Question 1

To say that a price floor is binding is to say that the price floor

Accepted Answer

A)  results in a shortage.
B)  is set below the equilibrium price.
C)  causes quantity supplied to exceed quantity demanded.
D)  All of the above are correct.

Question 2

If a tax is levied on the buyers of a product, then the demand curve will

Accepted Answer

A)  not shift.
B)  shift down.
C)  shift up.
D)  become flatter.

Question 3

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

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

Question 5

A price ceiling set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 6

If the government removes a binding price floor 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 7

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 8

A tax burden falls more heavily on the side of the market that

Accepted Answer

A)  has a fewer number of participants.
B)  is more inelastic.
C)  is closer to unit elastic.
D)  is less inelastic.

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)  $5

Question 10

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act)  tax to pay for

Accepted Answer

A)  unemployment compensation.
B)  the salaries of members of Congress.
C)  Social Security and Medicare.
D)  housing subsidies for low-income people.

Question 11

Figure 6-17
This figure shows the market demand and market supply curves for good Y 
-Refer to Figure 6-17. A government-imposed price of $12 in this market is an example of a

Accepted Answer

A)  binding price ceiling that creates a shortage.
B)  non-binding price ceiling that creates a shortage.
C)  binding price floor that creates a surplus.
D)  non-binding price floor that creates a surplus.

Question 12

Price controls can generate inequities.

Accepted Answer

A) True 
 B)False

Question 13

The effects of rent control in the long run include lower rents and lower-quality housing.

Accepted Answer

A) True 
 B)False

Question 14

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Accepted Answer

A) True 
 B)False

Question 15

Table 6-6 
-Refer to Table 6-6. In this market, over what range of prices would a price ceiling set by the government be binding?

Accepted Answer

A price ceiling must be set be...

Question 16

Figure 6-20 
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)  $5
B)  between $5 and $10
C)  between $10 and $14
D)  $14

Question 17

Table 6-1 
-Refer to Table 6-1. Which of the following price floors would be binding in this market?

Accepted Answer

A)  $70
B)  $60
C)  $50
D)  $40

Question 18

When a tax is placed on the buyers of a product, the

Accepted Answer

A)  size of the market decreases.
B)  effective price received by sellers decreases, and the price paid by buyers increases.
C)  demand for the product decreases.
D)  All of the above are correct.

Question 19

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

Accepted Answer

A) True 
 B)False

Question 20

Figure 6-13
This figure shows the market demand and market supply curves for good X. 
-Refer to Figure 6-13. Which of the following price floors would be binding in this market?

Accepted Answer

A)  $3
B)  $4
C)  $5
D)  $6

Exam 6: Supply, Demand, and Government Policies

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.

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A price ceiling set above the equilibrium price causes a surplus in the market.

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Table 6-6 -Refer to Table 6-6. In this market, over what range of prices would a price ceiling set by the government be binding?

Correct AnswerverifiedA price ceiling must be set be...View AnswerShow Answer

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

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A tax burden falls more heavily on the side of the market that

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Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following price floors would be binding in this market?

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When a tax is placed on the buyers of a product, the

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Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

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The effects of rent control in the long run include lower rents and lower-quality housing.

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The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for

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Table 6-1 -Refer to Table 6-1. Which of the following price floors would be binding in this market?

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A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

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Rent-control laws dictate a minimum rent that landlords may charge tenants.

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

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A tax of $1 on sellers shifts the supply curve upward by exactly $1.

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To say that a price floor is binding is to say that the price floor

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

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If a tax is levied on the buyers of a product, then the demand curve will

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Figure 6-17 This figure shows the market demand and market supply curves for good Y -Refer to Figure 6-17. A government-imposed price of $12 in this market is an example of a

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Price controls can generate inequities.

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A price ceiling must be set be...
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