-20 
-Refer to Figure 6-20. Suppose a tax of $5 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 will.
C)  Sellers will bear more of the burden of the tax than buyers will.
D)  Any of the above is possible.E) A) and C)
F) All of the above

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-3
Panel (a) 
Panel (b)   
-Refer to Figure 6-3. In panel (a) , 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) B) and D)
F) None of the above

Question 6

The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a result of rent control?

Accepted Answer

A)  fewer new apartments offered for rent
B)  less maintenance provided by landlords
C)  bribery
D)  higher quality housingE) B) and C)
F) None of the above

Question 8

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

Accepted Answer

A)  This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity.
B)  The price paid by buyers is $0.30 per drink more than it was before the tax.
C)  Forty percent of the burden of the tax falls on sellers.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A binding minimum wage

Accepted Answer

A)  alters both the quantity demanded and quantity supplied of labor.
B)  affects only the quantity of labor demanded; it does not affect the quantity of labor supplied.
C)  has no effect on the quantity of labor demanded or the quantity of labor supplied.
D)  causes only temporary unemployment because the market will adjust and eliminate any temporary surplus of workers.E) A) and C)
F) A) and D)

Question 11

The price paid by buyers in a market will increase if the government
(i) increases a binding price floor in that market.
(ii) increases a binding price ceiling in that market.
(iii) decreases a tax on the good sold in that market.

Accepted Answer

A)  (ii)  only
B)  (iii)  only
C)  (i)  and (ii)  only
D)  (i) , (ii) , and (iii) E) A) and C)
F) All of the above

Question 12

A tax on sellers will shift the

Accepted Answer

A)  demand curve upward by the amount of the tax.
B)  demand curve downward by the amount of the tax.
C)  supply curve upward by the amount of the tax.
D)  supply curve downward by the amount of the tax.E) B) and C)
F) A) and D)

Question 13

Figure 6-7 
-Refer to Figure 6-7. Which of the following price controls would cause a surplus of 20 units of the good?

Accepted Answer

A)  a price ceiling set at $6
B)  a price ceiling set at $5
C)  a price floor set at $9
D)  a price floor set at $8E) A) and D)
F) A) and C)

Question 14

The economy contains many labor markets for different types of workers.

Accepted Answer

A) True 
 B)False

Question 15

A price floor set below the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 16

Price ceilings and price floors that are binding

Accepted Answer

A)  are desirable because they make markets more efficient and more fair.
B)  cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price.
C)  can have the effect of restoring a market to equilibrium.
D)  are imposed because they can make the poor in the economy better off without causing adverse effects.E) All of the above
F) None of the above

Question 17

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 ceiling at $12 for this product. Is this price ceiling binding, and what will be the size of the shortage/surplus in this market?

Accepted Answer

The price ceiling wi...

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

A price floor 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) A) and B)
F) A) and C)

Question 20

Figure 6-23 
-Refer to Figure 6-23. Which of the following is correct?

Accepted Answer

A)  The entire burden of the tax falls on sellers, and none of the burden of the tax falls on buyers.
B)  One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers.
C)  One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers.
D)  Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers.E) None of the above
F) A) and B)

Exam 6: Supply, Demand, and Government Policies

A price floor set below the equilibrium price causes a surplus in the market.

Correct Answer
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A binding minimum wage

Correct Answer
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You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

Correct Answer
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The economy contains many labor markets for different types of workers.

Correct Answer
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Correct Answer
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The price ceiling wi...
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Which of the following is not a result of rent control?

Correct Answer
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The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.

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

Correct Answer
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Price ceilings and price floors that are binding

Correct Answer
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A binding price ceiling (i) causes a surplus. (ii) causes a shortage. (iii) is set at a price above the equilibrium price. (iv) is set at a price below the equilibrium price.

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

Correct Answer
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Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

Correct Answer
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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 $2 of the tax burden.

Correct Answer
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Figure 6-23 -Refer to Figure 6-23. Which of the following is correct?

Correct Answer
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Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a surplus of 20 units of the good?

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. Which of the following is correct?

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

Correct Answer
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A price floor is binding when it is set

Correct Answer
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A tax on sellers will shift the

Correct Answer
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The price paid by buyers in a market will increase if the government (i) increases a binding price floor in that market. (ii) increases a binding price ceiling in that market. (iii) decreases a tax on the good sold in that market.

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

A price floor set below the equilibrium price causes a surplus in the market.

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A binding minimum wage

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You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

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The economy contains many labor markets for different types of workers.

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Correct AnswerverifiedThe price ceiling wi...View AnswerShow Answer

Which of the following is not a result of rent control?

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The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.

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

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Price ceilings and price floors that are binding

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A binding price ceiling (i) causes a surplus. (ii) causes a shortage. (iii) is set at a price above the equilibrium price. (iv) is set at a price below the equilibrium price.

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

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Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

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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 $2 of the tax burden.

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Figure 6-23 -Refer to Figure 6-23. Which of the following is correct?

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Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a surplus of 20 units of the good?

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Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

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

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A price floor is binding when it is set

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A tax on sellers will shift the

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The price paid by buyers in a market will increase if the government (i) increases a binding price floor in that market. (ii) increases a binding price ceiling in that market. (iii) decreases a tax on the good sold in that market.

Correct AnswerverifiedShow Answer

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The price ceiling wi...
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