Question 1

Figure 6-25 
-Refer to Figure 6-25. The burden of the tax on sellers is

Accepted Answer

A)  $1 per unit.
B)  $1.50 per unit.
C)  $2 per unit.
D)  $3 per unit.E) All of the above
F) C) and D)

Question 2

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price of $16 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)  onlyE) All of the above
F) A) and D)

Question 3

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Accepted Answer

A)  OPEC raised the price of crude oil in world markets.
B)  U.S. gasoline producers raised the price of gasoline.
C)  the U.S. government maintained a price ceiling on gasoline.
D)  Americans typically commuted long distances.E) A) and C)
F) A) and B)

Question 4

Figure 6-18
The vertical distance between points A and B represents the tax in the market. 
-Refer to Figure 6-18. The price that buyers pay after the tax is imposed is

Accepted Answer

A)  $8.
B)  $10.
C)  $16.
D)  $24.E) A) and B)
F) All of the above

Question 5

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market. 
-Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is

Accepted Answer

A)  $2.
B)  $3.
C)  $4.
D)  $5.E) B) and D)
F) All of the above

Question 6

The distribution of the burden of a tax depends strictly on the elasticity of demand.
​

Accepted Answer

A) True 
 B)False

Question 7

If a binding price floor is imposed on the market for eBooks, then

Accepted Answer

A)  the demand for eBooks will decrease.
B)  the supply of eBooks will increase.
C)  a surplus of eBooks will develop.
D)  All of the above are correct.E) A) and D)
F) A) and C)

Question 8

When a tax is imposed on the sellers of a good, the supply curve shifts

Accepted Answer

A)  upward by the amount of the tax.
B)  downward by the amount of the tax.
C)  upward by less than the amount of the tax.
D)  downward by less than the amount of the tax.E) A) and B)
F) A) and C)

Question 9

A tax of $1 on buyers always decreases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 10

Figure 6-22 
-Refer to Figure 6-22. The effective price sellers receive after the tax is imposed is

Accepted Answer

A)  $2.00.
B)  $3.50.
C)  $5.00.
D)  $3.00.E) B) and D)
F) C) and D)

Question 11

A price floor will be binding only if it is set

Accepted Answer

A)  equal to the equilibrium price.
B)  above the equilibrium price.
C)  below the equilibrium price.
D)  either above or below the equilibrium price.E) None of the above
F) A) and D)

Question 12

When a binding price ceiling is imposed on a market to benefit buyers,

Accepted Answer

A)  no buyers actually benefit.
B)  some buyers benefit, but no buyers are harmed.
C)  some buyers benefit, and some buyers are harmed.
D)  all buyers benefit.E) B) and C)
F) A) and B)

Question 13

Figure 6-2 
-Refer to Figure 6-2. The price ceiling

Accepted Answer

A)  causes a shortage of 40 units.
B)  is not binding, because it is set above the equilibrium price.
C)  causes a shortage of 45 units.
D)  causes a shortage of 85 units.E) All of the above
F) B) and C)

Question 14

A minimum wage that is set below a market's equilibrium wage will

Accepted Answer

A)  result in an excess demand for labor, that is, unemployment.
B)  result in an excess demand for labor, that is, a shortage of workers.
C)  result in an excess supply of labor, that is, unemployment.
D)  have no impact on employment.E) B) and D)
F) B) and C)

Question 15

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A)  buyers will bear a greater burden of the tax than the sellers.
B)  sellers will bear a greater burden of the tax than the buyers.
C)  buyers and sellers are likely to share the burden of the tax equally.
D)  buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.E) A) and B)
F) A) and C)

Question 16

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 17

​Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

Accepted Answer

A)  ​a government study that shows that consuming chocolate increases the incidence of cancer.
B)  ​a large increase in the size of the cocoa bean crop; cocoa beans are used to produce chocolate.
C)  ​South American cocoa bean producers refuse to ship to chocolate producers in the US.
D)  ​a sharp drop in consumer income; chocolate is a normal good.E) A) and B)
F) A) and C)

Question 18

Table 6-1 
-Refer to Table 6-1. Suppose the government imposes a price floor of $70 on this market. What will be the size of the surplus in this market?

Accepted Answer

A)  0 units
B)  400 units
C)  600 units
D)  1000 unitsE) C) and D)
F) B) and D)

Question 19

The minimum wage does not apply to

Accepted Answer

A)  jobs for teenagers.
B)  jobs for members of minority groups.
C)  unpaid internships.
D)  jobs that include on-the-job training.E) None of the above
F) A) and B)

Question 20

Table 6-2 
-Refer to Table 6-2. A price floor set at $5 will

Accepted Answer

A)  be binding and will result in a surplus of 50 units.
B)  be binding and will result in a surplus of 250 units.
C)  be binding and will result in a surplus of 300 units.
D)  not be binding.E) B) and C)
F) A) and D)

Exam 6: Supply, Demand, and Government Policies

Figure 6-2 -Refer to Figure 6-2. The price ceiling

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Table 6-2 -Refer to Table 6-2. A price floor set at $5 will

Correct Answer
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The distribution of the burden of a tax depends strictly on the elasticity of demand.

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

The minimum wage does not apply to

Correct Answer
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When a binding price ceiling is imposed on a market to benefit buyers,

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Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $16 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
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Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price floor of $70 on this market. What will be the size of the surplus in this market?

Correct Answer
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Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

Correct Answer
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A tax of $1 on buyers always decreases the equilibrium price by $1.

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 price that buyers pay after the tax is imposed is

Correct Answer
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A minimum wage that is set below a market's equilibrium wage will

Correct Answer
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When a tax is imposed on the sellers of a good, the supply curve shifts

Correct Answer
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Figure 6-22 -Refer to Figure 6-22. The effective price sellers receive after the tax is imposed is

Correct Answer
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In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Correct Answer
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Figure 6-25 -Refer to Figure 6-25. The burden of the tax on sellers is

Correct Answer
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Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Correct Answer
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Correct Answer
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A price floor will be binding only if it is set

Correct Answer
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If a binding price floor is imposed on the market for eBooks, then

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

Figure 6-2 -Refer to Figure 6-2. The price ceiling

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Table 6-2 -Refer to Table 6-2. A price floor set at $5 will

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The distribution of the burden of a tax depends strictly on the elasticity of demand. ​

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

The minimum wage does not apply to

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When a binding price ceiling is imposed on a market to benefit buyers,

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Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $16 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

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price floor of $70 on this market. What will be the size of the surplus in this market?

Correct AnswerverifiedShow Answer

​Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

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A tax of $1 on buyers always decreases the equilibrium price by $1.

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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 price that buyers pay after the tax is imposed is

Correct AnswerverifiedShow Answer

A minimum wage that is set below a market's equilibrium wage will

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When a tax is imposed on the sellers of a good, the supply curve shifts

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Figure 6-22 -Refer to Figure 6-22. The effective price sellers receive after the tax is imposed is

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In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

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Figure 6-25 -Refer to Figure 6-25. The burden of the tax on sellers is

Correct AnswerverifiedShow Answer

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A price floor will be binding only if it is set

Correct AnswerverifiedShow Answer

If a binding price floor is imposed on the market for eBooks, then

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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The distribution of the burden of a tax depends strictly on the elasticity of demand.

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

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Correct Answer
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Correct Answer
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Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

Correct Answer
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