Question 1

Suppose the government imposes a 30-cent tax on the sellers of soft drinks. Which of the following is not correct? The tax would

Accepted Answer

A)   shift the supply curve upward by 30 cents.
B)   raise the equilibrium price by 30 cents.
C)   reduce the equilibrium quantity.
D)   discourage market activity.E) B) and D)
F) A) and B)

Question 2

A price floor is binding when it is set

Accepted Answer

A)   above the equilibrium price, causing a shortage.
B)   above the equilibrium price, causing a surplus.
C)   below the equilibrium price, causing a shortage.
D)   below the equilibrium price, causing a surplus.E) B) and D)
F) All of the above

Question 3

Figure 6-22 
-Refer to Figure 6-22. The amount of the tax per unit is

Accepted Answer

A)   $2.00.
B)   $1.50.
C)   $3.00.
D)   $0.50.E) A) and B)
F) None of the above

Question 4

Figure 6-22 
-Refer to Figure 6-22. The equilibrium price in the market before the tax is imposed is

Accepted Answer

A)   $3.50.
B)   $5.00.
C)   $2.00.
D)   $1.50.E) B) and D)
F) B) and C)

Question 5

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

Accepted Answer

A)   $8
B)   $5
C)   $6
D)   $7E) A) and B)
F) None of the above

Question 6

Figure 6-14 
-Refer to Figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Accepted Answer

A)   binding and creates a shortage of 20 units of the good.
B)   binding and creates a shortage of 40 units of the good.
C)   not binding but creates a shortage of 40 units of the good.
D)   not binding, and there will be no surplus or shortage of the good.E) All of the above
F) A) and D)

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

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.E) B) and C)
F) A) and C)

Question 9

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Accepted Answer

A) True 
 B)False

Question 10

The minimum wage is more often binding for teenagers than for other members of the labor force.

Accepted Answer

A) True 
 B)False

Question 11

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Accepted Answer

A) True 
 B)False

Question 12

Figure 6-24 
-Refer to Figure 6-24. Which of the following statements is correct?

Accepted Answer

A)   The amount of the tax per unit is $6.
B)   The tax leaves the size of the market unchanged.
C)   The tax is levied on buyers of the good, rather than on sellers.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 13

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, what price will buyers pay per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un...

Question 14

A binding price floor causes quantity supplied to be less than quantity demanded.

Accepted Answer

A) True 
 B)False

Question 15

Figure 6-12 
-Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Accepted Answer

A)   the market price will increase to P3.
B)   a surplus will occur at the new market price of P2.
C)   the market price will stay at P1.
D)   a shortage will occur at the new market price of P2.E) B) and D)
F) C) and D)

Question 16

If a tax is levied on the buyers of dog food, then

Accepted Answer

A)   buyers will bear the entire burden of the tax.
B)   sellers will bear the entire burden of the tax.
C)   buyers and sellers will share the burden of the tax.
D)   the government will bear the entire burden of the tax.E) None of the above
F) B) and C)

Question 17

A binding price floor causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following observations would be consistent with the imposition of a binding price floor on a market? After the price floor becomes effective,

Accepted Answer

A)   a smaller quantity of the good is bought and sold.
B)   a larger quantity of the good is demanded.
C)   a smaller quantity of the good is supplied.
D)   the price falls below the equilibrium price.E) A) and B)
F) A) and C)

Question 19

A price ceiling 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) A) and D)
F) B) and C)

Question 20

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Suppose the government imposes a 30-cent tax on the sellers of soft drinks. Which of the following is not correct? The tax would

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The minimum wage is more often binding for teenagers than for other members of the labor force.

Correct AnswerverifiedShow Answer

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Correct AnswerverifiedShow Answer

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

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A binding price floor causes quantity supplied to be less than quantity demanded.

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Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

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Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, what price will buyers pay per unit after the tax is imposed?

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

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

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Figure 6-22 -Refer to Figure 6-22. The amount of the tax per unit is

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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

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A price floor is binding when it is set

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Figure 6-14 -Refer to Figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

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Figure 6-24 -Refer to Figure 6-24. Which of the following statements is correct?

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A price ceiling will be binding only if it is set

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Which of the following observations would be consistent with the imposition of a binding price floor on a market? After the price floor becomes effective,

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If a tax is levied on the buyers of dog food, then

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A binding price floor causes a shortage in the market.

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

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Figure 6-22 -Refer to Figure 6-22. The equilibrium price in the market before the tax is imposed is

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

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