Question 1

Price floors are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 2

In a particular market, market demand is given by the equation  and market supply is given by the equation  Suppose a per-unit tax is imposed that reduces the number of units bought and sold in the market to 25 units. What is the size of the tax, and who bears the greater burden of the tax, buyers or sellers?

Accepted Answer

If the number of transactions falls to 2...

Question 3

A binding price floor causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 4

A tax of $1 on buyers shifts the demand curve downward by exactly $1.

Accepted Answer

A) True 
 B)False

Question 5

A price ceiling set below the equilibrium price is nonbinding.

Accepted Answer

A) True 
 B)False

Question 6

Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

Accepted Answer

A)   The effective price received by sellers is $0.40 per bottle less than it was before the tax.
B)   Sixty percent of the burden of the tax falls on sellers.
C)   This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume.
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 7

Figure 6-14 
-Refer to Figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Accepted Answer

A)   binding and creates a shortage of 20 units of the good.
B)   binding and creates a shortage of 40 units of the good.
C)   not binding but creates a shortage of 40 units of the good.
D)   not binding, and there will be no surplus or shortage of the good.E) None of the above
F) All of the above

Question 8

Figure 6-31 
-Refer to Figure 6-31. If the government set a price floor at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at...

Question 9

Figure 6-9 
-Refer to Figure 6-9. At which price would a price floor be binding?

Accepted Answer

A)   $7
B)   $6
C)   $4
D)   $5E) A) and D)
F) A) and C)

Question 10

Figure 6-26 
-Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

Accepted Answer

A)   $8.
B)   $16.
C)   $14.
D)   $12.E) A) and D)
F) B) and C)

Question 11

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) B) and C)
F) A) and B)

Question 12

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

Accepted Answer

A)   $6.
B)   $8.
C)   $10.
D)   $14.E) B) and C)
F) A) and D)

Question 13

Figure 6-8 
-Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Accepted Answer

A)   no surplus of the good.
B)   a surplus of 5 units of the good.
C)   a surplus of 10 units of the good.
D)   a surplus of 15 units of the good.E) B) and D)
F) A) and C)

Question 14

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 buyers in this market?

Accepted Answer

The burden...

Question 15

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A)   every seller in the market benefits.
B)   all buyers and sellers benefit.
C)   every seller who wants to sell the good will be able to do so, but only if he appeals to the personal biases of the buyers.
D)   some sellers will not be able to sell any amount of the good.E) None of the above
F) A) and B)

Question 16

Which of the following is not correct?

Accepted Answer

A)   Some states in the U.S. mandate minimum wages above the federal level.
B)   Most European nations have minimum-wage laws.
C)   The U.S. minimum wage is significantly higher than the minimum wages in France and the United Kingdom.
D)   The U.S. Congress first instituted a minimum wage with the Fair Labor Standards Act.E) A) and B)
F) None of the above

Question 17

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

Accepted Answer

A)   A price ceiling set at $12 would be binding, but a price ceiling set at $8 would not be binding.
B)   A price floor set at $8 would be binding, but a price ceiling set at $8 would not be binding.
C)   A price ceiling set at $9 would result in a surplus.
D)   A price floor set at $11 would result in a surplus.E) All of the above
F) None of the above

Question 18

Which of the following is not a function of prices in a market system?

Accepted Answer

A)   Prices have the crucial job of balancing supply and demand.
B)   Prices send signals to buyers and sellers to help them make rational economic decisions.
C)   Prices coordinate economic activity.
D)   Prices ensure an equal distribution of goods and services among consumers.E) A) and B)
F) A) and C)

Question 19

The tax burden will fall most heavily on sellers of the good when the demand curve

Accepted Answer

A)   is relatively steep, and the supply curve is relatively flat.
B)   is relatively flat, and the supply curve is relatively steep.
C)   and the supply curve are both relatively flat.
D)   and the supply curve are both relatively steep.E) All of the above
F) B) and C)

Question 20

Using the graph shown, answer the following questions.
a. What was the equilibrium price in this market before the tax?
b. What is the amount of the tax?
c. How much of the tax will the buyers pay?
d. How much of the tax will the sellers pay?
e. How much will the buyer pay for the product after the tax is imposed?
f. How much will the seller receive after the tax is imposed?
g. As a result of the tax, what has happened to the level of market activity?

Accepted Answer

a. $5
b. $3
c. $2
d. $1
e. $7
...

Exam 6: Supply, Demand, and Government Policies

Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct Answer
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A price floor set at...
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The tax burden will fall most heavily on sellers of the good when the demand curve

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

Correct Answer
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Figure 6-26 -Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

Correct Answer
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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 buyers in this market?

Correct Answer
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The burden...
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Which of the following is not a function of prices in a market system?

Correct Answer
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If the number of transactions falls to 2...
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Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

Correct Answer
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Figure 6-9 -Refer to Figure 6-9. At which price would a price floor be binding?

Correct Answer
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Which of the following is not correct?

Correct Answer
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Figure 6-8 -Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Correct Answer
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Figure 6-14 -Refer to Figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Correct Answer
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A binding price floor causes a shortage in the market.

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

Correct Answer
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When a binding price floor is imposed on a market to benefit sellers,

Correct Answer
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A price ceiling set below the equilibrium price is nonbinding.

Correct Answer
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A binding minimum wage

Correct Answer
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Correct Answer
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a. $5
b. $3
c. $2
d. $1
e. $7
...
View Answer

Price floors are typically imposed to benefit buyers.

Correct Answer
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A tax of $1 on buyers shifts the demand curve downward by exactly $1.

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

Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

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

The tax burden will fall most heavily on sellers of the good when the demand curve

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-26 -Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

Correct AnswerverifiedShow Answer

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 buyers in this market?

Correct AnswerverifiedThe burden...View AnswerShow Answer

Which of the following is not a function of prices in a market system?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIf the number of transactions falls to 2...View AnswerShow Answer

Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Figure 6-9 -Refer to Figure 6-9. At which price would a price floor be binding?

Correct AnswerverifiedShow Answer

Which of the following is not correct?

Correct AnswerverifiedShow Answer

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Correct AnswerverifiedShow Answer

Figure 6-14 -Refer to Figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Correct AnswerverifiedShow Answer

A binding price floor causes a shortage in the market.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a binding price floor is imposed on a market to benefit sellers,

Correct AnswerverifiedShow Answer

A price ceiling set below the equilibrium price is nonbinding.

Correct AnswerverifiedShow Answer

A binding minimum wage

Correct AnswerverifiedShow Answer

Correct Answerverifieda. $5b. $3c. $2d. $1e. $7...View AnswerShow Answer

Price floors are typically imposed to benefit buyers.

Correct AnswerverifiedShow Answer

A tax of $1 on buyers shifts the demand curve downward by exactly $1.

Correct AnswerverifiedShow Answer

Correct Answer
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A price floor set at...
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The burden...
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If the number of transactions falls to 2...
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a. $5
b. $3
c. $2
d. $1
e. $7
...
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