Microeconomics chp6

1 Price controls are usually enacted O A as a means of raising revenue for public purposes. O B when policymakers believe that the market price of a good or service is unfair to buyers or sellers. O C when policymakers detect inefficiencies in a market. O D All of the above are correct. Price controls O A always produce an equitable outcome. O B always produce an efficient outcome. O C can generate inequities of their own. O D produce revenue for the government. 3 A legal maximum price at which a good can be sold is a price O A floor. Q B stabilization. O C support. O D ceiling. 4 A price ceiling will be binding only if it is set O A equal to equilibrium price. Q B above equilibrium price. O C below equilibrium price. Q) D none of the above; a price onling is never binding.A price ceiling that is not binding wil O A cause a surplus in the market. O B cause a shortage in the market. O C cause the market to be less efficient than it would be without the price ceiling. O D have no effect on the market price. A price floor is binding if it O A is set lower than the equilibrium market price. O B results in an observed price that is the same as the equilibrium price. O C leads to a surplus. O D is strictly enforced by the government. 7 An example of a price floor is O A the regulation of gasoline prices in the U.S. in the 1970s. O B rent control. C the minimum wage. Q D any restriction on price that leads to a shortage. 8 Which of the following statements is correct? O A A price oniling is not binding when the price ceiling is set above the equilibrium price. O B A price floor is not binding when the price floor is set below the equilibrium price. O C A binding price oailing causes a shortage and a binding price floor causes a surplus. Q D All of the above are correct.Over time, housing shortages caused by rent control O A increase, because the demand for, and supply of, housing are less elastic in the long run. O B increase, because the demand for, and supply of, housing are more elastic in the long run. O C decrease, because the demand for, and supply of, housing are less elastic in the long run. O D decrease, because the demand for, and supply of, housing are more elastic in the long run. The minimum wage is an example of A a prion ceiling. O B a price floor. O C a wage subsidy. O D a price control that is not binding. If buyers are required to pay a $0.10 tax per bag on Hershey's kisses, the demand curve for kisses will shift O A upward by $0.10 per bag O B upward by $0.06 per bag. O C downward by $0.10 per bag. O D downward by $0.05 per bag- When a tax is imposed on tea and buyers of tea are required to send in the tax payments to the government, O A buyers of tea and sellers of tea both are made worse off. B buyers of tea are made worse off and the well-being of sellers is unaffected. O C buyers of tea are made worse off and sellers of tea are made better-off. O D the well-being of both buyers of tea and sellers of tea is unaffected.13 [40 10] $2 00 tax placed on the sellers of mailboxes will shift the supply curve O A upward by exactly $2.00. J B upward by less than $2.00. O C downward by exactly $2.00. O D downward by less than $2.00. If a tax is imposed on a market with elastic demand and inelastic supply, O A buyers will bear most of the burden of the fax. Q B sellers will bear most of the burden of the tax. Q C the burden of the tax will be shared equally between buyers and sellers. O D it is impossible to determine how the burden of the tax will be shared. 15 [402] Which of the following statements is true? O A A tax levied on buyers will never be even partially paid by sellers. B Who actually pays a tax depends on the price clasticities of supply and demand. Q C Government can decide who actually pays a tax. O D A tax levied on sellers always will be passed on completely to buyers