12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

Chapter 6/Supply, Demand, and Government Policies  159

Chapter6
Suppl
y,Demand,andGove
rnme
ntPol
ici
es
MULTI
PLECHOI
CE

1. Pri
cec ontrolsare
[Link] edt omakemar ketsmoree
ffic ient.
[Link] uallye nact
edwhenpol i
cymaker
sbe li
evetha
tthemarketpr
iceofagoodorservi
cei
sunfai
rtobuyer
sor
sell
e r
s.
c. nearlyalwa yseffe cti
vei
neli
minat
inginequit
ies.
[Link] tabli
she dbyfir mswi t
hmonopolypower .
ANSWER: b. usuall
yena c
tedwhenpoli
cyma kersbe
lie
vetha
tthema r
ketpri
ceofagoodorser
vicei
sunfai
rtobuye
rs
orsell
ers
.
TYPE:
M DI FFICULTY: 2

2. Pol
icymake r
sc hooset oenactpricecontr
olsinamar ketbe c
ause
[Link] li
evethemar ket
’soutcomet obeunf ai
r.
[Link] t
ingpr i
cec ontrol
swi l
ldirectl
yincreas
etaxreve nues.
[Link] rerequiredbyl awt oimprovema r
ketcondit
ions .
[Link] li
evetha tthemar ketsyst
emi sineffic i
entandt hei
rac
tionswi
lli
mpr
ovee
ffic
ienc
y.
ANSWER:a . t
he ybe l
ievethemar ket’
soutcomet obeunf air
.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

3. Pol
icymake r
sa rel
e dtocontrolpric
esbecause
a.t heyviewthemar ke t
’soutcomea si
neffic i
ent
.
b.t heyviewthemar ke t
’soutcomea sunfai
r.
c. allpol
it
ici
anse njo
ye xerc
isingthei
rpower .
d.t heyarerequir
e dtodos ounde rtheEmpl oymentAc
tof1
946
.
ANSWER: b. t
he yviewt hemar ket
’soutc
omea sunfair
.
TYPE:
M SECTI ON: 1DIFFICULTY: 2

4. Pri
cec ont
rol
s
a. alwaysproduceane qui
tableoutcome.
[Link] waysproduceane ffic ientoutc
ome .
c.c angenerat
einequiti
esoftheirown.
[Link] oducerevenueforthegove r
nme nt
.
ANSWER: c. c
ange ner
a t
einequiti
esoftheirown.
TYPE:
M SECTI ON: 1DIFFICULTY: 2

5. Whichoft hefoll
owingisar e
asonpol
icymakersi
mpos
etaxe
s?
[Link] tt
emptt omakema rketsmoree
ffic i
ent
[Link] nflue ncema rke
tout comes
[Link] ai
serevenueforpubl icuse
[Link] loftheabovear ecorrect
.
e. Bothbandca recorr
e c
t.
ANSWER: [Link] ndcar ecorrect
.
TYPE:
M SECTI ON: 1DIFFICULTY: 2

6. Alegalma ximum pri

cea
twhichagoodc
anbes
oldi
sapr
ice
a. floor .
[Link]
izati
on.
[Link] t.
[Link] i
li
ng.
ANSWER: d. cei
li
ng.
TYPE:
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CULTY:
1

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12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

160  Chapter 6/Supply, Demand, and Government Policies

7. A gover
nment -i
mposedmaxi
mum pr
icea
twhi
chagoodc
anbes
oldi
sca
lledapr
ice
a. floor .
b.c ei
li
ng.
c.s upport
.
[Link]
ium.
ANSWER: b. cei
li
ng.
TYPE:
M SECTI ON: 1DIFFI
CULTY:1

8. A pric
ec ei
li
ng
a.i salegalmaximum ont hepric
ea twhichagoodc anbesol
d.
b.i salegalmini
mum ont hepri
cea twhichagoodc anbesol
d.
c. occurswhent hepr i
cei
nthema rketistemporar
il
yaboveequi
li
brium.
[Link] llusuall
yresultinama r
ketsurplus.
ANSWER: a. isale
galmaxi mum ont hepric
ea twhic
hagoodc anbesold.
TYPE:
M SECTI ON: 1DI FFICULTY:1

9. Alegalmi ni
mum pr i
ceatwhi
chagoodc
anbes
oldi
sapr
ice
[Link].
[Link]
izat
ion.
[Link] i
li
ng.
[Link] .
ANSWER: d. floor.
TYPE:
M SECTI ON: 1DIFFICULTY:
1

10. A pri
cefloor
[Link] e
galmi ni
mum ont hepric
ea twhichagoodcanbesold.
[Link] e
galmaxi mum ont hepriceatwhichagoodc anbes
old.
c. wil
lge ne
rall
yr e
sultinama rketshor
tage.
[Link] l
lbe ne
fitt hecons umer,buthurtthesuppl
ier
.
ANSWER: a. i
sal e
galmi ni
mum ont hepri
ceatwhichagoodcanbes
old.
TYPE:
M SECTI ON: 1DIFFICULTY: 1

11. A pri
ceceil
ingwi l
lonl ybebindingifiti
sset
a.e qualtoequili
brium price.
[Link] quili
brium pr i
ce.
c. bel
ow equili
brium pr i
ce.
d.A pr i
cec e
ili
ngi sneverbindinginafreemar
kets
yst
em.
ANSWER: c. bel
ow e quil
ibri
um pr i
ce.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

12. A bi
ndingpr i
ceceil
ingc aus
es
a. ashortage
,whichc annotbee l
iminat
edthroughma rketadjustme nt.
[Link] urplus,whi
chc annotbee li
minat
edthroughmar ketadjustme nt.
c. ashortage
,whichi stemporary,s
incemarketadjus
tme ntwillcaus epri
cet
orise
.
[Link] urplus,whi
chi stemporary,si
ncema r
ketadjust
me ntwillcausepr ic
etori
se.
ANSWER: a
. ashor
tage, whic
hc annotbeeli
minatedthroughmar keta djust
ment
.
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M SECTI ON: 1DIFFICULTY: 2

13. Ifapric
ec e
ili
ngi snotbi nding,
[Link] quil
ibri
um pr i
ceisa bovet
hec ei
ling.
[Link] quil
ibri
um pr i
ceisbe l
ow theceil
ing.
[Link] egale nforc
e mentme chanism.
[Link] oplemus tvoluntarilyagreetoabidebyit.
ANSWER: b. t
hee qui l
ibri
um pr icei
sbelow thece
ili
ng.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

14. A pr
icece
ili
ngtha ti
snotbi
ndingwill
[Link] r
ket.
[Link]
.
[Link] rkett
obelesseffic ient
.
[Link] ffe ctonthemarketpr
ice.
ANSWER:d. havenoe ffectonthema r
ketpri
ce.
TYPE:
M SECTION: 1DI FFI
CULTY: 2

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12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

Chapter 6/Supply, Demand, and Government Policies  161

15. Bindingpriceceil
ingsinamar ketc
ausequant
it
yde
mande
dtobe
a. great
erthanquant i
tysuppl i
ed.
b.e qualtoquant i
tys uppli
ed.
c.l esst
hanquant i
tys uppl
ied.
[Link] hea bovear epossi
ble.
ANSWER: a. gre
a terthanquant i
tysuppl
ied.
TYPE:
M SECTI ON: 1DI FFICULTY: 3

16. Ifabi
ndingpr i
ceceil
ingisi
mpos edinamar ke t
[Link] urpl
usinthemar ket.
[Link]
lyfor
cedtowa rdequili
brium pr
ice.
[Link] hort
ageinthema rket
.
[Link] ketf
orceswi l
lguara
nteethatthepric
ewi llbeatequi
libr
ium.
ANSWER: c
. therewi l
lbeashorta
geint hema rket
.
TYPE:
M SECTION: 1DI FFICULTY:2

17. Inthefigur es hown,abindingpri

cec
eil
ingi
sshowni
n
a. panel(a)
.
[Link] l(b).
c. bothpanel(a)andpane l(
b).
[Link] i
therpa nel(
a)norpanel(b)
.
ANSWER: b. panel(b)
.
TYPE:
M SECTI ON: 1DIFFICULTY: 2

18. Inwhichpane l(
s)int hefigur eshownwoul
dthe
rebea
short
ageforCDsa tt heceil
ingpri
ce?
a. panel(a)
[Link] l(b)
c. panel(a)andpa ne l(
b)
[Link] i
therpa nel(
a)norpane l(b)
ANSWER: b. panel(b)
TYPE:
M SECTI ON: 1DIFFI CULTY: 2

19. Accordingt othegraphshown,abi

ndi
ngpr
icec
eil
ing
woulde xistatapriceof
a. $14.00.
b.$12. 00.
c. $10.00.
d.$8. 00.
ANSWER: d. $8.
00.
TYPE:
M SECTI ON: 1DIFFICULTY:2

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162  Chapter 6/Supply, Demand, and Government Policies

20. Acc
ordingtothegr aphshown,i
fthegove
rnme
nti
mpos
esabi
ndi
ngpr
icefloorof$
14.
00i
nthi
smar
ket
,ther
esul
t
wouldbea
a.surplusof20.
b.surplusof40.
c.shortageof20.
d.shortageof40.
ANSWER:b. surplusof40.
TYPE:
M SECTI ON:1DI FFICULTY:3

21. Acc
ordingtothegr aphshown,i
fthegove
rnme
nti
mpos
esabi
ndi
ngpr
icec
eil
ingof$
8.0
0int
hismar
ket
,ther
esul
t
wouldbea
a.surplusof20.
b.surplusof40.
c.shortageof20.
d.shortageof40.
ANSWER:c. shorta
geof2 0.
TYPE:
M SECTI ON:1DI FFICULTY:3

22. Accordi
ngtot hegr aph,abindingpri
cefloorwoul
dexi
sta
t
a. apric
eof$ 10.00.
[Link] ic
eof$ 8.00.
c. anypric
ea bove$ 1
0.00.
[Link] ic
ebe low $1 0.
00.
ANSWER: c. anypr i
c eabove$10.0
0.
TYPE:
M SECTI ON: 1DI FFICULTY: 3

23. A pri
c efloori sbi ndingifiti
s
a. higherthant hee quil
ibr
ium mar ketpr
ice
.
[Link] rthant hee quil
ibri
um ma rketpri
ce.
c.e qualtothee qui l
ibri
um marketpr i
ce.
d.s etbythegove rnment.
ANSWER: a. highe rthanthee qui
li
brium marketpr
ice
.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

24. Withabi ndingpr icefloort hema rke

tpric
ewill
a. belowe rthant hepr i
cefloor .
[Link] ghe rthant hepricefloor.
c.e qualthepr ic
efloor .
d.I ti
simpos sibletoc omparethema r
ketpri
cewit
hthepr
icefloor
.
ANSWER: a. bel owe rthanthepric
efloor .
TYPE:
M SECTI ON: 1DI FFICULTY: 2

25. A bindingpric
efloori namarkets
e t
spri
ce
a. aboveequili
bri
um pr i
ceandcaus
esashor t
age
.
[Link] quili
bri
um pr i
ceandcaus
esasur pl
us.
c. below e
quili
bri
um pr ic
eandcausesasurpl
us.
[Link] low e
quili
bri
um pr ic
eandcausesashort
age.
ANSWER: b. aboveequil
ibri
um pri
ceandcausesasurpl
us.
TYPE:
M SECTI ON: 1DIFFICULTY: 3

26. A pric
efloori snotbindingif
a.t hepric
efloori shigherthanthee quili
brium marketpri
ce.
b.t hepric
efloori slowerthanthee quili
brium marketpric
e.
c. peoplearewil
lingtobuylesswhent hepricefloori simposeda
stheydi
dbe
for
e.
d.t hegovernmentsetsi
t.
ANSWER: b. thepr
icefloori slowerthant hee qui
li
bri
um mar ke
tpri
ce.
TYPE:
M SECTI ON: 1DIFFICULTY: 2

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12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

Chapter 6/Supply, Demand, and Government Policies  163

27. A bi
ndingpr i
cefloorcauses
a.e xc
essdemand.
[Link] hortage.
c. asurplus.
[Link]
um pri
cetof
all
.
ANSWER: c. asurpl
us.
TYPE:
M SECTI ON: 1DIFFI
CULTY:2

28. Inthefigur eshown,whi chofthepane

lsr
epr
esent
sabi
ndi
ngpr
icefloor
?
a. panel(a)
[Link] l(b)
c. panel(a)andpanel(b)
[Link] i
therpa ne
l(a)norpanel(b)
ANSWER: b. panel(
b)
TYPE:
M SECTI ON: 1DIFFICULTY: 2

29. Inpanel(b),attheactualpri
cether
ewi
llbe
a. ashortageofwhe at.
b.e qui
libri
um i nthemar ke
t.
c. asurplusofwhe a
t.
[Link] xcessdemandf orwhe a
t.
ANSWER: c. as urpl
usofwhe at.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

30. Ifapri
cec e
ili
ngisabi ndi ngc
onstr
aintonthemar ke
t,
[Link] quil
ibri
um pr ic
emus tbebelow t
hepr i
cecei
ling.
[Link] quil
ibri
um pr ic
emus tbeabovethepr i
cecei
li
ng.
[Link] upplya nddemandmus tbeinequi
libri
um.
[Link] ffe ctonsupplyorde mand.
ANSWER: b. t
hee quili
brium pri
cemus tbeabovethepr i
cece
ili
ng.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

31. Ifapric
ec e
ili
ngisabindingconstrai
nt,the
a. act
ualpr i
cewil
lbebe l
ow thepr i
ceceil
ing.
[Link] t
ualpr i
cewil
lbeabovet hepr i
ceceil
ing.
c.e quil
ibr
ium pri
cewillequalthepr i
ceceil
ing.
[Link] t
ualpr i
cewil
lequalthepriceceil
ing.
ANSWER: d. act
ualpri
cewi l
lequalthepr i
cec e
ili
ng.
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164  Chapter 6/Supply, Demand, and Government Policies

32. Whe nbindingpr i

c ecei
li
ngsa reimpos e
di nama rke t
a. pric
enol ongers e
rvesa sar at
ioni
ngde vice.
b.t hemarke twillbeclearedofa nyshortagesors urpluse
sthate
xis
tedpr
evi
ous
ly.
c. buyersands el
lersbothbe nefite qually.
d.t hegovernme ntisatt
e mptingtoimpr ovema rke teffic i
enc
y.
ANSWER: a. pric
enol onge rservesasarationi
ngde vice.
TYPE:
M SECTI ON: 1DI FFICULTY: 3

33. Whenbindingpr i
cec ei
li
ngsa reimposedtobene fitbuyers
[Link]
ybuye ri
nt hema r
ketbe nefitsbe c
auseoflowerprices.
[Link] swi l
lnotbea bletobuya nyoftheproduct.
[Link]
ler
sint hema rketwil
le quallybenefitfrom apri
cece i
li
ng.
[Link]
erswanttos ellwil
lequalt
hequantitybuye r
swantt
obuy
.
ANSWER:b. somebuyer swillnotbea bletobuya nyoft
hepr oduct.
TYPE:
M SECTION: 1DI FFICULTY: 2

34. A bindingpr ic
ec eil
ingi simposedont hemar ke
tforpe
aches
.Att
hec
eil
ingpr
ice
,thequant
it
yde
mande
dofpe
ache
s
willbe
a. greaterthanthequant itysuppl
ied.
b.e qua ltothequa ntit
ys uppl
ied.
c.s mal l
erthant hequant it
ysuppli
ed.
[Link] ti
fic i
all
yr estri
ctedb ythepricecei
li
ng.
ANSWER: a. great
ertha nt hequanti
tys uppl
ied.
TYPE:
M SECTI ON: 1DI FFICULTY: 3

35. A bindingpr ic
ec eilingi
nt hecomputermarketwi
llc
ause
a. as urplusofc omput er
s.
[Link] hortageofc omput e
rs .
c. quant i
tyde mandedofc omputer
stobeequalt
oquanti
tys
uppl
ied.
[Link] ncreas
ei nt hedemandf orcomputer
s.
ANSWER: b. ashor tageofcomput e
rs.
TYPE:
M SECTI ON: 1DI FFI CULTY: 2

36. A bi
ndingpr i
cec e
i l
ingwi l
lmakei tnecessaryto
a.s upplymor eofthepr oduct
.
[Link] velopawa yofr at
ioningthepr oduct,becausetherewil
lbea
short
a ge.
c. developabe t
terma rketi
ngplan, becausetherewillbeasurpl
us.
[Link] r
eas edemandf ortheproduc t
.
ANSWER: b. devel
opawa yofra
tioningthepr oduct,becaus
etherewi
llbe
ashortage.
TYPE:
M SECTI ON: 1DI FFICULTY: 3

37. Bindingpr i
cecei
li
ngsres
ulti
neac
hoft
hef
oll
owi
ngEXCEPT
a. mar keti
neffic i
ency.
b.s hortages
.
c.s ell
erbias.
d.s urpluses.
ANSWER: d. surpl
uses
.
TYPE:
M SECTI ON: 1DIFFICULTY:2

38. Accordingtothegraphshown,i
fthegove
rnme
nti
mpos
esabi
ndi
ngpr
icec
eil
ingi
nthi
sma
rke
tatapr
iceof$
5.0
0,
theresultwouldbea
a.s hortageof20unit
s.
b.s hortageof10unit
s.
c.s urplusof20units
.
d.s urplusof10units
.
ANSWER: a. short
ageof20uni
ts.
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12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

Chapter 6/Supply, Demand, and Government Policies  165

39. Accordingtothegraphshown,abindi
ngpri
cec
eil
ingwoul
dexi
sta
tapr
iceof
a. $8.00.
b.$6. 00.
c. $5.00.
d.I tcouldexi
statanypri
ceabove$6.
00.
ANSWER: c. $5.
00.
TYPE:
M SECTI ON: 1DIFFICULTY:2

40. Acc
ordingtothegraphshown,i
fthegove
rnme
nti
mpos
esabi
ndi
ngpr
icefloorof$
5.0
0int
hismar
ket
,ther
esul
t
wouldbea
a.surplusof15.
b.surplusof35.
c.surplusof20.
d.shortageof20
.
ANSWER:b. surpl
usof35.
TYPE:
M SECTI ON:1DIFFICULTY:2

41. Accordingtothegraphshown,abi
ndingpri
cefloorwoul
dexi
sta
tapr
iceof
a. $5.00.
b.$4. 00.
c. $2.00.
d.I tcouldexi
statanypri
cebel
ow $4.
00.
ANSWER: a. $5.
00.
TYPE:
M SECTI ON: 1DIFFICULTY:2

42. Rat
ioningbylongl inesi s
[Link] ient
, be causei twa st
esbuyers
’time.
b.e ffic i
ent,bec aus ethosewhoa r
ewi l
lingtowai
tthelonge
stge
ttheg
oods
.
[Link] ys carcegoodsc anberat
ioned.
[Link] c
essaryi fpr ic
ec eil
ingsarenotbinding.
ANSWER: a. ineffic ient,becauseitwast
esbuye r
s’t
ime.
TYPE:
M SECTION: 1DI FFI CULTY: 1

43. Pri
cec e
ili
ngsa ndpr i
cefloor s
a. aredesir
ablebe c
ausetheymakemar ket
smor eeffic i
entaswe lla
se qui
table.
b.c ausesurplusesandshor t
agestopersi
stsi
ncepric
ecannotadjusttothemarke tequil
ibri
um pr i
ce.
c.c anbeenac tedtorest
oreama rkett
oe quil
ibr
ium.
[Link] eimpos e
dbe causetheycanmaket hepoorintheeconomybet te
roffwi thoutc ausi
nga dverseeffect
s.
ANSWER: b. causesurplusesandshorta
ge st
ope r
sis
tsinc
epricecannotadjustt
ot hema rketequil
ibri
um pri
ce.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

44. Int
he1970s,longl inesatgasstat
ionsintheUni t
edStat
eswerepr
imar
il
yar
esul
toft
hef
actt
hat
a. OPECra i
sedthepr ic
eofcrudeoi linworldmarkets
.
[Link]
nepr oducersr
aisedthepr i
ceofgasoli
ne.
[Link] r
nme ntimposedapr i
ceceil
ingongasoli
ne.
[Link] ric
anst ypi cal
lycommut elongdistances
.
ANSWER: c
. theU. S. gover
nme nthadi mposedapr i
cecei
li
ngon
gasoline .
TYPE:
M SECTION: 1DI FFICULTY: 2

45. OtherthanOPEC, theshortageofgas oli

neint heU.
[Link]
1970scoulda l
sobebl amedon
a. asharpinc r
e aseint hedemandf orgasoli
neneededforthe
Vietnam war .
[Link] rnme ntr egulat
ionsinthef orm ofapr ic
ecei
li
ng.
c. anindiffe re nceamongU. [Link] stowardconser
vat
ion.
d.t helackofa l
t ernati
vesourcesofc rudeoil
.
ANSWER: b. gover nme ntregulat
ionsi ntheform ofapri
ce
ceil
ing.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

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166  Chapter 6/Supply, Demand, and Government Policies

46. Whe nOPECr ai

sedt hepri
ceofcrudeoili
nthe1
970s
,itc
aus
edt
he
a. demandforgas ol
inet
oincrease.
[Link] mandforgas ol
inet
ode cr
ease.
c.s uppl
yofgasolinetoi
ncrease.
d.s uppl
yofgasolinetodecre
ase.
ANSWER: d. s
uppl yofgasoli
netode cre
ase
.
TYPE:
M SECTION: 1DI FFICULTY:2

47. Ac c
ordingt othegr aphs hown,wi t
hapr icecei
li
ngpresenti
nthi
sma
rke
t,whe
nthes
uppl
ycur
vef
orgas
oli
nes
hif
ts
from S1toS2
a.t hepr ic
ewi l
linc reasetoP3.
[Link] urpluswilloc curatthene w marketpri
ceofP2.
c.t hemar ke
tpricewi l
lstayatP1duet othepric
ecei
li
ng.
[Link] hortagewillocc uratthepricecei
li
ngofP2.
ANSWER: d. ashortagewi l
loccuratthepricec
eil
ingofP2.
TYPE:
M SECTI ON: 1DI FFICULTY: 3

48. Wit
houtthepric
ec ei
li
ngi nt hismarketforgasoli
ne,whent
hes
uppl
ycur
ves
hif
tsf
rom S
1toS2t
hepr
icewi
ll
[Link]
easetoP3,butas hor t
agewi l
lsti
llexi
s t
.
[Link]
easetoP3a ndthema rketwillcl
ear.
c.remainatP1a ndas hortagewi l
lsti
llexi
st.
[Link]
lymovet oP2wi thoutgovernmentas s
ist
anc
e.
ANSWER:b. i
ncreaset
oP3a ndt hema rketwillcl
ear.
TYPE:
M SECTION: 1DIFFICULTY: 3

49. Watershortagescausedbydr ought scanbemos teffic i

ent
lyl
essene
dby
a. all
owingpr ic
et oequatethequant it
yde mandedofwat
erwit
hthequa nt
it
ysuppl
iedofwate
r.
b.r es
tri
ctingwa t
e rusageofc onsume r
s.
c. arr
esti
nga nyonewhowa steswa t
er.
d.i mposingtightpricecontrolsonwa ter
.
ANSWER: a. all
owingpr icetoe quatethequant
itydemande
dofwa t
erwiththequa
nti
tysuppl
iedofwa
ter
.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

50. Watershortagescanbemos teffic ie

nt l
ye l
iminatedevenintimesofdroughti
f
a.t hemar ketisal
lowedt oadj
ustfreel
y.
[Link] tercanbemove df r
om whe r
ei ti
spl e
ntifult
owhe r ei
tisnee
dedmos t.
c. governme ntint
erventi
onoc c
urstor egulat
ewa terus
a ge.
d.t hepric
ei slow enoughforeveryonet ohavea l
lthewa te
rtheywant.
ANSWER: a. themar ketisall
owedtoa dj
us tfr
eely.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

51. Cali
fornia’
sdrought -
emergencywa t
erbank
a.c ausedas eve
rewa t
ershort
a gein1991.
b.c auseswatertobefixe dins upply.
c. all
owsf ar
me rstoleasewaterdur i
ngdryspell
s.
d.c ausedthepriceofwa terdur i
ngthelas
tdroughtt
ofal
l.
ANSWER: c. al
lowsf armerstoleasewa t
erduri
ngdr ys
pel
ls
.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

52. Rentc ont

rol i
s
a. ac ommone xa
mpl eofasoci
alpr oblemsolvedbyg ove
r nment
r
e gula
tion.
[Link] ommone xa
mpl eofapri
cec eil
ing.
[Link] teffe cti
vewa yt
opr ovidea ffor dabl
ehousing.
[Link] teffic ientwaytoallocatehousing.
ANSWER: b. acommone xa
mpleofapr i
ceceil
ing.
TYPE:
M SECTI ON: 1DIFFICULTY:2

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Chapter 6/Supply, Demand, and Government Policies  167

53. Overtime ,
hous ingshorta
gescausedbyrentcontr ol
[Link] r
ease,becausethedemanda nds
uppl ycurve sforhousi
nga r
emoreelas
ticint
helongr un.
[Link] r
ease,becausethedemanda nds
uppl ycurve sforhousi
nga r
emoreinel
asti
cinthelongr un.
c. decreas
e, bec
aus et
hedemandands upplycur vesforhousingaremor
einelast
ici
nthelongr un.
d.c hangeve rylit
tl
esincepri
ceisnotall
owe dtoa djust.
ANSWER: a. increase
,becauset
hedemanda nds uppl ycurvesf
orhousi
ngaremor eel
asti
cinthel ongr
un.
TYPE:
M SECTI ON: 1DIFFICULTY:2

54. Economistsgenerall
yhol dthatrentcontrolis
a. aneffic i
entande qui
tablewayt ohe lpthepoor.
[Link] ffic ient,butthebe s
twa ytos olveaserioussoci
alproblem.
c. ahighlyineffic ie
ntwa ytohelpthepoorr ai
s et
heirst
andar dofl
ivi
ng.
[Link] i
entwa ytoall
ocatehousing, butnotagoodwa yt ohelpthepoor
.
ANSWER: c. ahighlyineffic i
entwa ytohe l
pthepoorr ai
setheirst
andardofl
ivi
ng.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

55. Int
hehousi
ngma rke
t,r
entcontr
olscausequant
it
ysuppl
iedt
o
[Link]
landquanti
tydemandedtofall
.
[Link]
landquanti
tydemandedtor i
se.
[Link]
eandquanti
tydemande dtofal
l.
[Link]
eandquanti
tydemande dtoris
e.
ANSWER:b. fal
landquanti
tydemande dtoris
e.
TYPE:
M SECTION:1DIFFICULTY:3

56. Inthefigur eshown,whi

chpane
l(s
)be
str
epr
ese
nt(
s)abi
ndi
ngr
entc
ont
roli
nthes
hor
trun?
a. panel(a)
[Link] l(b)
c. nei
therpa ne
l
[Link] hpanels
ANSWER: a. panel(
a)
TYPE:
M SECTI ON: 1DIFFI
CULTY:
2

57. Inthefigur eshown,whi

chpane
l(s
)be
str
epr
ese
nt(
s)abi
ndi
ngr
entc
ont
roli
nthel
ongr
un?
a. panel(a)
[Link] l(b)
c. nei
therpa ne
l
[Link] hpanels
ANSWER: b. panel(
b)
TYPE:
M SECTI ON: 1DIFFI
CULTY:
2

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168  Chapter 6/Supply, Demand, and Government Policies

58. Whi choft hefol

lowingisNOTame
chani
sm ofr
ati
oni
ngus
edb
ylandl
ordsi
nci
ti
eswi
thr
entc
ont
rol
?
a. wai t
inglis
ts
b.r ace
c. price
[Link] ibes
ANSWER: c. pr
ice
TYPE:
M SECTI ON: 1DIFFICULTY:
1

59. Unde rrentcontrol,

briberyisame chanismt o
a. bringthetotalpriceofanapar t
me nt(includingthebri
be)cl
ose
rtotheequi
li
bri
um pr i
ce.
[Link] l
oc a
tehous i
ngt othepoorestindividualsinthemarket.
c.f orcethetotalpri
ceofa napartme nt(incl
udingt hebr
ibe)t
obelesst
hanthemarketpri
ce.
[Link] l
ocatehous i
ngt othemos tdeservingtenant s
.
ANSWER: a. bringthet ot
alpric
eofa napar t
me nt(i
nc l
udi
ngthebri
be)cl
ose
rtotheequil
ibri
um pr
ice
.
TYPE:
M SECTI ON: 1DIFFICULTY: 2

60. Unde rre

ntcontrol
,tenant scane xpe
ct
[Link] rre
nta ndhighe rqualityhousing.
[Link] rre
nta ndlowe rqual i
tyhous i
ng.
c. higherr
enta ndhighe rqualityhousing.
[Link] gherr
enta ndlowe rqualit
yhous ing.
ANSWER: b. l
owe rre
nta ndl owe rquali
tyhousi
ng.
TYPE:
M SECTI ON: 1DIFFICULTY: 2

61. Underrentcontrol
,landl ordsceasetober es
pons ivetotenant s
’conc
ernsaboutthequali
tyofthehousi
ngbecaus
e
a. wit
hs hort
agesa ndwai ti
nglist
s,t
he yhavenoi ncent
ivet omaint
ainandimpr ovet
heirproper
ty.
[Link] t heyc anne verpleasetheirt
enants.
[Link] nolonge rrequi re
sthemt omai ntainthe i
rbuildings.
[Link] rnme nt’
sresponsibi
lity
.
ANSWER: a
. wi
ths hor t
age sandwai t
inglist
s,theyha venoi ncenti
vetomaintai
na ndimprovethei
rproper
ty.
TYPE:
M SECTION: 1DI FFI CULTY: 2

62. Whi c
hoft hefol
lowi ngisNOTar e
sultofgove
rnme
nti
mpos
edr
entc
ont
rol
s?
a.f ewernewa par t
me ntsofferedforrent
b.l e
s smaint
enanc eprovidedbylandlor
ds
c. bribe
ry
[Link] gherquali
tyhous ing
ANSWER: d. hi
ghe rqua l
ityhousi
ng
TYPE:
M SECTI ON: 1DI FFICULTY: 2

63. Whichoft hefol l

owi ngs t
ateme ntsaboutr entc ontrolinNe w YorkCi tyisac
cura
te?
a. Rentcontrol haspr ovens uccessf
uli npr ovi
dingl ow-costhousingforpoorpeopl
e.
[Link] ntcontrol haspr oduc e
dani ncreaseina vailablerentalunits
.
c. Manywe l
l-to-dope oplel i
vei nrent-control
leda part
me nts.
[Link] lofthea bo veareac curat
es tat
eme nt s
.
ANSWER: c
. Manywe ll
-to-dope oplelivei nrent-controll
eda partme nt
s.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

64. Themi nimum wa geisanexampl eof

a. apricecei
li
ng.
[Link] icefloor .
c. afr
e e-
marketprocess.
[Link] i
entlaborall
oca
tionme c
hani
sm.
ANSWER: b. apric
efloor .
TYPE:
M SECTI ON: 1DIFFICULTY: 1

65. Mini
mum wa gelawsdi c
tat
ethe
[Link]
gepr iceemployersmus tpayforlabor
.
[Link] yforlabor.
[Link] ypayforlabor.
[Link]
tyofl aborwhichmus tbesupplied.
ANSWER:c. lowe s
tpri
c eemployersmaypa yforla
bor
.
TYPE:
M SECTION: 1DI FFI
CULTY: 1

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Chapter 6/Supply, Demand, and Government Policies  169

66. TheU. S.
Congres
sfir s
tins
tit
ute
dami
nimum wa
gei
n
a. 1890.
b.1914.
c. 1938.
d.1974.
ANSWER: c. 1938.
TYPE:
M SECTI ON:1DIFFI
CULTY: 1

67. Themi nimum wa gewasi nsti

tutedinor dertoe
ns ur
ewor
ker
s
a. ami ddle-c
lassstandardofl i
ving.
b.e mpl oyment.
c. ami nimall
ya dequa t
es t
andar dofliving.
[Link] mpl oymentc ompe nsati
on.
ANSWER: c. ami nimallyade quatestandardofli
ving.
TYPE:
M SECTI ON:1DI FFICULTY: 1

68. IntheUnite
dSt a
tes,whe nmi nimum wa gelawsareestabli
s he
d,employ
e r
smus t
a. paythegoing(equil
ibrium)wa geinthemar ket
.
[Link] yawa geequaltoorhi gherthanthemi ni
mum wa ge.
c. hir
eami ni
mum numbe rofe mployeeswhichissetbyt hegover
nme nt
.
[Link] r
eonlythosewor kerswhowi l
lwor kfort
hee s
tablis
he dminimum wa ge
.
ANSWER: b. payawa geequa ltoorhigherthanthemi nimum wa ge.
TYPE:
M SECTI ON:1DI FFICULTY: 2

69. Asof1999,t
[Link]
mum wageac
cor
dingt
ofe
der
all
aw was
a. $3.
75perhour
.
b.$4.25perhour
.
c. $4.
75perhour
.
d.$5.15perhour
.
ANSWER: d. $5.
15perhour.
TYPE:
M SECTION: 1DIFFI
CULTY:1

70. Whi c
hoft hefol
lowingisthemos taccuratest
atementaboutmi ni
mum wa gelaws?
a. Allst
ateshavelegi
sla
tionthatest
abl i
shesthesamemi nimum wa gea sthef
ede ralla
w.
[Link] ta
teshavelegi
slat
ionthatestabli
shesahighermi ni
mum wa gethanthefede rall
aw.
c. Somes ta
teshavelegi
slat
ionthatestabli
shesalowermi nimum wa gethanthefede ralla
w.
[Link] lst
ateshavelegi
sla
tionthatest
abl i
shesahigherminimum wa get hanthefeder a
llaw.
ANSWER: b. Somes t
ate
sha velegi
sla
tiont hate
stabl
ishe
sahi gherminimum wa get hant hefede
rall
aw.
TYPE:
M SECTION: 1DIFFICULTY: 2

71. Whichofthef
ollowingisacorrec
tstatementa boutthelabormarket
?
a. Worker
sdet
e rminethesupplyoflabor,andfir msde te
rminethedemandf orl
abor.
[Link] ker
sdet
e rminethedemandf orlabor,andfir msdeter
mi net hes uppl
yoflabor.
c. Worker
sdet
e rminethesupplyoflabor,andgover nmentdeter
mi ne sthedemandf orlabor.
[Link] r
nmentde t
e r
minesthesupplyoflabor ,andfir msde t
ermi net hesupplyofla
bor .
ANSWER: a
. Workersdeter
minethesuppl yoflabor ,
andfir msdetermi nethedemandf orlabor.
TYPE:
M SECTION:1DI FFICULTY: 1

72. A minimum wa gewi l

l
a. alt
erboththequant i
tydemande dandquanti
tysuppli
edoflabor .
[Link] ctonlythequanti
tyoflaborfir mswil
ldemanda tthehi gherwage ,butdoesnotaffectt
hequanti
tysuppl
ied
oflabor.
c. havenoe ffe ctonthequantitydemandedorquanti
tysuppliedofl aborsincetheequi
li
bri
um wagewil
lnot
change.
d.c auseonlytemporaryunempl oyment
,sinc
ethemarketwilladjustande li
mi nat
ethesurpl
usofworke
rs.
ANSWER: a. alt
erboththequanti
tyde mandedandquantit
ysuppl i
edofl abor.
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170  Chapter 6/Supply, Demand, and Government Policies

73. Ift
heminimum wageisabovetheequi
li
bri
um wa ge,
[Link]
tydemandedoflaborwil
lbegreatert
hanthequantit
ysuppli
ed.
[Link]
tydemandedoflaborwil
lequalthequanti
tysuppli
ed.
[Link]
tydemandedoflaborwil
lbelessthanthequant
itysuppl
ied.
[Link] saj
oba tt
hemi ni
mum wa gecanfindone .
ANSWER: c
. t
hequanti
tydemande dofl
aborwillbelesst
hanthequanti
tysuppl
ied.
TYPE:
M SECTION: 1DI
FFICULTY: 2

74. A minimum wageimposeda boveama rket’sequi

li
brium wagewillr
esul
tinthequantit
y
[Link]
dofl a
borbeinggreaterthant hequantitydemandedofl a
borandunempl oymentwil
loccur.
[Link] mandedoflaborbeinggreate
rt hant hequantit
ysupplie
dofl a
borandunempl oymentwil
loccur.
[Link]
dofl a
borbeinggreaterthant hequantitydemandedofl a
borandas hor
tageofworker
swi l
loccur
.
[Link] doflaborbeinggreate
rt hant hequantit
ysupplie
dofl a
borandas hor
tageofworker
swi l
loccur
.
ANSWER:a . suppli
edoflaborbeinggr eaterthanthequantit
yde mandedofla
borandunempl oymentwillocc
ur.
TYPE:
M SECTION: 1DIFFICULTY: 3

75. A ne
wlyimpos e
dmi nimum wa gese tabovet heequil
ibri
um wageinal abormarke
twi
ll
[Link] quil
ibrium wageint hemar kettor
ise.
[Link] verywor kerwhoisear ningawagebe low themini
mum be tteroff.
[Link] ke rst
ogetar ais
ea nds omewor kerst
olosethei
rjob.
[Link] kersearningmoret hant hemi ni
mum wagewor seoff.
ANSWER:c. caus esomewor kerstoge tar aiseandsomewor kerstolosethei
rjob
.
TYPE:
M SECTION: 1DIFFI CULTY:2

76. Worke
rswi thhighs kil
lsandmuc he xperi
encea renota
ffec t
edbyt
hemini
mum wa
gebe
caus
e
[Link] ounions .
[Link] egall
yguar ante
e dthemi nimum wa ge.
[Link] r
a l
lyearnwa gesl
esstha nthemini mum wage.
[Link]
requi l
ibri
um wa gesarewe l
la bovethemi ni
mum wa ge
.
ANSWER:d. theirequili
br i
um wa gesa rewel
la bovethemini
mum wage.
TYPE:
M SECTION: 1DI FFICULTY: 2

77. Themi nimum wa gehasi

tsgre
ate
sti
mpa
ctont
hema
rke
tfor
a.f e
mal eworkers.
[Link] teworkers.
c. blac
kwor kers
.
d.t e
ena geworkers
.
ANSWER: d. t
eenageworkers
.
TYPE:
M SECTI ON: 1DIFFICULTY:1

78. Theequil
ibrium wagesoft eenagerstendtobe
[Link] becauseteenagersa reamongt heleastski
ll
eda ndl e
astexperi
encedwor ke
rs.
[Link] causete
e nage
r sa r
ea mongt hestr
ongestandmos tene
rgeti
cwor kers
.
[Link] becausemos ttee
na ge r
sliveathomea nddonotr equir
ehighwa ges.
[Link] causete
e nage
r stendt ojoi
nunions .
ANSWER:a. l
ow becausetee nagersareamongt heleas
ts ki
lledandleastexper
iencedwor
ker
s.
TYPE:
M SECTION: 1DIFFICULTY: 1

79. Thetypicalstudyont hee ffectoftheminimum wageont eenagee

mpl
oyme
ntfindst
hata10pe
rce
nti
ncr
eas
eint
he
minimum wa ge
a. depressesteena geempl oymentby1to3percent.
[Link] pressesteena geempl oymentby10to13percent.
c. hasnoe ffec tont e
ena geemployment.
d.r ai
seswa ge soft e
enagersby10pe r
cent
.
ANSWER: a. de pressesteenageemploymentby1to3pe rcent
.
TYPE:
M SECTI ON: 1DI FFICULTY: 1

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Chapter 6/Supply, Demand, and Government Policies  171

80. Res
earc
hershavefoundt hata10perc
entincr
eas
einthemi
nimum wa
gewi
ll
[Link] ntby1to3pe r
cent.
[Link] ntby4to5pe r
cent.
[Link]
seteenemployme ntby1to3pe rc
ent.
[Link]
seteenemployme ntby4to5pe rc
ent.
ANSWER:a. l
owerteenempl oymentby1t o3per
cent
.
TYPE:
M SECTION: 1DIFFICULTY: 1

81. Ingeneral
,advoc a
tesoftheminimum wa ge
a. beli
evethattherearenoadverseeffe ctsofminimum- wagel a
ws .
[Link] li
evethatadverseeffectsaresma l
l,andgene ra
llyahi ghermi nimum wa gemakesthepoorbet
teroff.
c. beli
evethattheminimum wa geistheans wertosociet
y’sec onomi cprobl
ems .
[Link] esoci
ali
stswhowa ntt
oreplacet
hemar kets
ys t
em wi thcentraleconomicplanni
ng.
ANSWER: b. bel
ievethatadve
rseeffec tsaresma l
l,andge nerallyahighermi ni
mum wa gemakesthepoorbet
teroff.
TYPE:
M SECTI ON: 1DI FFI
CULTY: 2

82. Oppone ntsofthemi nimum wa gewouldargueeachoft

hefol
lowingEXCEPTi
t
a.e ncouragesteena gedr opouts.
b.c ausesunempl oyme nt.
c. preventson-the -
jobtraining.
d.t ar
getsonlyt hos ewithi ncomesbel
ow t
hepove rt
yli
ne.
ANSWER: d. tar
ge tsonlyt hos ewit
hincomesbelow t
hepove
rtyli
ne.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

83. Whi c
hofthefollowi ngisNOTaf unc t
ionofpricesi
nama r
ketsys
tem?
a. Pri
ceshavethec rucialj
obofbalancingsupplyanddemand.
[Link] i
cessends i
gnal stobuye
rsands elle
rstohelpthe
m maker at
ionalec
onomi
cde ci
sions.
c. Pri
cescoordinatee c
onomicacti
vity.
[Link] i
cesmakea nequi t
abl
edist
ributi
onofgoodsa nds e
rvice
samongc onsume
r spos
sible.
ANSWER: d. Pr
icesmakea nequit
abledistri
buti
onofgoodsa ndser
vicesamongconsume r
sposs
ibl
e.
TYPE:
M SECTION: 1DI FFICULTY:2

84. Whe ngovernmenti mpos espri

cec eil
ingsandfloorsinamar
ket
a. pric
enol ongerser vesasar at
ioningde vic
e.
b.e ffic iencyint hemar ketisincreased.
c.s hort
agesa ndsurpl usesareeli
mi nated.
[Link] rsands el
lersar ebothbetteroff.
ANSWER: a. pricenolonge rservesa sarationi
ngde
vic
e.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

85. Whi c
hofthef
ollowingisthemos tc orrec
tstat
eme ntaboutpri
cec
ontr
ols
?
a. Pri
cec
ontrol
salwayshe l
pt hoset heyaredes i
gnedtohelp.
[Link] i
cec
ontrol
sneverhe l
pt hosethe yaredesignedtohelp.
c. Pri
cec
ontrol
softenhurtthosethe yaredesi
gnedt ohel
p.
[Link] i
cec
ontrol
salwayshur tthoset heyaredesignedtohelp.
ANSWER: c. Pr
icecontrol
softenhur tthosetheyar edesi
gnedtohel
p.
TYPE:
M SECTION:1DI FFICULTY: 2

86. Pri
cecontrolsi
mpos e
dbypol i
cymakers
a. of
tenhur tthosetheya retr
yingtohelp.
[Link] s
ignedt opr ovidemor es
tabil
ityinthema r
ket.
c. al
low t
hemar kettoe quat
equantit
yde mandeda ndquantit
ysuppli
ed.
[Link] yimpr ovema r
ke teffic i
ency,butma ycausegrea
teri
nequi
ty.
ANSWER: a
. oft
e nhurtthos et
heyaretryingtohel
p.
TYPE:
M SECTION: 1DI FFICULTY: 2

87. Unlikeminimum wa gelaws,wagesubsi

dislương trợ cấp
e
a. disc
ouragefir msf r
om hiri
ngtheworkingpoor.
b.c auseunempl oyme nt.
c. helponlywe alt
hywor ke
rs.
d.r ai
seli
vingstandar dsoftheworki
ngpoorwi t
houtcr
eati
ngunemplo
yme nt
.
ANSWER: d. r
aiselivi
ngs tandar
dsoftheworkingpoorwit
houtc
rea
tingune
mpl oyme
nt.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

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172  Chapter 6/Supply, Demand, and Government Policies

88. Oneadvant ageofre ntsubsidiesove

rrentc
ontr
oli
stha
tre
nts
ubs
idi
es
a. donotl eadtohous ings hort
ages.
b.r educethede mandf orhous i
ng.
c. willnotleadtodi sc
r i
mina t
ion.
d.c auserentpricestobel owe r
.
ANSWER: a. donotl eadt ohous i
ngshort
ages
.
TYPE:
M SECTI ON: 1DIFFICULTY: 2

89. Onedis
advant ageofg overnmentsubs
idie
soverpr
icec
ontrol
sisthats
ubs
idi
es
[Link]
ibr i
um inthemarketinwhic
htheyarei
mpos ed.
[Link]
setaxes.
[Link] rpricestosuppli
ers
.
[Link] mployme nt
.
ANSWER:b. raisetaxes.
TYPE:
M SECTION: 1DI FFICULTY:2

90. Thee ar
nedi nc
omet axcre
ditisanexampl
eof
a.s upplyandde mand.
[Link] icydesignedtoincreaseeffic i
enc
y.
c. awa gesubsidy.
[Link] icecontr
ol.
ANSWER: c. awa gesubsidy.
TYPE:
M SECTI ON: 1DI FFICULTY: 2

91. Whi c
hi sthemos taccurat
estat
ementa boutt axe
sandgove rnme nt?
a. Allgovernme nts
,federal
,st
ate
,andl oc al
,rel
yont axestoraiser evenueforpublicpurposes
.
[Link] deralands t
ategovernmentsusetaxe storais
erevenue ,butl ocalgovernme nt
suseborrowing.
c. Federalandlocalgovernmentsuset axestorais
ereve nue,buts tategovernmentsuseborrowing.
[Link] at
ea ndlocalgovernmentsusetaxe storais
erevenue ,butthef ede r
algovernmentusesborrowing.
ANSWER: a. Allgovernme nts
,fede
ral
, s
ta te
,andl oc
al,
re l
yont axe stor ai
serevenueforpubli
cpur poses
.
TYPE:
M SECTI ON: 2DI FFICULTY: 2

92. Thetermt axinc i

dencere
fer
stothe
a. Bost
onTe aParty.
b." fla ttax"move ment
.
c. divi
si
onoft hetaxburde
nbetweenbuyer
sands e
llers
.
[Link]
onoft hetaxburdenbet
weensal
estax
esandi ncomet ax
es.
ANSWER: c. di
visi
onofthetaxburde
nbetweenbuyersands e
llers
.
TYPE:
M SECTI ON: 2DIFFICULTY:1

93. Thei ni
ti
aleffe c tofat axonthebuyersofagoodi
son
a.t hesupplyoft ha tgood.
b.t hedemandf ort hatgood.
c. boththes upplyoft hegooda ndthedemandfort
hegood.
d.t hepric
eoft hegood.
ANSWER: b. thede mandf ortha
tgood.
TYPE:
M SECTI ON: 2DI FFICULTY: 1

94. Ifataxisi
mpos edont hebuyerofaproductt
hedemandc
urvewoul
dshi
ft
a. downwa rdbythea mountofthetax.
[Link] r
dbyt heamountoft hetax.
c. downwa rdbylessthantheamountofthetax.
[Link] r
dbymor ethantheamountofthetax.
ANSWER: a. downwa r
dbyt heamountofthetax.
TYPE:
M SECTI ON: 2DIFFICULTY:2

95. A t
axplace
donkitebuye rswillshi
ft
[Link]
d,c a
us i
nge quili
bri
um pr icetori
seandequi l
ibrium quanti
tytofal
l.
[Link] mandupward,causingbothequi li
bri
um pr i
ceandquant it
yt ori
se.
[Link], c
aus i
nge quil
ibrium pri
cetofalla
nde quili
brium quanti
tytoris
e.
[Link] r
d, causi
ngbot he quil
ibri
um pric
ea ndqua ntit
ytofall
.
ANSWER: d. de
manddownwa rd,causingbot hequi
li
brium pr
icea ndquant i
tytofal
l.
TYPE:
M SECTION:2DIFFICULTY: 3

about:blank 14/32
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Chapter 6/Supply, Demand, and Government Policies  173

96. Assumet hatthede mandands upplycurvesf orcarsareel

asti
c.I
fthegove
rnmenti
mpos
eda$
500t
axont
hebuye
r
ofeachcar,
wec anas sumethatthe
a.e qui
li
brium pr i
ceofacarwoulddec reasebyl essthan$500.
[Link] i
ceofac arwoul ddecr
easebye xac
tly$ 500.
c. pri
ceofac arwoul ddecr
easebymor et han$ 500.
[Link] i
ceofac arwoul dnotchangeifbothc urveswe reel
ast
ic.
ANSWER: a. equil
ibri
um pri
ceofac arwoul ddec reasebyles
sthan$500.
TYPE:
M SECTI ON: 2DI FFI
CULTY: 3

97. Accordingtothegraphshown,t
heequi
li
bri
um pr
icei
nthemar
ketbe
for
ethet
axi
simpos
edi
s
a. $8.00.
b.$6. 00.
c. $5.00.
d.$3. 00.
ANSWER: b. $6.
00.
TYPE:
M SECTI ON: 2DIFFICULTY:1

98. Accordingtothegraph,t
hepri
cebuyer
swi
llpa
yaf
tert
het
axi
simpos
edi
s
a. $8.00.
b.$6. 00.
c. $5.00.
d.$3. 00.
ANSWER: a. $8.
00.
TYPE:
M SECTI ON: 2DIFFICULTY:
3

99. Accordingtothegraph,t
hepri
ces
ell
ersr
ece
ivea
fte
rthet
axi
simpos
edi
s
a. $8.00.
b.$6. 00.
c. $5.00.
d.$3. 00.
ANSWER: c. $5.
00.
TYPE:
M SECTI ON: 2DIFFICULTY:
3

100. Accordingtothegraph,t
heamountoft
het
axi
mpos
edi
nthi
s
marketi s
a. $1.00.
b.$1. 50.
c. $2.50.
d.$3. 00.
ANSWER: d. $3.
00.
TYPE:M SECTI ON:2DIFFICULTY:3

101. Accordingtothegraph,t
heamountoft
het
axt
hatbuye
rswoul
d
paywoul dbe
a. $1.00.
b.$1. 50.
c. $2.00.
d.$3. 00.
ANSWER: c. $2.
00.
TYPE:M SECTI ON: 2DIFFICULTY:3

102. Accordingtothegraph,t
heamountoft
het
axt
hats
ell
erswoul
dpa
ywoul
dbe
a. $1.00.
b.$1. 50.
c. $2.00.
d.$3. 00.
ANSWER: a. $1.
00.
TYPE:M SECTI ON: 2DIFFICULTY:3

about:blank 15/32
12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

174  Chapter 6/Supply, Demand, and Government Policies

103. Accordingtothegraph,t
hepri
cebuyer
swi
llpa
yaf
tert
het
axi
simpos
edi
s
a. $18.00.
b.$14. 00.
c. $12.00.
d.$8. 00.
ANSWER: a. $18.
00.
TYPE:M SECTI ON:2DIFFICULTY:
3

104. Accordingtothegraph,t
hepri
ces
ell
ersr
ece
ivea
fte
rthet
axi
simpos
edi
s
a. $18.00.
b.$14. 00.
c. $12.00.
d.$8. 00.
ANSWER: d. $8.
00.
TYPE:M SECTI ON:2DIFFICULTY:
3

105. Accordingtothegraph,t
heamountoft
het
axi
mpos
edi
nthi
s
marketi s
a. $10.00.
b.$6. 00.
c. $4.00.
d.$2. 00.
ANSWER: a. $10.
00.
TYPE:M SECTI ON:2DIFFICULTY:3

106. Accordingtothegraph,t
heamountoft
het
axt
hatbuye
rs
wouldpa ywouldbe
a. $10.00.
b.$6. 00.
c. $4.00.
d.$2. 00.
ANSWER: c. $4.
00.
TYPE:M SECTI ON: 2DIFFICULTY:3

107. Accordingtothegraph,t
heamountoft
het
axt
hats
ell
erswoul
dpa
ywoul
dbe
a. $10.00.
b.$6. 00.
c. $4.00.
d.$2. 00.
ANSWER: b. $6.
00.
TYPE:M SECTI ON: 2DIFFICULTY:3

108. Ifbuyer
sa r
er equiredtopaya$0 .
10taxpe
rba
gonHe
rshe
y’ski
sse
s,t
hede
mandf
orki
sse
swi
lls
hif
t
a. upb y$0.10pe rbag.
[Link] y$0.05pe rbag.
c. downby$ 0.10perba g.
[Link]$ 0.05perba g.
ANSWER: c. downby$ 0.10perbag.
TYPE:M SECTI ON: 2DI FFICULTY: 2

109. A t
axont hebuye rsofpopc or
n
[Link] r
eas e
st hes i
zeofthepopc ornma r
ket.
b.r educesthes izeofthepopc ornmarket.
c. hasnoe ffec tont hesi
zeoft hepopcornmarket
.
[Link] yincrease,decrease
,orha venoeffe ctonthesi
zeoft
hepopc
ornmar
ket
.
ANSWER: b. r
educ esthesizeofthepopcornmar ke
t.
TYPE:M SECTI ON: 2DI FFICULTY: 2

about:blank 16/32
12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

Chapter 6/Supply, Demand, and Government Policies  175

110. A t
axont hebuye r
sofc offe ewill
[Link] ducetheequili
bri
um pr i
ceofcoffee,andincr
easetheequili
bri
um quanti
ty.
[Link] r
easetheequili
brium pri
ceofcoffee,andreducetheequili
bri
um quanti
ty.
[Link] r
easetheequili
brium pri
ceofcoffee,andincre
asetheequili
bri
um quanti
ty.
[Link] ducetheequili
bri
um pr i
ceofcoffee,andreducetheequil
ibri
um quanti
ty.
ANSWER: b. inc
reasethee qui
li
bri
um pri
ceofcoffe e,
andr educ
et heequi
li
bri
um quant
it
y.
TYPE:M SECTI ON: 2DIFFICULTY: 3

111. A t
axont hebuye r
softeawillcaus ethepr i
cethebuyerpays
a. andthepricethesel
lerr
eceive storise.
[Link] hepricethesel
lerr
eceive stofall
.
c.t oris
eandt hepri
cethesell
e rreceivestofall
.
d.t ofal
landthepr i
cethesell
err ecei
vestor i
se.
ANSWER: c. t
or i
seandthepricet hes e
lle
rr ec
eivest
ofall
.
TYPE:M SECTI ON: 2DIFFICULTY: 3

112. Whichisthemos tcorrec

tstat
ementa boutthebur
de nofataxi
mpos
edonbuye
rsofs
ugar
?
a. Buyersbearthee nti
reburdenofthet ax.
[Link] l
ler
sbe artheentireburdenofthetax .
c. Buyersands ell
erssharetheburdenoft het
ax.
[Link] r
nmentbe arst
hee nti
reburdenofthetax.
ANSWER: c. Buyersa ndsell
erssharet
hebur denofthetax
.
TYPE:M SECTION: 2DI FFICULTY: 2

113. Supposeataxisi
mpos edonthebuyersofaproduc
[Link]
denoft
het
axwi
llf
all
a.e nt
ire
lyonthebuye r
s.
b.e nt
ire
lyonthesel
lers.
c.e nt
ire
lyonthegovernment.
[Link] hthebuyer
sandt hesel
ler
s.
ANSWER: d. onboththebuyersandthesel
ler
s.
TYPE:M SECTION: 2DIFFICULTY: 2

114. Whenat axisplacedont hebuye r

sofmi l
k,the
[Link] l
kmar keti sr
educed.
[Link] i
ceofmi l
kde cr
eases.
[Link] lkdecreases.
[Link] i
ceofmi l
kincreas
e s,andtheequil
ibri
um quant
it
yofmi
lki
sunc
hange
d.
ANSWER: a . sizeofthemi lkmar ke
tisre
duc ed.
TYPE:M SECTION: 2DIFFICULTY: 2

115. Whe nataxi

splacedont hebuye rofaproduc
tther
esul
tist
hatbuye
rspa
y
a. moreandsel
lersrecei
veless
.
[Link]
ler
sr ec
eiveles
s.
c. moreandsel
lersrecei
vemor e.
[Link]
ler
sr ec
eivemor e
.
ANSWER: a. moreands ell
ersrec
eiveles
s.
TYPE:M SECTION: 2DIFFICULTY: 2

116. Anyti
meat axispl
ac edont hebuyersofapr oduc titwill
[Link]
ibrium pri
ceandi ncr
easet hee quil
ibri
um quanti
tyofthatproduct
.
[Link]
ibrium pri
ceande quil
ibrium quant it
yofthatproduct.
[Link]
asetheequili
br i
um pric
eande quili
br i
um quant it
yofthatproduct.
[Link]
asetheequili
brium pric
eandr educet hee quil
ibri
um quanti
tyofthatproduct
.
ANSWER: d. inc
reas
et hee qui
li
brium pri
ceandr educ et
hee qui
li
bri
um q uanti
tyoftha
tproduc
t.
TYPE:M SECTION: 2DIFFICULTY: 3

117. Theinit
ialimpactofat axont hes el
lersofaproduc
t
[Link] hesupplyoft hepr oduct.
[Link] hedemandf orthepr oduc t
.
[Link] hthes upplyoft hepr oductandthedemandf
ort
hepr
oduc
t.
[Link] simpactbothde ma nda nds upply.
ANSWER: a . i
sont hesuppl yoft hepr oduct
.
TYPE:M SECTI ON: 2DIFFICULTY: 2

about:blank 17/32
12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

176  Chapter 6/Supply, Demand, and Government Policies

118. Ifat
axisleviedont hesell
erofaproduc
tthede
mandc urve
a. wil
lnotc hange. tax on buyers: demand
[Link] l
lshi
ftdownwar d. tax on sellers: supply
c. wil
lshi
ftupwa rd.
[Link] yshiftupordown, dependi
ngontheamountofthet
ax.
ANSWER: a
. wi llnotchange.
TYPE:M SECTION: 2DI FFI
CULTY: 2

119. A t
axplacedont hesell
erofapr oduc twil
l
[Link]
ibri
um pr ic
eandl owe re qui
li
brium quant
it
y.
[Link]
bri
um pr i
c eandquant ity
.
[Link] requil
ibri
um pr i
ceandr ais
ee qui
li
brium quant
it
y.
[Link] rbothequil
ibrium pricea ndquantit
y.
ANSWER: a
. r
aiseequil
ibrium pricea ndlowere qui
li
bri
um quant
it
y.
TYPE:M SECTI ON: 2DIFFICULTY: 3

120. A t
axplace
dont hes el
lerofagood
[Link]
sthepricebuyerspaya ndlowe rsthepricesel
lersre
ceive
.
[Link] ndrais
est hepricesel
lersre
ceive
.
[Link]
sboththepr i
cebuyerspa yandt hepr i
cesell
ersrecei
ve.
[Link] ndt hepricesel
lersrec
eive.
ANSWER: a
. rai
sesthepr i
cebuyerspaya ndl owersthepricesel
ler
sre
cei
ve.
TYPE:M SECTION: 2DI FFI
CULTY: 3

121. Whe nataxisplacedont hese l

lersofaproductt
he
a.s i
zeofthemar ketisreduced.
[Link] i
ceoftheproduc tdecreases.
c. demandf ort
hepr oduc tf
alls
.
[Link] i
ceoftheproduc tfal
lsandquant it
ydemandinc
reas
es.
ANSWER: a. thesizeoft hemar ketisre
duced.
TYPE:M SECTION: 2DIFFICULTY: 2

122. Accordingtot hegraphshown,t

heequi
li
bri
um pr
icei
nthemar
ket
bef
oret hetaxisimpos e
dis
a. $1.00.
b.$3. 50.
c. $5.00.
d.$6. 00.
ANSWER: c. $5.
00.
TYPE:M SECTI ON: 2DIFFICULTY:2

123. Accordingtothegraphshown,t
heequi
li
bri
um pr
icei
nthemar
ketaf
ter
thetaxisimposedis
a. $1.00.
b.$3. 50.
c. $5.00.
d.$6. 00.
ANSWER: d. $6.
00.
TYPE:M SECTI ON: 2DIFFICULTY:3

124. Accordingtothegraph,t
hepri
cebuyer
swi
llpa
yaf
tert
het
axi
simpos
edi
s
a. $1.00.
b.$3. 50.
c. $5.00.
d.$6. 00.
ANSWER: d. $6.
00.
TYPE:M SECTI ON: 2DIFFICULTY:
3

about:blank 18/32
12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

Chapter 6/Supply, Demand, and Government Policies  177

125. Accordingtothegraph,t
hepri
ces
ell
ersr
ece
ivea
fte
rthet
axi
simpos
edi
s
a. $1.00.
b.$3. 50.
c. $5.00.
d.$6. 00.
ANSWER: b. $3.
50.
TYPE:M SECTI ON: 2DIFFICULTY:
3

126. Accordingtothegraph,t
heamountoft
het
axi
mpos
edi
nthi
smar
keti
s
a. $1.00.
b.$1. 50.
c. $2.50.
d.$3. 50.
ANSWER: c. $2.
50.
TYPE:M SECTI ON: 2DIFFICULTY:3

127. Accordingtothegraph,t
heamountoft
het
axt
hatbuye
rswoul
dpa
ywoul
dbe
a. $1.00.
b.$1. 50.
c. $2.50.
d.$3. 00.
ANSWER: a. $1.
00.
TYPE:M SECTI ON: 2DIFFICULTY:3

128. Accordingtothegraph,t
heamountoft
het
axt
hats
ell
erswoul
dpa
ywoul
dbe
a. $1.00.
b.$1. 50.
c. $2.50.
d.$3. 00.
ANSWER: b. $1.
50.
TYPE:M SECTI ON: 2DIFFICULTY:3

129. A t
axonthes el
ler
sofTVs
[Link]
ler
stos upplyasmall
erquanti
tya teveryprice.
[Link] malle
rquant i
tya tever
ypr i
ce.
[Link]
ler
stos upplyal
argerquanti
tyate ver
ypr ic
e.
[Link]
fttotheri
ght.
ANSWER: a
. le
adss el
ler
stosupplyasmallerquantityateverypr
ice
.
TYPE:M SECTION: 2DI FFI
CULTY: 3

130. A t
axof$0.
10pe rba ronthes el
ler
sofSnic
kerswi l
lcausethe
[Link] veofSni cker
st oshi
ftdownby$ 0.1
0.
[Link] veofSni cker
st oshi
ftupby$0.10. tax on sellers: D curve shift left = shift up
[Link] veofSni cker
st oshi
ftdownby$ 0.0
5.
[Link] urveofSni ckerstoshi
ftupby$0.10.
ANSWER: b. s uppl ycur veofSnicker
stoshi
ftupby$ 0.10.
TYPE:M SECTION: 2DI FFICULTY: 3

131. A t
axont hes el
lersofcel
lphone swill
a.r educethesizeofthecellphonema rket
.
b.i ncr
easethes i
zeofthece l
lphonemar ket.
c. affe ctthepriceofcel
lphone s
,butnotthesizeofthemarke
t.
[Link] veapr edict
ableeffe ctonthes i
zeofthecel
lphonemarke
t.
ANSWER: a. reducethesizeofthecellphonema r
ket.
TYPE:M SECTI ON: 2DI FFICULTY: 2

132. A t
axont hes el
ler
softir
eswill
[Link] ducetheequili
bri
um pri
ceoftires
,andincr
easetheequili
bri
um quanti
ty.
[Link] ducetheequili
bri
um pri
ceoftires
,andreducetheequi
libri
um quanti
ty.
[Link] r
easetheequili
bri
um pri
ceoftires
,andincre
asetheequili
bri
um quanti
ty.
[Link] r
easetheequili
bri
um pri
ceoft i
res,
andreducetheequili
bri
um quanti
ty.
ANSWER: d. inc
reasetheequi
li
brium pri
ceofti
res,
andr educ
et heequi
li
bri
um quant
it
y.
TYPE:M SECTI ON: 2DIFFICULTY:3

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178  Chapter 6/Supply, Demand, and Government Policies

133. A t
axont hes e
lle
rsofjewelrywil
lcausethepr i
cethebuyerspa
y
a. andthee ffe ct
ivepric
ethesell
ersre
ceivetorise
.
[Link] hee ffe ct
ivepric
ethesell
ersre
ceivetofall
.
c.t oris
e,andthee ffec t
ivepri
cethesel
lersrece
ivetofal
l.
d.t ofal
l,andthepr i
cethesel
ler
srecei
vetor i
se.
ANSWER: c. tori
se,andthee ffecti
vepricethesel
lersr
ecei
vetofal
l.
TYPE:M SECTI ON: 2DIFFICULTY: 3

134. Wha ti
strueaboutt hebur denofat aximposedoncandles
?
a. Buyersbearthee nti
rebur denoft hetax.
[Link] l
ler
sbe artheentirebur denoft hetax.
c. Buyersands el
lerssharethebur de nofthet
ax.
[Link] r
nmentbe arsthee nti
reburdenofthetax.
ANSWER: c. Buyersands ell
e r
ss haretheburdenoft
het ax
.
TYPE:M SECTION: 2DIFFI CULTY: 2

135. A t
axplacedonthes eller
sofbluebe
rri
es
[Link]
asescost
s,lowe rsprofitandshift
ssupplytothele
ft(upwa r
d).
[Link]
asescost
s,lowe rsprofitandshift
ssupplytotheri
ght(downwar d)
.
[Link]
s,rais
e sprofitands hi
ft
ssupplytothelef
t(upwa r
d).
[Link]
asescost
s,lowe rsprofitandcausesamove mentalongthesupplycurve.
ANSWER: a
. inc
reasescos t
s,l
owe r
sprofita ndshi
ftssuppl
yt ot
heleft(upward)
.
TYPE:M SECTION: 2DIFFI CULTY: 3

136. A $
2.00taxplacedont hes e
lle
rsofmailbox
eswi
lls
hif
tthes
uppl
ycur
ve
[Link](upward)bye xact
ly$2.00.
[Link](upward)byle s
sthan$2. 0
0.
[Link](downwar d)bye xact
ly$2.0
0.
[Link](downwar d)b yl
e s
sthan$2.00
.
ANSWER: a. l
eft(
upwar d)bye xact
ly$2.
00.
TYPE:M SECTI ON: 2DIFFICULTY: 2

137. Whe nataxi spl

acedont hes el
lersoflemonade
a.t hesel
lerspa
yt heentir
et ax.
b.t hebuyerspaytheentiretax.
c. buyersandsell
erssharethebur de noft
hetax.
d.t heburdenofthetaxwi llbea l
wa ysbeequal
lydi
videdbe
twee
nthebuye
randt
hes
ell
er.
ANSWER: c. buye
rsands ell
erss haretheburdenoft
hetax.
TYPE:M SECTI ON: 2DIFFICULTY: 2

138. Thetaxinci
denceisequiva
lent
[Link]
viedononl ythesel
ler
.
[Link]
viedonlyont hebuyer.
[Link]
viedonbot hthebuyerandthese
lle
r.
[Link]
ssofwhe the
rthetaxislevi
edonbuyersorse
lle
rs.
ANSWER: d. regardl
essofwhe t
herthetaxisl
evi
edonbuyersorse
ller
s.
TYPE:M SECTI ON:2DI FFI
CULTY: 2

139. Revenuefrom theFI CA t

axi susedto
a. helpret
irethena ti
onalde bt.
b.c overcr
opi nsuranceclai
ms .
c. paythes al
ari
esofc ongressme n.
[Link] yforSocialSecurit
ya ndMe di
car
e.
ANSWER: d. payforSoc i
alSecur i
tyandMedi
car
e.
TYPE:M SECTI ON: 2DI FFICULTY: 1

140. FI
CAi sane xampleof
a. apayrol
ltax.
[Link] al
estax.
c. afar
ms ubs i
dy.
[Link] einsurance.
ANSWER: a
. apa yrol
ltax.
TYPE:M SECTION: 2DIFFICULTY:
1

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Chapter 6/Supply, Demand, and Government Policies  179

141. A pa
yrol
ltaxisa
[Link] gesfir mspa ytheirworker
s.
[Link] m mus tpaytothegovernmenttohir
ewor ke
rsandoper
ateabus
ines
s.
c. fixed“perwor ker”amounte ac
hfir m pa
ystothegovernment
.
[Link] l
lwagesa boveminimum wa ge.
ANSWER: a
. t
axont hewa gesfir mspa ythei
rworker
s.
TYPE:M SECTION: 2DIFFICULTY: 2

142. Congressintendedtha t
[Link] ntir
eFI CAt axbepai
dbyworkers
.
[Link] ntir
eFI CAt axbepai
dbyfir ms.
[Link] ntir
eFI CAt axbepai
dbyconsume r
s .
[Link] l
ftheFI CA taxbepaidbyworke
rs,andhal fbepai
db yfirms.
ANSWER: d. halftheFICA t
axbepai
db ywor kers
,andhalfbepai
dbyfir
ms.
TYPE:M SECTI ON: 2DI FFICULTY:2

143. Lawmake rsenact

edtheFICAt axtobe
a.e quall
ysharedbetweenemployerandemploye
e.
[Link] dmostlybytheemployer.
c. paidmostlybytheemployee.
[Link] i
rel
ypaidb ytheemployer
.
ANSWER: a. e
quallyshar
edbe t
we enempl
oyera
nde mpl
oye
e.
TYPE:M SECTI ON: 2DIFFICULTY:2

144. Alt
houghla
wma ker
slegisl
atedafif ty-
fif tydi
visi
oni nthepayme ntoftheFICAtax
[Link] doccurift
hee nt
iret
axhadbe enleviedononl ythework
e roronl
yonthefirm.
[Link] isrequir
edbyl a
wt opa yalar
gerpe r
cent
ageoft hetax.
[Link] isrequire
dbyl awtopa yalar
gerpe r
centageofthetax.
[Link]
edbyl awtopaytheirporti
onoft hetax.
ANSWER: a
. thesameout comewoul doc c
uriftheenti
retaxhadbe enlevie
dononl ytheworkeroronl
yont
hefir
m.
TYPE:M SECTION: 2DIFFICULTY: 2

145. A keyresul
tofapa yr
olltaxisthatit
a. becomesataxonpoorpe ople
.
[Link] comesataxonc orporati
ons.
c. place
sawe dgebetwe enthewa getha
tfir mspayandt
hewagetha
tworkersr
ece
ive
.
[Link] ffe ctequili
bri
um i nl
abormarket
s.
ANSWER: c. pl
acesawe dgebe t
we enthewagethatfir
mspayandthewagetha
tworker
sre
cei
ve.
TYPE:M SECTI ON:2DI FFI
CULTY: 2

146. Whenapa yr
olltaxi senact
ed,thewagerecei
vedbywor
ker
s
[Link]
lsandthewa gepaidbyfir msri
ses.
[Link]
lsandthewa gepaidbyfir msf
all
s.
[Link]
esandthewa gepaidbyfir msfal
ls
.
[Link] gepai dbyfir msbothfal
l.
ANSWER: a. f
all
sa ndt hewa gepaidbyfir msris
es.
TYPE:M SECTI
ON: 2DI FFICULTY: 2

147. Mostlaboreconomi st
sbeli
evetha
tthes upplyoflabori s
[Link]
icthande mandandthe r
eforefir msbe armos tofthebur denofthepa yr
olltax.
[Link]
icthande mandandthe r
eforeworke r
sbe armos toftheburdenoft hepayrollta
x.
c. moree l
asti
cthande mandandt heref
orewor kersbearmos toftheburde nofthepayrolltax.
[Link] ee l
asti
cthande mandandt heref
orefir msbe armos toftheburdeno fthepayrollt
ax .
ANSWER: b. l
esselasti
cthandemanda ndt he
reforewor kersbearmos toftheburdenofthepa yr
ollt
ax.
TYPE:M SECTI ON: 2DI FFI
CULTY: 2

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180  Chapter 6/Supply, Demand, and Government Policies

148. Al t
houghl awma kersdesi
gne dthebur de noftheFI
CApa yr
ollt
axt obes
plitfift
y-fift
ybe t
weenworke
rsandfir
ms,
labore c
onomi s t
sbelievet
ha t
a.t hel aborma rketistoodistortedbythet axandshouldbee l
iminat
ed.
[Link] msbe armos tofthebur de nofthetax.
c.l awmake rsma yha veact
ual l
ya chie
ve dthei
rgoal,s
incest
ati
sti
csshow t
hatt
hetaxburde
ni sc
urr
ent
lyequal
ly
di vi
de d.
[Link] ker sbearmos tofthebur denoft hetax.
ANSWER: d. worker
sbe armos toft heburdenofthetax.
TYPE:M SECTI ON: 2DIFFICULTY: 2

149. Intheend, t
axinci
de nce
a. dependsont helegisl
atedburden.
b.i senti
rel
yrandom.
c. dependsont heforcesofsupplyanddemand.
d.f al
lsenti
rel
yonbuye rsorenti
rel
yons e
llers
.
ANSWER: c. dependsont heforce
sofs uppl
ya ndde
mand.
TYPE:M SECTI ON: 2DIFFI CULTY:2

150. Accordi
ngt othegraphsgi
ven,i
nwhi
chmar
ketwi
llt
hemaj
ori
tyofat
axbepa
idbyt
hebuyer
?
a. market(a)
[Link] ket(b)
c. market(c)
[Link] loftheabovea r
ecor
rect
.
ANSWER: b. market(b)
TYPE:M SECTI ON: 2DIFFICULTY:2

151. Accor
dingt othegraphsgi
ven,i
nwhi
chmar
ketwi
llt
hemaj
ori
tyofat
axbepa
idbyt
hes
ell
er?
a. market(a)
[Link] ket(b)
c. market(c)
[Link] loftheabovea r
ecor
rect
.
ANSWER: a
. market(a)
TYPE:M SECTI ON: 2DIFFICULTY:2

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Chapter 6/Supply, Demand, and Government Policies  181

152. Accordi
ngt othegraphsgi
ven,i
nwhi
chmar
ketwi
llt
het
axbemos
tequal
lydi
videdbe
twe
ent
hebuye
randt
he
se
ller
?
a. market(a)
[Link] ket(b)
c. market(c)
[Link] loftheabovearecor
rect
.
ANSWER: c. market(c)
TYPE:M SECTI ON: 2DIFFICULTY:2

153. Inthegraphshown,t
heequil
ibri
um pr
icebe
for
ethet
axi
s
a. P0.
b.P1.
c. P2.
[Link] heabovearec
orrec
t.
ANSWER: b. P1.
TYPE:M SECTI ON:2DIFFICULTY:2

154. Inthegraphshown, t
hepri
cet
hatwi
llbepai
daf
tert
het
axi
s
a. P0.
b.P1.
c. P2.
d.i mpossi
bletodete
rmine
.
ANSWER: c. P2.
TYPE:M SECTI ON: 2DIFFI
CULTY:2

155. Inthegraphshown, t
hepri
ces
ell
ersr
ece
ivea
fte
rthet
axi
s
a. P0.
b.P1.
c. P2.
d.i mpossi
bletodete
rmine
.
ANSWER: a. P0.
TYPE:M SECTI ON: 2DIFFI
CULTY:2

156. Inthegraphs hown,t

heperuni
tbur
denoft
het
axonbuye
rsi
s
a. P2minusP0.
b.P2mi nusP1.
c. P1minusP0.
d.Q1mi nusQ0.
ANSWER: b. P2minusP1.
TYPE:M SECTI ON: 2DIFFI
CULTY:3

157. Inthegraphs hown,t

heperuni
tbur
denoft
het
axont
hes
ell
ersi
s
a. P2minusP0.
b.P2mi nusP1.
c. P1minusP0.
d.Q1mi nusQ0.
ANSWER: c. P1minusP0.
TYPE:M SECTI ON: 2DIFFI
CULTY:3

158. Inthegraphs hown,t

heamountoft
het
axi
mpos
edi
s
a. P2minusP0.
b.P2mi nusP1.
c. P1minusP0.
d.Q1mi nusQ0.
ANSWER: a. P2minusP0.
TYPE:M SECTI ON: 2DIFFI
CULTY:3

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182  Chapter 6/Supply, Demand, and Government Policies

159. Inthegraphshown,t
heequi
li
bri
um pr
icebe
for
ethet
axi
s
a. $24.
b.$16.
c. $10.
d.$8.
ANSWER: b. $16.
TYPE:M SECTI ON:2DIFFI
CULTY:1

160. Inthegraphshown,t
hepr
icet
hatwi
llbepai
daf
tert
het
axi
s
a. $24.
b.$16.
c. $10.
d.$8.
ANSWER: a. $24.
TYPE:M SECTI ON:2DIFFI
CULTY:3

161. Inthegraphshown,t
hepr
ices
ell
ersr
ece
ivea
fte
rthet
axi
s
a. $24.
b.$14.
c. $10.
d.$8.
ANSWER: c. $10.
TYPE:M SECTI ON:2DIFFI
CULTY:2

162. Inthegraphshown,t
hepe
runitbur
denoft
het
axonbuye
rsi
s
a. $16.
b.$14.
c. $8.
d.$6.
ANSWER: c. $8.
TYPE:M SECTI ON:2DIFFI
CULTY:
3

163. Inthegraphs
hown,t
hepe
runitbur
denoft
het
axont
hes
ell
ersi
s
a. $16.
b.$14.
c. $8.
d.$6.
ANSWER: d. $6
TYPE:M SECTI ON:2DI
FFI
CULTY:
3

164. Inthegraphshown,t
heamountoft
het
axi
mpos
edi
s
a. $16.
b.$14.
c. $8.
d.$6.
ANSWER: b. $14
TYPE:M SECTI ON:2DIFFI
CULTY:3

165. Ifataxisimposedonama rke twithinel

asti
cde manda ndelas
ticsupply,
a. buyerswillbearmos toft hebur denofthetax.
b.s el
lerswil
lbe armostoft hebur denofthet ax.
c.t heburdenoft hetaxwi llbes haredequall
ybe t
we enbuyersands e
ller
s.
d.i ti
simpos si
bletodetermi nehow t heburde nofthetaxwil
lbes hared.
ANSWER: a. buyerswillbearmos toftheburdenoft hetax.
TYPE:M SECTI ON: 2DI FFI
CULTY: 3

166. Buyersofaproductwi l
lpayt hema j
orit
yofataxpl
ace
donapr
oduc
twhe
n
a.s upplyi
smor eelast
icthande mand.
[Link] mandinmor eel
a s
ticthans upply.
[Link] axi
splacedont hesellerofthepr oduc
t.
[Link] axi
splacedont hebuyeroft heproduct
.
ANSWER: a. supplyismor eelasticthande mand.
TYPE:M SECTI ON:2DI FFICULTY: 2

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Chapter 6/Supply, Demand, and Government Policies  183

167. Ifataxisimposedonamar ke twi

the l
ast
icdemanda ndinel
asti
csupply,
a. buyerswil
lbe armos toft heburdenofthetax.
b.s el
lerswil
lbearmos toft heburdenoft hetax.
c.t heburdenoft hetaxwi llbesharedequall
ybe t
weenbuyersands e
ller
s.
d.i ti
simpossibletodetermi nehow theburde noft
hetaxwillbeshared.
ANSWER: b. s
eller
swi l
lbe armos toftheburdenofthetax.
TYPE:M SECTI ON: 2DI FFI
CULTY: 3

168. Whe nat axi

splacedonthese
lle
rsofapr
oduc
titwi
lls
hif
tthe
a.s upplycurvedown.
b.s upplycurveup.
c. demandc urveup.
[Link] urvedown.
ANSWER: [Link].
TYPE:M SECTI ON: 2DIFFICULTY:
2

169. Whichofthefoll
owingisthemostcor
rec
tst
ate
me ntabouttaxbur dens?
a. Ataxburdenfall
smos thea
vil
yonthesi
deofthema rkett
hatismor eelast
ic.
b.A taxburdenfall
smos thea
vil
yonthesi
deofthema rkett
hatismor einel
astic
.
c. Ataxburdenfall
smos thea
vil
yonthesi
deofthema rkett
hatisc l
osertounitelas
tic
.
d.A taxburdenisdistr
ibut
edindepe
ndent
lyofrel
ati
vee l
ast
ici
ti
e sofsupplyanddemand.
ANSWER: b. At axburdenfal
lsmosthe
avi
lyonthesideofthema rketthati
smor einelas
tic
.
TYPE:M SECTION: 2DIFFICULTY: 2

170. Ingeneral,ataxburdenfal
lsmorehe
avi
lyont
hes
ideoft
hemar
kett
hati
s
a. perfec
t l
ye l
ast
ic.
[Link] eelast
ic.
c. unitelasti
c.
[Link] l
astic
.
ANSWER: d. l
essel
asti
c.
TYPE:M SECTI ON: 2DIFFICULTY:2

171. Theburde nofataxplace

donapr oduct
a. dependsonthes uppl
ya nddemandoft ha
tproduct.
[Link] pendsonhow l a
wma kersdecidetheburde
ns houldbeplac
ed.
c. usua
llyfal
lsmorehe avi
lyonthebuye r.
[Link]
lsmor eheavi
lyonthes el
ler
.
ANSWER: a
. depe
ndsont hesupplya nddemandoft hatproduc
t.
TYPE:M SECTI ON: 2DIFFICULTY:2

172. Supposet hatataxispl acedonDVDs .I

fthesel
lere
ndsuppayingt
hema
jor
ityoft
het
axweknow t
hatt
he
a. demandc urveismor eine l
asti
cthanthesupplycur
ve.
b.s uppl
yc ur veismor einelast
icthanthedemandc urve
.
c. gover
nme nthasplacedt hetaxont hesel
ler
.
[Link] r
nme nthasplacedt hetaxont hebuyer.
ANSWER: b. s upplyc urveismor einelas
tict
hanthedemandcurve
.
TYPE:
M SECTION: 2DIFFICULTY: 2

173. Supposethatataxispl acedonbooks .Ifthebuye

rpaysthemajor
ityoft
het
axweknow t
hatt
he
a.s uppl
yc urveismorei nelast
icthanthedemandc urve.
[Link] mandc urveismor eine l
asti
cthanthes upplyc
urve.
c. gover
nme nthasplacedt hetaxont hese l
ler
.
[Link] r
nme nthasplacedt hetaxont hebuye r.
ANSWER: b. de mandc urvei smorei ne
last
icthanthesuppl
yc ur
ve.
TYPE:
M SECTION: 2DIFFI
CULTY: 2

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184  Chapter 6/Supply, Demand, and Government Policies

174. In1990, Congr esspas sedane wl uxurytaxonitemss uc

hasyac
hts
,pr
iva
tea
irpl
ane
s,f
urs
,je
wel
ry,a
nde
xpe
nsi
ve
car
s. Thegoaloft het axwa sto
a.r aisere venuef rom thewe alt
hy .
[Link] e
ve ntrichpe opl efrom buyingluxuri
es.
[Link] cepr oduc e
r sofl uxurygoodst oreduceemployment
.
[Link] te xportsofl uxurygoodst oothercountri
es.
ANSWER: a . r
aisereve nuef r
om thewe alt
hy.
TYPE:M SECTI ON: 2DI FFICULTY: 2

175. Whichofthefoll
owi ngwasNOTar esultofthel uxurytaximpos edbyCongr
essi
n1990?
a. Theburdenofthet axfel
lonsuppli
ers
.
[Link] denofthet axfel
lmoreonthemi ddleclassthanont herich.
c. Thedemandforma nyluxurygoodsfell
.
[Link] r
nme ntr
e venuefrom thet
axincreaseds ubstanti
all
y.
ANSWER: d. Governme ntrevenuefr
om thetaxi ncreasedsubstanti
all
y.
TYPE:
M SECTION: 2DIFFI CULTY: 2

176. Theburdenofaluxurytaxfal
ls
a. moreontheric
hthanont hemiddlec l
ass.
[Link] eonthepoorthanont hemiddleclass
.
c. moreonthemiddleclas
sthanont herich.
[Link]
yont heri
ch,t
hemi ddlecl
ass,andthepoor.
ANSWER: c
. moreonthemi ddlecl
assthanont her
ich.
TYPE:M SECTION: 2DIFFICULTY:2

177. Whenanalyzingthee conomiceffec t

sofgove rnmentpolic
ies,
[Link]
yandde mandar eusef
ultool
sofa nalysi
s.
[Link] hatthee ffectsar
ea l
wa ysthosestat
edinthelegi
sl
a t
ion.
[Link]
yandde mandar enotuse
ful,si
ncet heyapplyonlytounregulat
edmar
ket
s.
[Link] hemt obetherandom out c
omeofe conomicshocks.
ANSWER: a. supplyandde mandareusefultoolsofanalys
is.
TYPE:M SECTI
ON: 2DI FFICULTY: 2

178. Whi c
hoft hefoll
owi ngi stheLEASTl ikelytoresultfr
om theimposi
ti
onofapr
icec
eil
ingi
nthemar
ketf
orr
ent
al
car
s?
a.f r
eegas ol
inegive ntope opleasa ninc ent
ivetoar entc
a r
[Link] nginema intenanceinr ent
alc ars
c. anaccumul ati
onofdi rti
nt heinteriorofrentalcars
d.s l
ow replaceme ntofol drentalcarswi thnew one s
ANSWER: a. freegasolinegivent opeopl easani ncenti
vetoar e
ntca
r
TYPE:M SECTION: 1DI FFICULTY: 2

179. Whi c
hoft hefoll
owi ngi stheMOSTl ikelytoresultf
rom t
hei
mposi
ti
onofapr
icefloori
nthema
rke
tforr
ent
alc
ars
?
a.f r
eegas ol
inegive ntope opleasa ni ncenti
vet oarentc
ar
[Link] nginema intenanceinr entalcars
c. anaccumul ati
onofdi rtonthei nteriorofrentalc
ars
d.s l
ow replaceme ntofol drentalcarswi t
hne w ones
ANSWER: a. freegasolinegiventope opleasa nincenti
vetoare
ntc
ar
TYPE:M SECTION: 1DI FFICULTY: 2

180. Youha ver es

pons i
bili
tyforeconomicpolic
yi [Link] c
entlythenei
ghboringcountryof
Sylvaniahasc utoffal lexportsoforange
st oFre
[Link] ,whoi soneofy ouradvis
ors,suggest
sthatyoushoul
d
impos eabindi ngpric
ece i
li
nginor dertoavoidashort
ageofor [Link],anotheroneofyouradvisors
, a
rgues
thatwi t
houtabi ndingpr i
cefloor ,ashorta
gewi l
lcert
[Link], athir
dadvisor,s
a yst
hatthebestwayto
avoidas hortageoforangesistotakenoactionatall
.Whi chofyourt hreeadvisorsismostl
ikel
yt ohavestudie
d
economi cs?
a. Ha rpo
[Link] co price floor => surplus
c. Ze ppo
[Link] he m
price ceiling => shortage
ANSWER: c. Zeppo
TYPE:M SECTI ON: 1DIFFICULTY: 2

about:blank 26/32
12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

Chapter 6/Supply, Demand, and Government Policies  185

181. Oneeconomi sthasa r

gue dthatrentc ontrolis“ t
hebe stwaytode str
oyac i
ty,ot
he rthanbombi ng.
”Whywoul da n
economis
tsayt hi
s?
a. Hefearsthatlow rentswillcaus elow-incomepe opletomovei ntot
hec i
ty,reduc i
ngt hequalityoflif
eforot he
r
peopl
e.
[Link] earsthatrentcontrolwi l
lbe nefitl a ndlordsattheexpenseoftenants,
inc reasi
ngi nequali
t yi
nthec i
ty.
c. Hefearsthatrentcontrolswi l
lcaus eac onstructi
onboom, whi chwillmaket hec it
yc rowde da ndmor epollut
ed.
[Link] earsthatrentcontrolwi l
leliminatet heincenti
vet omaintainbuil
dings,l
e adingtoade t
eriorat
ionofthec i
ty.
ANSWER: d. Hef e
a rst
ha tr
entc ontrolwi l
lelimina t
etheincenti
vet omaintai
nbui l
di ngs,l
e adi
ngt oade te
rior
ationof
t
hec i
ty.
TYPE:M SECTION: 1DI FFI
CULTY: 2

182. Whi c
hoft hefollowi ngi sthemos tli
kelyexplanati
onf ort
hei
mposit
ionofapricefloori nthema rketf
orcorn?
a. Poli
cyma ke rsha ves t
udi edthee ffe c
tsofthepr i
cefloorcar
eful
lyandrecognizethatt
hepricefloori s
advantageousf ors ocietya sawhol e.
[Link] sands e l
le r
sofc ornha vea greedtha tt
hepr i
cefloori
sgoodforbothoft hema ndhavetheref
orepressur
ed
poli
cyma kersi ntoenac ti
ngt hepr i
cefloor .
c. Buyersofc orn, recognizingtha tt
hepr icefloori sgoodf
orthem,havepres
sure dpoli
cymakersintoenacti
ngthe
pric
efloor .
[Link] l
lersofcorn,r e
cognizingt hatthepr icefloori sgoodf
ort
hem,ha vepr
essuredpolicymakersintoenac
tingthe
pric
efloor .
ANSWER: d. Selle
r sofc orn,re c
ogni zi
ngt hatthepric
efloorisgoodforthem,havepr e
ssuredpoli
cymake rsi
nto
enactingt hepr icefloor .
TYPE:M SECTI ON: 1DI FFICULTY: 2

183. Thel ong-runeffe ctsofrentcontrolsareagoodil

lust
rat
ionoft
hepri
nci
plethat
a.s ocietyfacesas hort-r
untradeoffbe tweenunemploymentandi
nfla t
ion.
b.t hec ostofsomet hingiswha tyougi veuptogetit
.
c. peopl erespondt oi nc
enti
ves.
[Link] rnmentc ans ometimesimpr oveonma rke
toutcomes.
ANSWER: c. peopler espondtoincentives.
TYPE:M SECTI ON: 1DI FFICULTY: 2

184. Whichofthef oll

owi ngstat
eme nt
si strue?
a. Ataxleviedonbuye rswil
lne verevenparti
allybepaidbys e
lle
rs.
[Link] tuall
ypa ysat axdependsont hepri
cee l
ast
ici
tyofsupplyandde
mand.
c. Gover
nme ntcande cidewhoa c
tuallypaysatax.
d.A taxleviedons el
ler
swi l
lalwa ysbepassedonc omplet
elytobuyers
.
ANSWER: b. Whoa ct
uallypaysataxdepe ndsonthepr i
ceel
asti
cit
yofsuppl
yanddema
nd.
TYPE:M SECTION: 2DI FFICULTY: 2

185. Supposethatthede mandf orpict

ureframesispri
ceelast
icandt
hes
uppl
yofpi
c t
uref
ramesi
spri
ceine
las
tic
.Atax
of$1pe rf
ramel e
vi edonbuye rsofpi
cturefr
ameswi l
lincre
aset
hee
qui
li
bri
um pri
cepai
dbybuyer
sofpict
ure
fr
amesby
a. $1.
[Link] et
han$0.5 0butl es
sthan$1.0
0.
c.l es
sthan$0 .
50.
d.I ti
simpossibletos a
ywi t
houtmoreinfor
ma t
ion.
ANSWER: c. l
essthan$ 0.50.
TYPE:M SECTI ON: 2DI FFICULTY: 2

186. Supposethatt
hede mandf orpict
ureframesispri
ceinel
asti
candthesuppl
yofpict
urefr
amesi
spric
eelas
tic
.Atax
of$1pe rf
rameleviedonbuye rsofpi
cturefr
ameswi l
lincr
easet
heequil
ibr
ium pr
icepai
dbybuye
rsofpict
ure
fr
amesby
a. $1.
[Link] et
han$0.50butlessthan$1.0
0.
c.l es
sthan$0.
50.
d.I ti
simpossi
bletos a
ywi t
houtmor einfor
ma t
ion.
ANSWER: b. morethan$0.5
0butl esst
han$1.00.
TYPE:M SECTI ON:2DI FFICULTY: 2

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186  Chapter 6/Supply, Demand, and Government Policies

187. Thede mandf ors alti

spri
cei nela
sti
candt hesupplyofsal
tispri
ceelast
[Link] mandforcaviarispri
cee
las
tica
nd
thesupplyofc aviarispri
ceinelasti
[Link] ethatat
axof$1pe rpoundi slevi
edont hesel
ler
sofs al
tandataxof$1
perpoundi sleviedont hebuyer sofc a
[Link] dexpectt
hatmos tofthesetaxe
swi l
lbepai dbythe
a.s el
ler
sofs altandt hebuyersofc aviar
.
b.s el
ler
sofs altandt hesel
lersofcaviar.
c. buyersofsaltandt hesel
lersofc aviar
.
[Link] rsofsalta ndthebuye rsofcaviar.
ANSWER: c. buye r
sofs al
tandt hes el
lersofcaviar
.
TYPE:M SECTI ON: 2DI FFI
CULTY: 2

188. Supposethatthede ma ndforma c

aronii
spr iceinelast
icandthesupplyofmac aronii
spric
eelas
tic
,andthatt
he
demandf orcigaret
tesispri
ceinel
asti
candt hes upplyofc i
gare
tte
sispriceelas
tic
.Ifataxwer
eleviedonthesel
ler
s
ofbothofthesecommodi t
ies,
wewoul de xpectthatthe
a.s el
ler
sofbot hgoodswoul dpa ymostoft hetax .
[Link] rsofbothgoodswoul dpaymos tofthet ax.
c.s el
ler
sofc iga
rette
sa ndthebuyersofmac aroniwoul dpa ymostofthetax.
[Link] ouldnotbes urewhowoul dact
ua l
lypa ymos toft
hetax.
ANSWER: b. buyersofbothgoodswoul dpa ymos tofthetax.
TYPE:M SECTI ON: 2DI FFICULTY: 2

TRUE/
FALSE

1. Economi
cpoli
cie
sof
tenha
vee
ffe
ctst
hatt
hei
rar
chi
tec
tsdi
dnoti
ntendora
nti
cipa
te.
ANSWER:TTYPE:
T

2. Poli
cymake
rsuset
axe
sbot
htor
ais
ere
venuef
orpubl
icpur
pos
esandt
oinflue
ncemar
ketout
come
s.
ANSWER:TTYPE:T

3. A pr
icec
eil
ingisal
egalmi
nimum ont
hepr
iceofagoodors
ervi
ce.
ANSWER:
FTYPE: T

4. I
fapri
cece
ili
ngof$2pe rgall
onisi
mpos
edongas
oli
ne,butt
hemar
kete
qui
li
bri
um pr
icei
s$1.
50,t
hepr
icec
eil
ingi
s
abi
ndi
ngconstr
aintonthemar k
et.
ANSWER:FTYPE:TSECTI ON: 1

5. Ifapri
cece
ili
ngi
snotbi
ndi
ng,
itwi
llha
venoe
ffe
ctont
hema
rke
t.
ANSWER:TTYPE:TSECTI
ON:1

6. Ifapri
cece
ili
ngi
sbel
ow equi
li
bri
um pr
ice
,thequant
it
yde
mande
dwi
lle
xce
edt
hequant
it
ysuppl
ied.
ANSWER:TTYPE:TSECTI
ON:1

7. Bi
ndingpr
icecei
li
ngsbene
fitc
ons
ume
rsbe
caus
ethe
yal
low c
ons
ume
rst
obuya
llt
hegoodst
heyde
manda
tal
owe
r
pr
ice
.
ANSWER:FTYPE: TSECTION:1

8. Whenfr
eemarke
tsr
ati
ongoodswi
thpr
ice
siti
sbot
heffic
ientandi
mper
sonal
.
ANSWER:
TTYPE:
TSECTION:1

9. Longgasl
inesint
heUnitedSt
atesa
fte
rOPECr
ais
edt
hepr
iceofc
rudeoi
linwor
ldmar
ket
swe
rec
aus
edbyt
he
hi
gherpri
cesofoi
landgas.
ANSWER:FTYPE: TSECTION: 1

10. Thehousi
ngshort
agesc
ause
dbyrentcontr
olsa
relar
geri
nthelongrunthani
nthes
hor
trunbe
caus
ebot
hthe
suppl
yofhousi
nga ndt
hedemandforhousi
ngaremoreel
ast
icint
helongrun.
ANSWER: TTYPE:TSECTION:1

11. Re
ntcont
rol
mayleadtol
owerr
ent
sfort
hos
ewhofindhous
ing,
butt
hequal
it
yoft
hehous
ingma
yal
sobel
owe
r.
ANSWER:TTYPE:TSECTION:1

12. I
fthee
qui
li
bri
um wager
ateis$
4pe
rhour
,andt
hemi
nimum wa
gei
s$5.
15pe
rhour
,as
hor
tageofl
aborwi
lle
xis
t.
ANSWER:FTYPE:TSECTI
ON: 1

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12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

Chapter 6/Supply, Demand, and Government Policies  187

13. A bi
ndi
ngmi
nimum wa
geinac
ompe
tit
ivel
aborma
rke
tcr
eat
esune
mpl
oyme
nt.
ANSWER:TTYPE:
TSECTION:1

14. Mos
teconomi
stsa
rei
nfa
vorofpr
icec
ont
rol
sasawa
yofa
lloc
ati
ngr
esour
cesi
nthee
conomy
.
ANSWER:FTYPE:TSECTI
ON:1

15. Rentsubsi
die
sandwages
ubsi
die
sar
ebe
ttert
hanpr
icec
ont
rol
sathe
lpi
ngt
hepoorbe
caus
ethe
yha
venoc
ost
s
as
sociat
edwitht
hem.
ANSWER: FTYPE:TSECTI
ON: 1

16. Ec
onomis
tsus
ethete
rmt
axinc
ide
ncet
ore
fert
owhoi
sle
gal
lyr
espons
ibl
eforpa
yingt
het
ax.
ANSWER:FTYPE:TSECTI
ON:1

17. I
fbuyer
sofaproductar
erequi
redt
opa
yat
ax,t
hedemandc
urvef
ort
hepr
oduc
twi
lls
hif
tdownwar
dbye
xac
tlyt
he
s
izeoft
hetax.
ANSWER:TTYPE: TSECTION:1

18. A gove
rnmenti
mposedt
axonamar
kets
hri
nkst
hes
izeoft
hema
rke
t.
ANSWER: TTYPE:TSECTI
ON:1

19. A t
axongolfcl
ubswi
llc
aus
ethee
qui
li
bri
um ma
rke
tpr
iceofgol
fcl
ubst
oinc
rea
se,a
ndt
hee
qui
li
bri
um quant
it
y
s
oldtodecre
ase.
ANSWER: TTYPE:TSECTI
ON:1

20. Ifat
axi
simpos
edonthebuye
rofapr
oduc
t,t
het
axi
nci
denc
ewi
llf
alle
nti
rel
yont
hebuye
r,c
aus
ingt
hebuye
rto
paymor
e.
ANSWER:FTYPE:TSECTI
ON: 1

21. A t
axonsell
erss
hif
tsthes
uppl
ycur
veupwa
rdbye
xac
tlyt
hes
izeoft
het
ax.
ANSWER: TTYPE:TSECTION:1

22. Thei
nci
denc
eofataxdepe
ndsonwhe
thert
het
axi
sle
vie
donbuye
rso
rse
lle
rs.
ANSWER:FTYPE:TSECTION:1

23. Sinc
ehalfoft
heFICA t
axi
spaidbyfir
ms,
andt
heot
herha
lfi
spai
dbywor
ker
s,t
hebur
denoft
het
axmus
tfal
l
equal
lyonfir msandworke
rs.
ANSWER: FTYPE:TSECTION:1

24. Lawmakerscandeci
dewhet
hert
hebuye
rort
hes
ell
ermus
tse
ndat
axt
othegove
rnment
,butt
heyc
annotl
egi
sl
ate
thet
rueburdenofatax.
ANSWER:TTYPE: TSECTION:1

25. Whopayst
hema j
ori
tyofat
axl
evi
edonapr
oduc
tde
pendsonwhe
thert
het
axi
spl
ace
dont
hebuye
rort
hes
ell
er.
ANSWER:FTYPE:TSECTION:1

26. I
ngener
al,
ataxbur
denfal
lsmor
ehe
avi
lyont
hes
ideoft
hemar
kett
hati
smor
eine
las
tic
.
ANSWER:
TTYPE: TSECTION:1

27. Mostoft
heburde
nofaluxur
ytaxf
all
sont
hemi
ddl
ecl
asswor
ker
swhos
uppl
yluxur
ygoodsr
athe
rtha
nont
he
r
ichwhobuythem.
ANSWER:TTYPE:TSECTION:1

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12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

188  Chapter 6/Supply, Demand, and Government Policies

SHORTANSWER

1. Usi
ngasuppl
y-de
manddiagr
am, s
how al
abormarke
twit
habindi
ngminimum wa
[Link],
uset
hedi
agr
amt
o
s
how t
hosewhoarehe
lpe
dbyt hemini
mum wage,
andthosewhoar
ehurtbyt
hemini
mum wage
.
ANSWER:

Thos ehe l
pe dbyt hemi nimum wa gea ret hewor kerswhoar e
stil
le mpl oye d,butnow r eceivethehighe rwa [Link] agram,
thos ewoul dbeme asur edbyt hequant ityofl abordemande da t
themi nimum wa ge .Thos ewhoa rehur tbyt hemi ni
mum wa ge
aret hosewhoa renow une mpl [Link] sewor kersareme asur e
d
ast hedi ffe rencebet weent hequant it
yofl abors uppli
e dandt he
quant i
tyde mandeda tthemi nimum wa ge .Thepe rc
eptive
stude ntmi ghtnot etha ttheune mpl oyedgr oupc anbedi vi
de d
intot hosewhol oset heirjobsa sar es
ultoft hemi nimum wa ge
(thec ompe titi
vee quilibri
um quant i
tyofl abormi nusthe
quant i
tyde mandeda tthemi nimum wa ge ),andt hosewhoe nter
themar ke ta sare sultofthehi ghe rwage ,butc annotfind
empl oyme nt( quant i
tyofl abors upplieda tt hemi nimum wa ge
mi nust hec ompe titi
vee quili
br i
um quant ity) .Thebuyer softhe
labor( empl oyers)a r
ea lsowor seoffbec aus ethe yhavet opa ya
highe rwa gef orlabor ,hence,hireas ma ll
erquant i
ty.
TYPE:
SKEY1: GSECTI ON:1OBJ ECTI VE:2RANDOM:Y

2.
a. Usingt hegr aphs hown, analyzet heeffe cta$ 300pr i
ceceil
ingwoul
dha
veont
hemar
ketf
ort
en-
spe
edbi
cyc
les
.
Woul dt hisbeabi ndingpr icec ei
ling?
[Link] ingt hegr aphs hown, analyzet heeffe cta$ 700pr i
cefloor
woul dha veont hismar [Link] dt hisbeabi ndi ngpr icefloor?
c. Whywoul dpol ic
ymake rsc hoos etoimpos eapr i
c eceili
ngor
pricefloor ?
ANSWER:
a. Fort hi
se xampl e,a$300pr icece i
lingwoul dcaus eas horta
geof
4,0
00bi cycle [Link] ic
ec eil
ingi sbindingi fi
tisse ta tanypr i
ce
below equi libri
um pr i
[Link] ethee quil
ibri
um pr iceinthe
mar ketis$ 500, t
hiswoul dbeabi ndingpr i
cec e
iling.
[Link] hi
se xampl e,a$700pr icefloorwoul dc aus eas urplusof
4,0
00bi cycle [Link] ic
efloori sbi ndingifiti
ss eta tanypr ic
e
abovee quilibr i
um pr i
[Link] ethee quil
ibri
um pr i
c einthe
mar ketis$ 500, t
hiswoul dbeabi ndingpr i
cefloor .
c. Mor ethanoner easonma ye xistforpolicymake rst oimpos ea
priceceili
ngorpr i
cefloori namar [Link]
nt hi sisdonei nan
att
e mptt oi ncreaseequity.
TYPE:
SSECTI ON: 1

3. Usingthegr aphshown, answerthef ol

lowingque s
tions.
a. Wha twast heequil
ibri
um priceint hi
smar ketbefor
et hetax
?
[Link] tistheamountoft hetax?
c. How muc hofthetaxwi l
lthebuye rspay?
[Link] muc hofthetaxwi l
lthese l
ler
spa y?
e. How muc hwillt
hebuyerpa yf orthepr oduc
ta f
terthetaxis
imposed?
f. How muc hwillt
hes el
lerrec
eivea f
terthetaxisimpos ed?
[Link] esultoft
hetax ,whathashappe ne dtothelevelofma r
ket
act
ivit
y?
ANSWER: a. $10
b.$3
c. $1
d.$2
e. $11
f. $8

about:blank 30/32
12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

Chapter 6/Supply, Demand, and Government Policies  189

[Link] e
sul
toft
hetax,thel
eve
lofmar
keta
cti
vit
yhasf
all
en,f
rom 1
00uni
tsbe
ingboughta
nds
oldt
oonl
y90uni
ts
bei
ngboughtandsold.
TYPE:
SSECTION:2

4. Usingt hegraphs hown, ans werthef ol

lowingque s
tions.
a. Wha twasthee quil
ibr i
um priceint hi
smar ketbefor
et he
tax?
[Link] ti
sthea mountoft hetax?
c. How muc hoft hetaxwi l
lthebuye rspay?
[Link] muc hoft hetaxwi l
lthese l
ler
spa y?
[Link] muc hwi llt
hebuye rpayf orthepr oductaf
terthetax
isimpos ed?
[Link] muc hwi llt
hes e l
lerrec
eiveafterthetaxisimpos ed?
[Link] es
ultofthetax, wha thasha ppene dtothelevelof
mar ketacti
vit
y?
ANSWER:
a. $10.00
b.$5. 00
c. $2.50
d.$2. 50
e. $12.50
f. $7.50
[Link] es
ultofthetax ,thelevelofmar ketacti
vit
yhasf all
en,f
rom 1
00uni
tsbe
ingboughta
nds
oldt
oonl
y80uni
ts
beingboughta ndsol d.
TYPE:
SS ECTI ON: 2

5. Usingthegr aphs hown, ans werthef ol

lowingque st
ions.
a. Wha twast hee quil
ibrium pricea ndquant i
tyinthismar ke
t
bef
oret het ax?
[Link] tisthea mountoft hetax?
c. How muc hoft het axwi l
lthebuye rspay?
[Link] muc hoft het axwi l
lthese l
ler
spa y?
e. How muc hwi llthebuyerpa yf orthepr oductaf
terthetax
isi
mpos ed?
f. How muc hwi llthes ell
err ec
eivea f
terthetaxisimpos ed?
[Link] esultoft hetax ,wha thashappe nedtothelevelof
marke tacti
vity?
ANSWER:
a. Equil
ibrium pr iceis$ 8a ndequi l
ibri
um i s8,
000units.
[Link] axi s$ 3.
00.
c. Buyerswi llpay$ 1
.00.
[Link] l
lerswi l
lpa y$ 2.00.
e. $9.
00
f. $6.
00
g.I ns
teadof8 ,0
00uni t
sbe ingboughta nds ol
d,only6,000willbeboughtands
old.
TYPE:
SS ECTION: 2

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12/15/24, 7:12 PM Chapter 06 Test bank for practicing before final exam

190  Chapter 6/Supply, Demand, and Government Policies

6. How doe
sel
ast
ici
tya
ffec
tthebur
denofat
ax?J
ust
if
yyourans
werus
ings
uppl
yandde
manddi
agr
ams
.
ANSWER:

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