Question 1

A price ceiling set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 2

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 3

If a price ceiling is a binding constraint on a market,then

Accepted Answer

A)   the equilibrium price must be below the price ceiling.
B)   the quantity supplied must exceed the quantity demanded.
C)   sellers cannot sell all they want to sell at the price ceiling.
D)   buyers cannot buy all they want to buy at the price ceiling.E) None of the above
F) All of the above

Question 4

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) A) and B)

Question 5

A price ceiling is

Accepted Answer

A)   often imposed on markets in which "cutthroat competition" would prevail without a price ceiling.
B)   a legal maximum on the price at which a good can be sold.
C)   often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling.
D)   All of the above are correct.E) C) and D)
F) All of the above

Question 6

If a tax is levied on the buyers of a product,then there will be a(n)

Accepted Answer

A)   upward shift of the demand curve.
B)   downward shift of the demand curve.
C)   movement up and to the left along the demand curve.
D)   movement down and to the right along the demand curve.E) C) and D)
F) A) and B)

Question 7

A binding price floor may not help all sellers,but it does not hurt any sellers.

Accepted Answer

A) True 
 B)False

Question 8

When a tax of $1.00 per gallon is imposed on sellers of gasoline,the supply curve for gasoline shifts upward,but by less than $1.00.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Accepted Answer

A)   a binding price floor
B)   a binding price ceiling
C)   a tax on the good
D)   All of the above are correct.E) B) and D)
F) C) and D)

Question 10

Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then the

Accepted Answer

A)   demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20.
B)   demand curve will shift upward by $20, and the price paid by buyers will decrease by $20.
C)   supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20.
D)   supply curve will shift downward by $20, and the effective price received by sellers will increase by $20.E) A) and B)
F) B) and D)

Question 11

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

Question 12

Policymakers use taxes

Accepted Answer

A)   to raise revenue for public purposes but not to influence market outcomes.
B)   both to raise revenue for public purposes and to influence market outcomes.
C)   when they realize that price controls alone are insufficient to correct market inequities.
D)   only in those markets in which the burden of the tax falls clearly on the sellers.E) None of the above
F) A) and B)

Question 13

A nonbinding 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)   (i)  only
B)   (iii)  only
C)   (i)  and (iii)  only
D)   (ii)  and (iv)  onlyE) A) and B)
F) All of the above

Question 14

A binding minimum wage raises the incomes of some workers,but it lowers the incomes of workers who cannot find jobs.

Accepted Answer

A) True 
 B)False

Question 15

When a binding price floor is imposed on a market,

Accepted Answer

A)   price no longer serves as a rationing device.
B)   the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor.
C)   all sellers benefit.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 16

Figure 6-14
The vertical distance between points A and B represents the tax in the market.
 
-Refer to Figure 6-14.The effective price that sellers receive after the tax is imposed is

Accepted Answer

A)   $6.
B)   $10.
C)   $16.
D)   $24.E) A) and D)
F) B) and D)

Question 17

Figure 6-23
 
-Refer to Figure 6-23.The price paid by buyers after the tax is imposed is

Accepted Answer

A)   $8.
B)   $10.
C)   $14.
D)   $18.E) A) and B)
F) B) and C)

Question 18

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

Question 19

A tax on buyers decreases demand.

Accepted Answer

A) True 
 B)False

Question 20

Minimum-wage laws dictate

Accepted Answer

A)   the exact wage that firms must pay workers.
B)   a maximum wage that firms may pay workers.
C)   a minimum wage that firms may pay workers.
D)   both a minimum wage and a maximum wage that firms may pay workers.E) A) and D)
F) A) and C)

Exam 6: Supply, Demand, And Government Policies.

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

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Figure 6-23 -Refer to Figure 6-23.The price paid by buyers after the tax is imposed is

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A price ceiling set above the equilibrium price is not binding.

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A tax on buyers decreases demand.

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A tax on sellers will shift the

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Which of the following causes the price paid by buyers to be different than the price received by sellers?

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Price ceilings and price floors that are binding

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Minimum-wage laws dictate

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Figure 6-14 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-14.The effective price that sellers receive after the tax is imposed is

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If a price ceiling is a binding constraint on a market,then

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Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then the

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A price ceiling is

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When a tax of $1.00 per gallon is imposed on sellers of gasoline,the supply curve for gasoline shifts upward,but by less than $1.00.

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Policymakers use taxes

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When a binding price floor is imposed on a market,

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A binding minimum wage raises the incomes of some workers,but it lowers the incomes of workers who cannot find jobs.

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A binding price floor may not help all sellers,but it does not hurt any sellers.

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A nonbinding 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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Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

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If a tax is levied on the buyers of a product,then there will be a(n)

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