2015-08-13
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154. Price controls
a. always produce an equitable outcome.
b. always produce an efficient outcome.
c. can generate inequities of their own.
d. produce revenue for the government.
ANSWER: c. can generate inequities of their own.
155. A legal maximum price at which a good can be sold is a
a. price floor.
b. price stabilization.
c. price support.
d. price ceiling.
ANSWER: d. price ceiling.
156. A legal minimum price at which a good can be sold is a
a. price floor.
b. price stabilization.
c. price ceiling.
d. price cut.
ANSWER: a. price floor.
157. If a price ceiling is not binding,
a. the equilibrium price is above the ceiling.
b. the equilibrium price is below the ceiling.
c. it has no legal enforcement mechanism.
d. people must voluntarily agree to abide by it.
ANSWER: b. the equilibrium price is below the ceiling.
158. According to the graph shown, when the supply curve for gasoline shifts from S1 to S2
a. the price will increase to P3.
b. a surplus will occur at the new market price of P2.
c. the market price will stay at P1 due to the price ceiling.
d. a shortage will occur at the price ceiling of P2.
ANSWER: d. a shortage will occur at the price ceiling of P2.
159. Rent control is
a. a common example of a social problem solved by government regulation.
b. a common example of a price ceiling.
c. the most effective way to provide affordable housing.
d. the most efficient way to allocate housing.
ANSWER: b. a common example of a price ceiling.
160. A price floor is binding if
a. it is higher than the equilibrium market price.
b. it is lower than the equilibrium market price.
c. it is equal to the equilibrium market price.
d. it is set by the government.
ANSWER: a. it is higher than the equilibrium market price.
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161. A binding price floor causes
a. excess demand.
b. a shortage.
c. a surplus.
d. equilibrium price to fall.
ANSWER: c. a surplus.
162. The minimum wage is an example of
a. a price ceiling.
b. a price floor.
c. a free-market process.
d. an efficient labor allocation mechanism.
ANSWER: b. a price floor.
163. According to the graph shown, the equilibrium price in the market before the tax is imposed is
a. $8.00.
b. $6.00.
c. $5.00.
d. $3.50.
ANSWER: b. $6.00.
164. According to the graph, the price buyers will pay after the tax is imposed is
a. $8.00.
b. $6.00.
c. $5.00.
d. $3.50.
ANSWER: a. $8.00.
165. According to the graph, the price sellers receive after the tax is imposed is
a. $8.00.
b. $6.00.
c. $5.00.
d. $3.50.
ANSWER: c. 5.00.
166. According to the graph, the amount of the tax imposed in this market is
a. $1.00.
b. $1.50.
c. $2.50.
d. $3.00.
ANSWER: d. 3.00.
167. According to the graph, the amount of the tax that buyers would pay would be
a. $1.00.
b. $1.50.
c. $2.00.
d. $3.00.
ANSWER: c. 2.00.
168. According to the graph, the amount of the tax that sellers would pay would be
a. $1.00.
b. $1.50.
c. $2.00.
d. $3.00.
ANSWER: a. $1.00.
169. In the graph shown, the equilibrium price before the tax is
a. P0.
b. P1.
c. P2.
d. none of the above.
ANSWER: b. P1.
170. In the graph shown, the price that will be paid after the tax is
a. P0.
b. P1.
c. P2.
d. impossible to determine.
ANSWER: c. P2.
171. In the graph shown, the price sellers receive after the tax is
a. P0.
b. P1.
c. P2.
d. impossible to determine.
ANSWER: a. P0.
172. In the graph shown, the per unit burden of the tax on buyers is
a. P2 minus P0.
b. P2 minus P1.
c. P1 minus P0.
d. Q1 minus Q0.
ANSWER: b. P2 minus P1.
173. In the graph shown, the per unit burden of the tax on the sellers is
a. P2 minus P0.
b. P2 minus P1.
c. P1 minus P0.
d. Q1 minus Q0.
ANSWER: c. P1 minus P0.
174. If a tax is imposed on a market with inelastic demand and elastic supply,
a. buyers will bear most of the burden of the tax.
b. sellers will bear most of the burden of the tax.
c. the burden of the tax will be shared equally between buyers and sellers.
d. it is impossible to determine how the burden of the tax will be shared.
ANSWER: a. buyers will bear most of the burden of the tax.
175. If a tax is imposed on a market with elastic demand and inelastic supply,
a. buyers will bear most of the burden of the tax.
b. sellers will bear most of the burden of the tax.
c. the burden of the tax will be shared equally between buyers and sellers.
d. it is impossible to determine how the burden of the tax will be shared.
ANSWER: b. sellers will bear most of the burden of the tax.
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176. Which of the following is the most correct statement about tax burdens?
a. A tax burden falls most heavily on the side of the market that is elastic.
b. A tax burden falls most heavily on the side of the market that is inelastic.
c. A tax burden falls most heavily on the side of the market that is closer to unit elastic.
d. A tax burden is distributed independently of relative elasticities of supply and demand.
ANSWER: b. A tax burden falls most heavily on the side of the market that is inelastic.
177. The burden of a luxury tax falls
a. more on the rich than on the middle class.
b. more on the poor than on the middle class.
c. more on the middle class than on the rich.
d. equally on the rich, the middle class, and the poor.
ANSWER: c. more on the middle class than on the rich.
178. When analyzing the economic effects of government policies,
a. supply and demand are the most useful tools of analysis.
b. one finds that the effects are always those stated in the legislation.
c. supply and demand are not useful, since they apply only to unregulated markets.
d. one usually finds them to be the random outcome of economic shocks.
ANSWER: a. supply and demand are the most useful tools of analysis.
