Question 1

When a tax is placed on the sellers of energy drinks, the

Accepted Answer

A)  sellers bear the entire burden of the tax.
B)  buyers bear the entire burden of the tax.
C)  burden of the tax will be always be equally divided between the buyers and the sellers.
D)  burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

Question 2

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

Accepted Answer

A)  every buyer in the market benefits.
B)  every buyer and seller in the market benefits.
C)  every buyer who wants to buy the good will be able to do so, but only if he waits in long lines.
D)  some buyers will not be able to buy any amount of the good.

Question 3

Figure 6-3
 
-Refer to Figure 6-3. In panel (a) , there will be

Accepted Answer

A)  a shortage of wheat.
B)  equilibrium in the market.
C)  a surplus of wheat.
D)  lines of people waiting to buy wheat.

Question 4

Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-18 
-Refer to Figure 6-18. The equilibrium price in the market before the tax is imposed is

Accepted Answer

A)  $3.50.
B)  $5.
C)  $6.
D)  $7.

Question 6

In a free, competitive market, what is the rationing mechanism?

Accepted Answer

A)  seller bias
B)  buyer bias
C)  government law
D)  price

Question 7

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

Accepted Answer

A)  supplied to exceed quantity demanded by 45 units.
B)  supplied to exceed quantity demanded by 85 units.
C)  demanded to exceed quantity supplied by 45 units.
D)  demanded to exceed quantity supplied by 85 units.

Question 8

Suppose the government imposes a 20-cent tax on the sellers of iced tea. Which of the following is not correct? The tax would

Accepted Answer

A)  shift the supply curve upward by 20 cents.
B)  raise the equilibrium price by 20 cents.
C)  reduce the equilibrium quantity.
D)  discourage market activity.

Question 9

Figure 6-26 
-Refer to Figure 6-26. A price ceiling set at $70 would create a shortage of 40 units.

Accepted Answer

A) True 
 B)False

Question 10

Figure 6-17 
-Refer to Figure 6-17. What is the amount of the tax per unit?

Accepted Answer

A)  $1
B)  $2
C)  $3
D)  $4

Question 11

Figure 6-18 
-Refer to Figure 6-18. The effective price sellers receive after the tax is imposed is

Accepted Answer

A)  $2.50.
B)  $3.50.
C)  $5.00.
D)  $6.00.

Question 12

A price ceiling is always a binding price control, whereas a price floor may be either binding or not binding.

Accepted Answer

A) True 
 B)False

Question 13

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 14

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would

Accepted Answer

A)  shift the demand curve downward by 25 cents.
B)  lower the equilibrium price by 25 cents.
C)  reduce the equilibrium quantity.
D)  discourage market activity.

Question 15

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Accepted Answer

A) True 
 B)False

Question 16

A tax on sellers shifts the supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 17

Not all sellers benefit from a binding price floor.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  causes a shortage of 45 units of the good.
B)  makes it necessary for sellers to ration the good.
C)  is not binding because it is set below the equilibrium price.
D)  Both a)  and b)  are correct.

Question 19

When a binding price floor is imposed on a market,

Accepted Answer

A)  price no longer serves as a rationing device.
B)  the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor.
C)  only some sellers benefit.
D)  All of the above are correct.

Question 20

The long-run effects of rent controls are a good illustration of the principle that

Accepted Answer

A)  society faces a short-run tradeoff between unemployment and inflation.
B)  the cost of something is what you give up to get it.
C)  people respond to incentives.
D)  government can sometimes improve on market outcomes.

Exam 6: Supply, Demand, and Government Policies

In a free, competitive market, what is the rationing mechanism?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the government imposes a 20-cent tax on the sellers of iced tea. Which of the following is not correct? The tax would

Correct AnswerverifiedShow Answer

Not all sellers benefit from a binding price floor.

Correct AnswerverifiedShow Answer

The long-run effects of rent controls are a good illustration of the principle that

Correct AnswerverifiedShow Answer

A tax on sellers shifts the supply curve to the left.

Correct AnswerverifiedShow Answer

When a binding price floor is imposed on a market,

Correct AnswerverifiedShow Answer

Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.

Correct AnswerverifiedShow Answer

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would

Correct AnswerverifiedShow Answer

Figure 6-18 -Refer to Figure 6-18. The effective price sellers receive after the tax is imposed is

Correct AnswerverifiedShow Answer

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Correct AnswerverifiedShow Answer

Figure 6-26 -Refer to Figure 6-26. A price ceiling set at $70 would create a shortage of 40 units.

Correct AnswerverifiedShow Answer

Figure 6-18 -Refer to Figure 6-18. The equilibrium price in the market before the tax is imposed is

Correct AnswerverifiedShow Answer

A price ceiling is always a binding price control, whereas a price floor may be either binding or not binding.

Correct AnswerverifiedShow Answer

Figure 6-3 -Refer to Figure 6-3. In panel (a) , there will be

Correct AnswerverifiedShow Answer

When a tax is placed on the sellers of energy drinks, the

Correct AnswerverifiedShow Answer

Figure 6-17 -Refer to Figure 6-17. What is the amount of the tax per unit?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified