QUIZ 4- Econ

D

A legal maximum on the price at which a good can be sold is called a price A. floor. B. subsidy. C. support. D. ceiling.

B

A legal minimum on the price at which a good can be sold is called a price A. subsidy. B. floor. C. support. D. ceiling.

D

A minimum wage that is set below a market's equilibrium wage will result in A. an excess demand for labor, that is, unemployment. B. an excess demand for labor, that is, a shortage of workers. C. an excess supply of labor, that is, unemployment. D. None of the above is correct.

C

A price ceiling will be binding only if it is set A. equal to the equilibrium price. B. above the equilibrium price. C. below the equilibrium price. D. either above or below the equilibrium price.

B

A price floor will be binding only if it is set A. equal to the equilibrium price. B. above the equilibrium price. C. below the equilibrium price. D. either above or below the equilibrium price.

A

A tax imposed on the buyers of a good will A. raise the price paid by buyers and lower the equilibrium quantity. B. raise the price paid by buyers and raise the equilibrium quantity. C. raise the effective price received by sellers and lower the equilibrium quantity. D. raise the effective price received by sellers and raise the equilibrium quantity.

C

An example of a price floor is A. the regulation of gasoline prices in the U.S. in the 1970s. B. rent control. C. the minimum wage. D. any restriction on price that leads to a shortage.

C

If a binding price ceiling is imposed on the computer market, then A. the demand for computers will increase. B. the supply of computers will decrease. C. a shortage of computers will develop. D. All of the above are correct.

D

If a price ceiling is not binding, then A. there will be a surplus in the market. B. there will be a shortage in the market. C. the market will be less efficient than it would be without the price ceiling. D. there will be no effect on the market price or quantity sold.

A

If a price floor is not binding, then A. the equilibrium price is above the price floor. B. the equilibrium price is below the price floor. C. it has no legal enforcement mechanism. D. More than one of the above is correct.

B

If a tax is levied on the buyers of a product, then the demand curve A. will not shift. B. will shift down. C. will shift up. D. will become flatter.

A

If the government levies a $500 tax per car on buyers of cars, then the price paid by buyers of cars would A. increase by less than $500. B. increase by exactly $500. C. increase by more than $500. D. decrease by an indeterminate amount.

A

If the government removes a tax on buyers of a good and imposes the same tax on sellers of the good, then the price paid by buyers will A. not change and the price received by sellers will not change. B. not change and the price received by sellers will decrease. C. decrease and the price received by sellers will not change. D. decrease and the price received by sellers will decrease

B

If the minimum wage exceeds the equilibrium wage, then A. the quantity demanded of labor will exceed the quantity supplied. B. the quantity supplied of labor will exceed the quantity demanded. C. the minimum wage will not be binding. D. there will be no unemployment.

B

In the housing market, rent control causes A. quantity supplied and quantity demanded to fall. B. quantity supplied to fall and quantity demanded to rise. C. quantity supplied to rise and quantity demanded to fall. D. quantity supplied and quantity demanded to rise.

B

Over time, housing shortages caused by rent control A. increase, because the demand for and supply of housing are less elastic in the long run. B. increase, because the demand for and supply of housing are more elastic in the long run. C. decrease, because the demand for and supply of housing are less elastic in the long run. D. decrease, because the demand for and supply of housing are more elastic in the long run.

D

Suppose buyers of liquor are required to send $1.00 to the government for every bottle of liquor they buy. Further, suppose this tax causes the effective price received by sellers of liquor to fall by $0.80 per bottle. Which of the following statements is correct? A. This tax causes the demand curve for liquor to shift downward by $1.00 at each quantity of liquor. B. The price paid by buyers is $0.20 per bottle more than it was before the tax. C. Eighty percent of the burden of the tax falls on sellers. D. All of the above are correct.

C

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, A. the demand curve for physicals shifts to the right. B. the supply curve for physicals shifts to the left. C. the quantity demanded of physicals increases and the quantity supplied of physicals decreases. D. the number of physicals performed stays the same.

B

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

B

The imposition of a binding price floor on a market causes quantity demanded to be A. greater than quantity supplied. B. less than quantity supplied. C. equal to quantity supplied. D. Both (a) and (b) are possible.

C

When a binding price ceiling is imposed on a market to benefit buyers, A. no buyers actually do benefit. B. some buyers benefit, but no buyers are harmed. C. some buyers benefit and some buyers are harmed. D. all buyers benefit.

A

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

D

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

C

When a tax is placed on the sellers of cell phones, A. the size of the cell phone market and the price paid by buyers both increase. B. the size of the cell phone market increases, but the price paid by buyers decreases. C. the size of the cell phone market decreases, but the price paid by buyers increases. D. the size of the cell phone market and the price paid by buyers both decrease.

C

Which of the following causes the price paid by buyers to be different than the price received by sellers? A. a binding price floor B. a binding price ceiling C. a tax on the good D. More than one of the above is correct.