Question 1

As rationing mechanisms, prices

Accepted Answer

A)   and long lines are efficient.
B)   are efficient, but long lines are inefficient.
C)   are inefficient, but long lines are efficient.
D)   and long lines are inefficient.E) A) and B)
F) B) and D) B

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

A price floor set below the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 4

Table 6-3
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 $2 above the equilibrium price in this market. 
-Refer to Table 6-3. How many units of the good are sold after the imposition of the price floor?

Accepted Answer

A)   5
B)   9
C)   10
D)   15E) B) and D)
F) B) and C) A

Question 5

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Accepted Answer

A)   Improvements in production technology reduce the costs of producing laptop computers.
B)   The number of firms selling laptop computers decreases.
C)   Consumers' income decreases, and laptop computers are a normal good.
D)   The number of consumers buying laptop computers decreases.E) B) and D)
F) C) and D)

Question 6

A binding price floor causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 7

Scenario 6-1
Suppose that demand in the market for good X is given by the equation  and that supply in the market for good X is given by the equation 
-Refer to Scenario 6-1. What are the equilibrium price and quantity in the market for good X?

Accepted Answer

The equilibrium pric...

Question 8

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 9

A tax on the buyers of personal computer external hard drives encourages

Accepted Answer

A)   sellers to supply a smaller quantity at every price.
B)   buyers to demand a smaller quantity at every price.
C)   buyers to demand a larger quantity at every price.
D)   Both a)  and b)  are correct.E) A) and C)
F) B) and D)

Question 10

If a price ceiling is not binding, then

Accepted Answer

A)   the equilibrium price is above the price ceiling.
B)   the equilibrium price is below the price ceiling.
C)   it has no legal enforcement mechanism.
D)   None of the above is correct because all price ceilings must be binding.E) A) and C)
F) None of the above

Question 11

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) A) and B)

Question 12

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

Accepted Answer

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

Question 13

The economy contains many labor markets for different types of workers.

Accepted Answer

A) True 
 B)False

Question 14

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Accepted Answer

A) True 
 B)False

Question 15

Figure 6-6 
-Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?

Accepted Answer

A)   a price ceiling set at $8
B)   a price ceiling set at $6
C)   a price floor set at $8
D)   a price floor set at $6E) B) and D)
F) None of the above

Question 16

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

Accepted Answer

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

Question 17

Figure 6-31 
-Refer to Figure 6-31. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $8 would result in a shortage of 8 units.

Question 18

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

Question 19

Price floors are typically imposed to benefit sellers.

Accepted Answer

A) True 
 B)False

Question 20

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A)   a surplus in the market.
B)   a shortage in the market.
C)   a nonbinding price control.
D)   long lines of frustrated buyers.E) A) and B)
F) A) and D)

Exam 6: Supply, Demand, and Government Policies

As rationing mechanisms, prices

Correct Answer
verified
B

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

Correct Answer
verified

A price floor set below the equilibrium price causes a surplus in the market.

Correct Answer
verified

Correct Answer
verified
A

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Correct Answer
verified

A binding price floor causes a shortage in the market.

Correct Answer
verified

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. What are the equilibrium price and quantity in the market for good X?

Correct Answer
verified
The equilibrium pric...
View Answer

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Correct Answer
verified

A tax on the buyers of personal computer external hard drives encourages

Correct Answer
verified

If a price ceiling is not binding, then

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The economy contains many labor markets for different types of workers.

Correct Answer
verified

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Correct Answer
verified

Figure 6-6 -Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?

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

Correct Answer
verified

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct Answer
verified
A price ceiling set at $8 would result in a shortage of 8 units.

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

Correct Answer
verified

Price floors are typically imposed to benefit sellers.

Correct Answer
verified

An outcome that can result from either a price ceiling or a price floor is

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

As rationing mechanisms, prices

Correct AnswerverifiedB

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

Correct AnswerverifiedShow Answer

A price floor set below the equilibrium price causes a surplus in the market.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Correct AnswerverifiedShow Answer

A binding price floor causes a shortage in the market.

Correct AnswerverifiedShow Answer

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. What are the equilibrium price and quantity in the market for good X?

Correct AnswerverifiedThe equilibrium pric...View AnswerShow Answer

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Correct AnswerverifiedShow Answer

A tax on the buyers of personal computer external hard drives encourages

Correct AnswerverifiedShow Answer

If a price ceiling is not binding, then

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The economy contains many labor markets for different types of workers.

Correct AnswerverifiedShow Answer

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Correct AnswerverifiedShow Answer

Figure 6-6 -Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set at $8 would result in a shortage of 8 units.

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

Correct AnswerverifiedShow Answer

Price floors are typically imposed to benefit sellers.

Correct AnswerverifiedShow Answer

An outcome that can result from either a price ceiling or a price floor is

Correct AnswerverifiedShow Answer

Correct Answer
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B

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A

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The equilibrium pric...
View Answer

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A price ceiling set at $8 would result in a shortage of 8 units.

Correct Answer
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Correct Answer
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Correct Answer
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