Question 1

A binding price floor:

Accepted Answer

A)   will cause quantity demanded to exceed quantity supplied.
B)   will cause quantity supplied to exceed quantity demanded.
C)   will increase total well-being.
D)   will set a legal maximum price in a market.E) B) and C)
F) None of the above

Question 2

If a price ceiling of $8 were placed on the market in the graph shown, which area represents the surplus that is transferred from producers to consumers?

Accepted Answer

A)   C + D + F + G
B)   C + D
C)   F + G
D)   CE) A) and D)
F) C) and D)

Question 3

The graph shown portrays a subsidy to buyers. Before the subsidy is put in place, the producers sold _____ units and received _____ for each of them.

Accepted Answer

A)   100; $46
B)   100; $30
C)   150; $40
D)   150; $24E) A) and B)
F) A) and C)

Question 4

Governments may choose to intervene in a market in an attempt to:

Accepted Answer

A)   encourage the consumption of certain goods.
B)   discourage the consumption of certain goods.
C)   redistribute surplus.
D)   All of these are true.E) All of the above
F) A) and B)

Question 5

Does a subsidy to sellers affect the supply curve?

Accepted Answer

A)   Yes, it shifts supply vertically downward by the amount of the subsidy.
B)   Yes, it shifts supply to the right by the amount of the subsidy.
C)   No, the quantity supplied will increase, but the supply curve does not move.
D)   No, the quantity supplied will decrease, but the supply curve does not move.E) All of the above
F) C) and D)

Question 6

A tax on sellers has what effect on a market?

Accepted Answer

A)   Supply shifts vertically upward by the amount of the tax.
B)   Demand shifts vertically downward by the amount of the tax.
C)   Equilibrium price decreases and equilibrium quantity decreases.
D)   Equilibrium price decreases and equilibrium quantity increases.E) B) and D)
F) C) and D)

Question 7

If the producers bear a larger portion of tax incidence than the buyers, which of the following must be true?

Accepted Answer

A)   They are not as business savvy as the buyers.
B)   Their supply curve must be more inelastic than the buyers demand curve.
C)   They face a very inelastic demand.
D)   Their supply curve must be more elastic than the buyers demand curve.E) None of the above
F) A) and B)

Question 8

Suppose a tax on sellers has been imposed in the graph shown. The amount of deadweight loss generated by this tax is:

Accepted Answer

A)   $0.
B)   $80.
C)   $160.
D)   $129.50.E) C) and D)
F) A) and C)

Question 9

If a price floor of $23 were placed in the market in the graph shown:

Accepted Answer

A)   a surplus of 27 would occur.
B)   a surplus of 37 would occur.
C)   a surplus of 10 would occur.
D)   a surplus of 20 would occur.E) A) and B)
F) None of the above

Question 10

Because a price ceiling causes:

Accepted Answer

A)   a shortage, some form of rationing must occur.
B)   a surplus, some form of rationing must occur.
C)   a shortage, the outcome will be efficient.
D)   a surplus, the outcome will be inefficient.E) All of the above
F) A) and C)

Question 11

The graph shown best represents:

Accepted Answer

A)   a binding price ceiling.
B)   a binding price floor.
C)   a missing market.
D)   a market for an inferior good.E) None of the above
F) A) and B)

Question 12

With reference to the graph above, if the intended aim of the price ceiling set at $6 was a net increase in the well-being of consumers:

Accepted Answer

A)   then the policy was effective since consumers gained in surplus overall.
B)   then the policy was ineffective since consumers gained in surplus overall.
C)   then the policy was ineffective since consumers lost surplus overall.
D)   then the policy was effective since consumers lost surplus overall.E) B) and D)
F) None of the above

Question 13

Tax incidence is:

Accepted Answer

A)   the difference between what the buyers pay and what the sellers receive in a market where taxes are present.
B)   the relative tax burden borne by buyers and sellers.
C)   the generated revenue that comes from taxes in markets.
D)   the difference between the tax revenue generated and the value of deadweight loss caused by the imposition of the tax.E) A) and C)
F) C) and D)

Question 14

Governments tend to set price ceilings:

Accepted Answer

A)   to ensure everyone can afford certain goods.
B)   to ensure producers make enough for everyone.
C)   to ensure producers make enough profit to stay in the industry.
D)   to prevent consumers from choosing the wrong goods.E) B) and C)
F) A) and B)

Exam 6: Government Intervention

If a price floor of $23 were placed in the market in the graph shown:

Correct Answer
verified

With reference to the graph above, if the intended aim of the price ceiling set at $6 was a net increase in the well-being of consumers:

Correct Answer
verified

The graph shown best represents:

Correct Answer
verified

Governments tend to set price ceilings:

Correct Answer
verified

Suppose a tax on sellers has been imposed in the graph shown. The amount of deadweight loss generated by this tax is:

Correct Answer
verified

Does a subsidy to sellers affect the supply curve?

Correct Answer
verified

Governments may choose to intervene in a market in an attempt to:

Correct Answer
verified

If the producers bear a larger portion of tax incidence than the buyers, which of the following must be true?

Correct Answer
verified

The graph shown portrays a subsidy to buyers. Before the subsidy is put in place, the producers sold _ units and received _ for each of them.

Correct Answer
verified

Tax incidence is:

Correct Answer
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A binding price floor:

Correct Answer
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A tax on sellers has what effect on a market?

Correct Answer
verified

If a price ceiling of $8 were placed on the market in the graph shown, which area represents the surplus that is transferred from producers to consumers?

Correct Answer
verified

Because a price ceiling causes:

Correct Answer
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Exam 6: Government Intervention

If a price floor of $23 were placed in the market in the graph shown:

Correct AnswerverifiedShow Answer

With reference to the graph above, if the intended aim of the price ceiling set at $6 was a net increase in the well-being of consumers:

Correct AnswerverifiedShow Answer

The graph shown best represents:

Correct AnswerverifiedShow Answer

Governments tend to set price ceilings:

Correct AnswerverifiedShow Answer

Suppose a tax on sellers has been imposed in the graph shown. The amount of deadweight loss generated by this tax is:

Correct AnswerverifiedShow Answer

Does a subsidy to sellers affect the supply curve?

Correct AnswerverifiedShow Answer

Governments may choose to intervene in a market in an attempt to:

Correct AnswerverifiedShow Answer

If the producers bear a larger portion of tax incidence than the buyers, which of the following must be true?

Correct AnswerverifiedShow Answer

The graph shown portrays a subsidy to buyers. Before the subsidy is put in place, the producers sold _____ units and received _____ for each of them.

Correct AnswerverifiedShow Answer

Tax incidence is:

Correct AnswerverifiedShow Answer

A binding price floor:

Correct AnswerverifiedShow Answer

A tax on sellers has what effect on a market?

Correct AnswerverifiedShow Answer

If a price ceiling of $8 were placed on the market in the graph shown, which area represents the surplus that is transferred from producers to consumers?

Correct AnswerverifiedShow Answer

Because a price ceiling causes:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The graph shown portrays a subsidy to buyers. Before the subsidy is put in place, the producers sold _ units and received _ for each of them.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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