Quiz about ECO111 - CHAPTER 6

Question 1

Rent-control laws dictate

Accepted Answer

b.

a maximum rent that landlords may charge tenants.

Answer

a.

the exact rent that landlords must charge tenants.

Answer

c.

a minimum rent that landlords may charge tenants.

Answer

d.

a minimum rent and a maximum rent that landlords may charge tenants.

Question 2

Minimum-wage laws dictate

Accepted Answer

c.

a minimum wage that firms may pay workers.

Answer

a.

the exact wage that firms must pay workers.

Answer

b.

a maximum wage that firms may pay workers.

Answer

d.

a minimum wage and a maximum wage that firms may pay workers.

Question 3

A legal maximum on the price at which a good can be sold is called a price

Accepted Answer

d.ceiling.

Answer

a.floor.

Answer

b.subsidy.

Answer

c.support.

Question 4

If a price ceiling is not binding, then

Accepted Answer

b.

the equilibrium price is below the price ceiling.

Answer

a.

the equilibrium price is above the price ceiling.

Answer

c.

it has no legal enforcement mechanism.

Answer

d.

More than one of the above is correct.

Question 5

If a price ceiling is not binding, then

Accepted Answer

d.

there will be no effect on the market price or quantity sold.

Answer

a.

there will be a surplus in the market.

Answer

b.

there will be a shortage in the market.

Answer

c.

the market will be less efficient than it would be without the price ceiling.

Question 6

A price ceiling will be binding only if it is set

Accepted Answer

c.

below the equilibrium price.

Answer

a.

equal to the equilibrium price.

Answer

b.

above the equilibrium price.

Answer

d.

either above or below the equilibrium price.

Question 7

To say that a price ceiling is binding is to say that the price ceiling

Accepted Answer

c.

causes quantity demanded to exceed quantity supplied.

Answer

a.

results in a surplus.

Answer

b.

is set above the equilibrium price.

Answer

d.

All of the above are correct.

Question 8

A shortage results when

Accepted Answer

c.

a binding price ceiling is imposed on a market.

Answer

a.

a nonbinding price ceiling is imposed on a market.

Answer

b.

a nonbinding price ceiling is removed from a market.

Answer

d.

a binding price ceiling is removed from a market.

Question 9

When OPEC raised the price of crude oil in the 1970s, it caused the

Accepted Answer

d.

supply of gasoline to decrease.

Answer

a.

demand for gasoline to increase.

Answer

b.

demand for gasoline to decrease.

Answer

c.

supply of gasoline to increase.

Question 10

In the housing market, rent control causes

Accepted Answer

b.

quantity supplied to fall and quantity demanded to rise.

Answer

a.

quantity supplied and quantity demanded to fall.

Answer

c.

quantity supplied to rise and quantity demanded to fall.

Answer

d.

quantity supplied and quantity demanded to rise.

Question 11

A legal minimum on the price at which a good can be sold is called a price

Accepted Answer

b.floor.

Answer

a.subsidy.

Answer

c.support.

Answer

d.ceiling.

Question 12

If a price floor is not binding, then

Accepted Answer

a.

the equilibrium price is above the price floor.

Answer

b.

the equilibrium price is below the price floor.

Answer

c.

it has no legal enforcement mechanism.

Answer

d.

More than one of the above is correct.

Question 13

If a price floor is not binding, then

Accepted Answer

c.

there will be no effect on the market price or quantity sold.

Answer

a.

there will be a surplus in the market.

Answer

b.

there will be a shortage in the market.

Answer

d.

the market will be less efficient than it would be without the price floor.

Question 14

A price floor will be binding only if it is set

Accepted Answer

b.

above the equilibrium price.

Answer

a.

equal to the equilibrium price.

Answer

c.

below the equilibrium price.

Answer

d.

either above or below the equilibrium price.

Question 15

A surplus results when

Accepted Answer

c.

a binding price floor is imposed on a market.

Answer

a.

a nonbinding price floor is imposed on a market.

Answer

b.

a nonbinding price floor is removed from a market.

Answer

d.

a binding price floor is removed from a market.

Question 16

The minimum wage is an example of

Accepted Answer

b.

a price floor.

Answer

a.

a price ceiling.

Answer

c.

a wage subsidy.

Answer

d.a tax.

Question 17

Minimum-wage laws dictate the

Accepted Answer

c.

lowest price employers may pay for labor.

Answer

a.

average price employers must pay for labor.

Answer

b.

highest price employers may pay for labor.

Answer

d.

the highest and lowest prices employers may pay for labor.

Question 18

If the minimum wage exceeds the equilibrium wage, then

Accepted Answer

b.

the quantity supplied of labor will exceed the quantity demanded.

Answer

a.

the quantity demanded of labor will exceed the quantity supplied.

Answer

c.

the minimum wage will not be binding.

Answer

d.

there will be no unemployment.

Question 19

If a tax is levied on the sellers of a product, then the demand curve

Accepted Answer

d.

will not shift.

Answer

a.

will shift down.

Answer

b.

will shift up.

Answer

c.

will become flatter.

Question 20

If a tax is levied on the sellers of a product, then the supply curve

Accepted Answer

d.

will not shift.

Answer

a.

will shift up.

Answer

b.

will shift down.

Answer

c.

will become flatter.

Question 21

A tax on the sellers of TVs

Accepted Answer

a.

leads sellers to supply a smaller quantity at every price.

Answer

b.

leads buyers to demand a smaller quantity at every price.

Answer

c.

leads sellers to supply a larger quantity at every price.

Answer

d.

Both (a) and (b) are correct.

Question 22

A $2.00 tax levied on the sellers of mailboxes will shift the supply curve

Accepted Answer

a.

upward by exactly $2.00.

Answer

b.

upward by less than $2.00.

Answer

c.

downward by exactly $2.00.

Answer

d.

downward by less than $2.00.

Question 23

When a tax is placed on the sellers of a product,

Accepted Answer

b.

buyers pay more and sellers receive less than they did before the tax.

Answer

a.

buyers pay more and sellers receive more than they did before the tax.

Answer

c.

buyers pay less and sellers receive more than they did before the tax.

Answer

d.

buyers pay less and sellers receive less than they did before the tax.

Question 24

A tax on the sellers of coffee will

Accepted Answer

d.

increase the price of coffee paid by buyers, decrease the effective price of coffee received by sellers, and

Answer

a.

increase the price of coffee paid by buyers, increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.

Answer

b.

increase the price of coffee paid by buyers, increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

Answer

c.

increase the price of coffee paid by buyers, decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.

decrease the equilibrium quantity of coffee.

Question 25

A tax imposed on the sellers of a good will

Accepted Answer

b.

raise the price buyers pay and lower the effective price sellers receive.

Answer

a.

raise both the price buyers pay and the effective price sellers receive.

Answer

c.

lower the price buyers pay and raise the effective price sellers receive.

Answer

d.

lower both the price buyers pay and the effective price sellers receive.

Question 26

When a tax is levied on sellers of tea,

Accepted Answer

d.

sellers and buyers of tea both are made worse off.

Answer

a.

the well-being of both sellers and buyers of tea is unaffected.

Answer

b.

sellers of tea are made worse off and the well-being of buyers is unaffected.

Answer

c.

sellers of tea are made worse off and buyers of tea are made better off.

Question 27

A tax on the buyers of coffee will

Accepted Answer

a.

increase the price of coffee paid by buyers, decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

Answer

b.

increase the price of coffee paid by buyers, decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.

Answer

c.

increase the price of coffee paid by buyers, increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

the equilibrium quantity of coffee.

Answer

d.

increase the price of coffee paid by buyers, increase the effective price of coffee received by sellers, and increase

Question 28

If the government levies a $500 tax per car on buyers of cars, then the price received by sellers of cars would

Accepted Answer

c.

decrease by less than $500.

Answer

a.

decrease by more than $500.

Answer

b.

decrease by exactly $500.

Answer

d.

increase by an indeterminate amount.

Question 29

If a tax is levied on the buyers of sugar, then

Accepted Answer

c.

buyers and sellers will share the burden of the tax.

Answer

a.

buyers will bear the entire burden of the tax.

Answer

b.

sellers will bear the entire burden of the tax.

Answer

d.

the government will bear the entire burden of the tax.

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