Quiz On Microeconomics: Supply, Demand, And Government Policies
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Supply, Demand, and Government Policies
- 1.If the equilibrium 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
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