Microeconomics [ch. 6]

34 Questions  I  By Emy_2
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Microeconomics Quizzes & Trivia
Supply, Demand, and Government Policies

  
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  • 1. 
    If the equlibrium price of gasoline is $1.00 per gallon and the government places a price ceiling on gasoline of $1.50 per gallon, the result will be a shortage of gasoline
    • A. 

      True

    • B. 

      False


  • 2. 
    A price ceiling set below the equilibrium price causes a surplus
    • A. 

      True

    • B. 

      False


  • 3. 
    A price floor set above the equilibrium price is a binding constraint
    • A. 

      True

    • B. 

      False


  • 4. 
    The shortage of housing caused by a binding rent control is likely to be more severe in the long run when compared to the short run
    • A. 

      True

    • B. 

      False


  • 5. 
    The minimum wage helps all teenagers because they receive higher wages than they would otherwise
    • A. 

      True

    • B. 

      False


  • 6. 
    A 10 percent increase in the minimum wage causes a 10 percent reduction in teenage employment
    • A. 

      True

    • B. 

      False


  • 7. 
    A price ceiling that is not a binding constraint today could cause a shortage in the future if demand were to increase and raise the eqilibrium price above the frixed price ceiling.
    • A. 

      True

    • B. 

      False


  • 8. 
    A price floor in a market always creates a surplus in that market
    • A. 

      True

    • B. 

      False


  • 9. 
    A $10 tax on baseball gloves will always raise the price that the buyers pay for baseball gloves by $10
    • A. 

      True

    • B. 

      False


  • 10. 
    The ultimate burden of a tax lands more heavily on the side of the market that is less elastic
    • A. 

      True

    • B. 

      False


  • 11. 
    When we use the model of supply and demand to analyze a tax collected form the buyers, we shift the demand curve upward by the size of the tax
    • A. 

      True

    • B. 

      False


  • 12. 
    If medicine is a necessity, the burden of a tax on medicine will likely land more heavily on the buyers of medicine
    • A. 

      True

    • B. 

      False


  • 13. 
    A tax creates a tax wedge between a buyer and a seller.  This causes the price paid by the buyer to rise, the price received by the seller to fall, and the quantity sold to fall
    • A. 

      True

    • B. 

      False


  • 14. 
    The government can choose to place the burden of a tax on the buyers in a market by collecting the tax from the buyers rather than the sellers
    • A. 

      True

    • B. 

      False


  • 15. 
    A tax collected from buyers has an equivilant impact to a same size tax collected from sellers
    • A. 

      True

    • B. 

      False


  • 16. 
    For a price ceiling to be a binding constraint on the market, the government must set it
    • A. 

      Above the equilibrium price

    • B. 

      Below the equilibrium price

    • C. 

      Precisely at the equilibrium price

    • D. 

      At any price because all price ceilings are binding constraints


  • 17. 
    A  binding price ceiling creates
    • A. 

      A shortage

    • B. 

      A surplus

    • C. 

      An equilibrium

    • D. 

      A shortage or surplus depending on whether the price ceiling is set above or below the equlibrium price


  • 18. 
    Suppose the equlibrium price for apartments is $500 per month and the government imposes ren controls of $250. Which of the following is unlikely to occur as a result of the rent controls?
    • A. 

      There will be a shortage of housing

    • B. 

      Landlords may discriminate among apartment renters

    • C. 

      Landlords may be offered bribes to rent apartments

    • D. 

      The quality of apartments will improve

    • E. 

      There may be long lines of buyers waiting for apartments


  • 19. 
    A price floor
    • A. 

      Sets a legal maximum on the price at which a good can be sold

    • B. 

      Set a legal minimum on the price at which a good can be sold

    • C. 

      Always determines the price at which a good must be sold

    • D. 

      Is not a binding constraint if it is set above the equilibrium price


  • 20. 
    Which of the following statements about a binding price ceiling is true?
    • A. 

      The surplus created by the price ceiling is greater in the short run than in the long run

    • B. 

      The surplus created by the price ceiling is greater in the long run than in the short run

    • C. 

      The shortage created by the price ceiling is greater in the short run than in the long run

    • D. 

      The shortage created by the price ceiling is greater in the long run than in the short run


  • 21. 
    Which side of the market is more likely to lobby government for a price floor?
    • A. 

      Neither buyers nor sellers desire a price floor

    • B. 

      Both buyers and sellers desire a price floor

    • C. 

      The sellers

    • D. 

      The buyers


  • 22. 
    Which of the following is an example of a price floor?
    • A. 

      Rent controls

    • B. 

      Restricting gasoline prices to $1.00 per gallon when the equilibrium price is $1.50 per gallon

    • C. 

      The minimum wage

    • D. 

      All of the above are price floors


  • 23. 
    Which of the following statements is true if the government places a price ceiling on gasoline at $1.50 per gallon and the equilibrium price is $1.00 per gallon?
    • A. 

      There will be a shortage of gasoline

    • B. 

      There will be a surplus of gasoline

    • C. 

      A significant increase in the supply of gasoline could cause the price ceiling to become a binding constraint

    • D. 

      A significant increase in the demand for gasoline could cause the price ceiling to become a binding constraint


  • 24. 
    Studies show that a 10 percent increase in the minimum wage
    • A. 

      Decreases teenage employment by about 10 to 15 percent

    • B. 

      Increases teenage employment by about 10 to 15 percent

    • C. 

      Decreases teenage employment by about 1 to 3 percent

    • D. 

      Increases teenage employment by about 1 to 3 percent


  • 25. 
    Within the supply-and-demand model, a tax collected from the buyers of a good shifts the
    • A. 

      Demand curve upward by the size of the tax per unit

    • B. 

      Demand curve downward by the size of the tax per unit

    • C. 

      Supply curve upward by the size of the tax per unit

    • D. 

      Supply curve downward by the size of the tax per unit


  • 26. 
    Within the supply-and-demand model, a tax collected from the sellers of a good shifts the
    • A. 

      Demand curve upward by the size of the tax per unit

    • B. 

      Demand curve downward by the size of the tax per unit

    • C. 

      Supply curve upward by the size of the tax per unit

    • D. 

      Supply curve downward by the size of the tax per unit


  • 27. 
    Which of the following takes place when a tax is placed on a good?
    • A. 

      An increase in the price buyers pay, a decrease in the price sellers receive, and a decrease in the quantity sold

    • B. 

      An increase in the price buyers pay, a decrease in the price sellers receive, and an increase in the quantity sold

    • C. 

      A decrease in the price buyers pay, an increase in the price sellers receive, and a decrease in the quantity sold

    • D. 

      A decrease in the price buyers pay, an increase in the price sellers receive, and an increase in the quantity sold


  • 28. 
    When a tax is collected from the buyers in a market,
    • A. 

      The buyers bear the burden of the tax

    • B. 

      The sellers bear the burden of the tax

    • C. 

      The tax burden on the buyers and sellers is the same as an equivalent tax collected from he sellers

    • D. 

      The tax burden falls most heavily on the buyers


  • 29. 
    A tax of $1.00 per gallon on gasoline
    • A. 

      Increases the price the buyers pay by $1.00 per gallon

    • B. 

      Decreases the price the sellers receive by $1.00 per gallon

    • C. 

      Increases the price the buyers pay by precisely $.50 and reduces the price received by sellers by precisely $.50

    • D. 

      Places a tax wedge of $1.00 between the price the buyers pay and the price the sellers receive


  • 30. 
    The burden of a tax falls more heavily on the sellers in a market when
    • A. 

      A demand is inelastic and supply is elastic

    • B. 

      Demand is elastic and supply is inelastic

    • C. 

      Both supply and demand are elastic

    • D. 

      Both supply and demand are inelastic


  • 31. 
    A tax is placed on a good that is a necessity for consumers will likely generate a tax burden that
    • A. 

      Falls more heavily on buyers

    • B. 

      Falls more heavily on sellers

    • C. 

      Is evenly distributed between buyers and sellers

    • D. 

      Falls entirely on sellers


  • 32. 
    The burden of a tax falls more heavily on the buyers in a market when
    • A. 

      Demand is inelastic and supply is elastic

    • B. 

      Demand is elastic and supply is inelastic

    • C. 

      Both supply and demand are elastic

    • D. 

      Both supply and demand are inelastic


  • 33. 
    Which of the following statements about the burden of a tax is correct?
    • A. 

      The tax burden generated from a tax placed on a good consumers perceive to be a necessity will fall most heavily on the sellers of the good

    • B. 

      The tax burden falls heavily on the side of the market (buyers or sellers) that is most willing to leave the market when price movements are unfavorable to them

    • C. 

      The burden of a tax lands on the side of the market (buyers or sellers) from which it is collected

    • D. 

      The distribution of the burden of a tax is determined by the relative elasticities of supply and demand and is not determined by legislation


  • 34. 
    For which of the following products would the burden of a tax likely fall more heavily on the sellers?
    • A. 

      Food

    • B. 

      Entertainment

    • C. 

      Clothing

    • D. 

      Housing


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