Question 1

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 2

If a tax is imposed on a market with inelastic supply and elastic demand, then

Accepted Answer

A)  buyers will bear most of the burden of the tax.
B)  sellers will bear most of the burden of the tax.
C)  the burden of the tax will be shared equally between buyers and sellers.
D)  it is impossible to determine how the burden of the tax will be shared.

Question 3

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

Accepted Answer

A)  increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.
B)  increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.
C)  decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.
D)  decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

Question 4

If the government removes a binding price ceiling from a market, then the price received by sellers will

Accepted Answer

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

Question 5

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a (i) 
Binding price ceiling.
(ii) 
Non-binding price ceiling.
(iii) 
Binding price floor.
(iv) 
Non-binding price floor.

Accepted Answer

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

Question 6

The primary effect of rent control in the short run is to reduce rents.

Accepted Answer

A) True 
 B)False

Question 7

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Accepted Answer

A) True 
 B)False

Question 8

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 9

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A)  an enhancement of efficiency.
B)  undesirable rationing mechanisms.
C)  a surplus.
D)  a shortage.

Question 10

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

Accepted Answer

A binding price ceil...

Question 11

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.

Question 12

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

Accepted Answer

A)  U.S. government regulations pertaining to the price of gasoline.
B)  the Organization of Petroleum Exporting Countries (OPE
C)  .
C)  major oil companies operating in the U.S.
D)  consumers who bought gasoline frequently, even when their cars' gasoline tanks were nearly full.

Question 13

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un...

Question 14

Figure 6-24 
-Refer to Figure 6-24. In the after-tax equilibrium, government collects

Accepted Answer

A)  $1,440 in tax revenue; of this amount, $960 represents a burden on buyers and $480 represents a burden on sellers.
B)  $1,440 in tax revenue; of this amount, $720 represents a burden on buyers and $720 represents a burden on sellers.
C)  $1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers.
D)  $1,680 in tax revenue; of this amount, $840 represents a burden on buyers and $840 represents a burden on sellers.

Question 15

A tax on buyers decreases demand.

Accepted Answer

A) True 
 B)False

Question 16

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 17

A $5 tax levied on the buyers of pants will cause the

Accepted Answer

A)  supply curve for pants to shift down by $5.
B)  supply curve for pants to shift up by $5.
C)  demand curve for pants to shift down by $5.
D)  demand curve for pants to shift up by $5.

Question 18

Figure 6-8 
-Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be

Accepted Answer

A)  no shortage of the good.
B)  a shortage of 10 units of the good.
C)  a shortage of 20 units of the good.
D)  a shortage of 30 units of the good.

Question 19

Figure 6-6 
-Refer to Figure 6-6. Which of the following statements is not correct?

Accepted Answer

A)  A price ceiling set at $6 would be binding, but a price ceiling set at $12 would not be binding.
B)  A price floor set at $14 would be binding, but a price floor 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 $6 would result in a shortage.

Question 20

Price floors are typically imposed to benefit sellers.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

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

Figure 6-24 -Refer to Figure 6-24. In the after-tax equilibrium, government collects

Correct Answer
verified

Figure 6-6 -Refer to Figure 6-6. Which of the following statements 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
verified

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be

Correct Answer
verified

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

Correct Answer
verified

A $5 tax levied on the buyers of pants will cause the

Correct Answer
verified

Price floors are typically imposed to benefit sellers.

Correct Answer
verified

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a (i) Binding price ceiling. (ii) Non-binding price ceiling. (iii) Binding price floor. (iv) Non-binding price floor.

Correct Answer
verified

The primary effect of rent control in the short run is to reduce rents.

Correct Answer
verified

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Correct Answer
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With a $6 tax per un...
View Answer

An outcome that can result from either a price ceiling or a price floor is

Correct Answer
verified

If a tax is imposed on a market with inelastic supply and elastic demand, then

Correct Answer
verified

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

Correct Answer
verified

A tax on buyers decreases demand.

Correct Answer
verified

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Correct Answer
verified

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

Correct Answer
verified
A binding price ceil...
View Answer

If the government removes a binding price ceiling from a market, then the price received by sellers will

Correct Answer
verified

Correct Answer
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Initially the price floor is not binding...
View Answer

Exam 6: Supply, Demand, and Government Policies

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

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

Figure 6-24 -Refer to Figure 6-24. In the after-tax equilibrium, government collects

Correct AnswerverifiedShow Answer

Figure 6-6 -Refer to Figure 6-6. Which of the following statements 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 6-8 -Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A $5 tax levied on the buyers of pants will cause the

Correct AnswerverifiedShow Answer

Price floors are typically imposed to benefit sellers.

Correct AnswerverifiedShow Answer

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a (i) Binding price ceiling. (ii) Non-binding price ceiling. (iii) Binding price floor. (iv) Non-binding price floor.

Correct AnswerverifiedShow Answer

The primary effect of rent control in the short run is to reduce rents.

Correct AnswerverifiedShow Answer

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Correct AnswerverifiedWith a $6 tax per un...View AnswerShow Answer

An outcome that can result from either a price ceiling or a price floor is

Correct AnswerverifiedShow Answer

If a tax is imposed on a market with inelastic supply and elastic demand, then

Correct AnswerverifiedShow Answer

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

Correct AnswerverifiedShow Answer

A tax on buyers decreases demand.

Correct AnswerverifiedShow Answer

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Correct AnswerverifiedShow Answer

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

Correct AnswerverifiedA binding price ceil...View AnswerShow Answer

If the government removes a binding price ceiling from a market, then the price received by sellers will

Correct AnswerverifiedShow Answer

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

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With a $6 tax per un...
View Answer

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A binding price ceil...
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Initially the price floor is not binding...
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