Question 1

Price controls often hurt those they are trying to help.

Accepted Answer

A) True 
 B)False

Question 2

A tax on the sellers of bottled water will increase the price of bottled water paid by buyers,

Accepted Answer

A)  increase the effective price of bottled water received by sellers, and increase the equilibrium quantity of bottled water.
B)  increase the effective price of bottled water received by sellers, and decrease the equilibrium quantity of bottled water.
C)  decrease the effective price of bottled water received by sellers, and increase the equilibrium quantity of bottled water.
D)  decrease the effective price of bottled water received by sellers, and decrease the equilibrium quantity of bottled water.E) B) and C)
F) None of the above

Question 3

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)  You will owe $300 per paycheck to pay the FICA tax for the remainder of the fiscal year regardless of your wages.
B)  Your employer is required by law to pay $150 to match half the $300 deducted from your check.
C)  This type of tax is an example of a sales tax.
D)  The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee.E) A) and B)
F) A) and C)

Question 4

Figure 6-11
​
 
-Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)  One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers.
B)  One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers.
C)  One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers.
D)  Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers.E) All of the above
F) C) and D)

Question 5

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 6

Price is the rationing mechanism in a free, competitive market.

Accepted Answer

A) True 
 B)False

Question 7

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 8

Long lines and gasoline shortages during the 1970s can be attributed completely to the decision by OPEC to raise crude oil prices.

Accepted Answer

A) True 
 B)False

Question 9

A binding price floor causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 10

When a tax is placed on the buyers of bottled water, the

Accepted Answer

A)  sellers bear the entire burden of the tax.
B)  buyers bear the entire burden of the tax.
C)  burden of the tax will always be equally divided between the buyers and the sellers.
D)  burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.E) A) and B)
F) A) and C)

Question 11

A binding price floor causes quantity supplied to be less than quantity demanded.

Accepted Answer

A) True 
 B)False

Question 12

Rent-control laws dictate

Accepted Answer

A)  the exact rent that landlords must charge tenants.
B)  only a maximum rent that landlords may charge tenants.
C)  only a minimum rent that landlords may charge tenants.
D)  both a minimum rent and a maximum rent that landlords may charge tenants.E) A) and D)
F) A) and C)

Question 13

A surplus results when a

Accepted Answer

A)  nonbinding price floor is imposed on a market.
B)  nonbinding price floor is removed from a market.
C)  binding price floor is imposed on a market.
D)  binding price floor is removed from a market.E) A) and B)
F) All of the above

Question 14

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

Question 15

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Accepted Answer

The tax burden fa...

Question 16

Figure 6-18
  ​
-Refer to Figure 6-18. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at...

Question 17

The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

Accepted Answer

A) True 
 B)False

Question 18

If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers.

Accepted Answer

A) True 
 B)False

Question 19

Table 6-2
 $$\begin{array} { | l | l | l | } 
\hline \text { Price (\$) } & \begin{array} { l } 
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Supplied }
\end{array} \
\hline 0 & 21 & 0 \
\hline 1 & 18 & 4 \
\hline 2 & 15 & 8 \
\hline 3 & 12 & 12 \
\hline 4 & 9 & 16 \
\hline 5 & 6 & 20 \
\hline 6 & 3 & 24 \
\hline 7 & 0 & 28 \
\hline
\end{array}$$
-Refer to Table 6-2. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set ...

Question 20

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Price is the rationing mechanism in a free, competitive market.

Correct Answer
verified

Price ceilings and price floors that are binding

Correct Answer
verified

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Correct Answer
verified

Correct Answer
verified
A price ceiling set ...
View Answer

A tax on the sellers of bottled water will increase the price of bottled water paid by buyers,

Correct Answer
verified

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Correct Answer
verified

A binding price floor causes quantity supplied to be less than quantity demanded.

Correct Answer
verified

If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers.

Correct Answer
verified

A binding price floor causes a shortage in the market.

Correct Answer
verified

Figure 6-11 -Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Correct Answer
verified

The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

Correct Answer
verified

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
verified

When a tax is placed on the buyers of bottled water, the

Correct Answer
verified

Rent-control laws dictate

Correct Answer
verified

A surplus results when a

Correct Answer
verified

Figure 6-18 -Refer to Figure 6-18. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct Answer
verified
A price floor set at...
View Answer

Price controls often hurt those they are trying to help.

Correct Answer
verified

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

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Correct Answer
verified

The tax burden fa...
View Answer

Long lines and gasoline shortages during the 1970s can be attributed completely to the decision by OPEC to raise crude oil prices.

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

Price is the rationing mechanism in a free, competitive market.

Correct AnswerverifiedShow Answer

Price ceilings and price floors that are binding

Correct AnswerverifiedShow Answer

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA price ceiling set ...View AnswerShow Answer

A tax on the sellers of bottled water will increase the price of bottled water paid by buyers,

Correct AnswerverifiedShow Answer

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Correct AnswerverifiedShow Answer

A binding price floor causes quantity supplied to be less than quantity demanded.

Correct AnswerverifiedShow Answer

If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers.

Correct AnswerverifiedShow Answer

A binding price floor causes a shortage in the market.

Correct AnswerverifiedShow Answer

Figure 6-11 ​ -Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Correct AnswerverifiedShow Answer

The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

Correct AnswerverifiedShow Answer

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 AnswerverifiedShow Answer

When a tax is placed on the buyers of bottled water, the

Correct AnswerverifiedShow Answer

Rent-control laws dictate

Correct AnswerverifiedShow Answer

A surplus results when a

Correct AnswerverifiedShow Answer

Figure 6-18 ​ -Refer to Figure 6-18. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price floor set at...View AnswerShow Answer

Price controls often hurt those they are trying to help.

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

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Correct Answerverified ​The tax burden fa...View AnswerShow Answer

Long lines and gasoline shortages during the 1970s can be attributed completely to the decision by OPEC to raise crude oil prices.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A price ceiling set ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Figure 6-11 -Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Figure 6-18 -Refer to Figure 6-18. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct Answer
verified
A price floor set at...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The tax burden fa...
View Answer

Correct Answer
verified