Question 1

A price floor set above the equilibrium price is a binding constraint.

Accepted Answer

A) True 
 B)False

Question 2

Subsidies are levied when a government wants to:

Accepted Answer

A)   increase its tax revenues.
B)   encourage the consumption of a good it thinks is currently under-produced.
C)   decrease the demand for a product.
D)   provide consumers with a disincentive to buy.E) C) and D)
F) None of the above

Question 3

Which side of the market is more likely to lobby government for a price floor?

Accepted Answer

A)   the buyers
B)   neither buyers nor sellers desire a price floor.
C)   the sellers
D)   both buyers and sellers desire a price floor.E) C) and D)
F) All of the above

Question 4

A binding price ceiling creates

Accepted Answer

A)   a shortage or a surplus depending on whether the price ceiling is set above or below the equilibrium price.
B)   a surplus.
C)   a shortage.
D)   an equilibrium.E) All of the above
F) A) and B)

Question 5

A tax collected from buyers has an equivalent impact to a same size tax collected from sellers.

Accepted Answer

A) True 
 B)False

Question 6

The government decides to reduce air pollution by reducing the use of petrol. It imposes a tax of €0.50 on each litre of petrol sold.
​
a. Should it impose this tax on petrol companies or motorists? Create a graph to justify your answer.
b. If demand for petrol were more elastic, would this tax be more or less effective in reducing the quantity of petrol consumed?
c. To what extent are consumers of petrol and oil industry workers affected by this tax?

Accepted Answer

a. It doesn't matter whether the tax is ...

Question 7

Within the supply and demand model, a tax collected from the sellers of a good shifts the

Accepted Answer

A)   demand curve downward by the size of the tax per unit.
B)   supply curve downward by the size of the tax per unit.
C)   demand curve upward by the size of the tax per unit.
D)   supply curve upward by the size of the tax per unit.E) None of the above
F) C) and D)

Question 8

Suppose the equilibrium price for apartments is €500 per month and the government imposes rent controls of €250. Which of the following is unlikely to occur as a result of the rent controls?

Accepted Answer

A)   There may be long lines of buyers waiting for apartments.
B)   Landlords may discriminate among apartment renters.
C)   Landlords may be offered bribes to rent apartments.
D)   There will be a shortage of housing.
E)   The quality of apartments will improve.F) D) and E)
G) C) and D)

Question 9

Using the graph below, analyse the effect a €700 price floor would have on this market for ten-speed bicycles. Would this be a binding price floor?

Accepted Answer

For this example, a €700 price floor wou...

Question 10

Which of the following causes a surplus of a good?

Accepted Answer

A)   a binding price floor
B)   a binding price ceiling
C)   a tax on the good
D)   More than one of the above is correct.E) B) and D)
F) A) and C)

Question 11

Within the supply and demand model, a tax collected from the buyers of a good shifts the

Accepted Answer

A)   supply curve downward by the size of the tax per unit.
B)   supply curve upward by the size of the tax per unit.
C)   demand curve upward by the size of the tax per unit.
D)   demand curve downward by the size of the tax per unit.E) B) and C)
F) All of the above

Exam 8: Supply, Demand and Government Policies

Using the graph below, analyse the effect a €700 price floor would have on this market for ten-speed bicycles. Would this be a binding price floor?

Correct Answer
verified
For this example, a €700 price floor wou...
View Answer

A price floor set above the equilibrium price is a binding constraint.

Correct Answer
verified

Which side of the market is more likely to lobby government for a price floor?

Correct Answer
verified

Within the supply and demand model, a tax collected from the sellers of a good shifts the

Correct Answer
verified

Within the supply and demand model, a tax collected from the buyers of a good shifts the

Correct Answer
verified

A tax collected from buyers has an equivalent impact to a same size tax collected from sellers.

Correct Answer
verified

A binding price ceiling creates

Correct Answer
verified

Correct Answer
verified
a. It doesn't matter whether the tax is ...
View Answer

Subsidies are levied when a government wants to:

Correct Answer
verified

Suppose the equilibrium price for apartments is €500 per month and the government imposes rent controls of €250. Which of the following is unlikely to occur as a result of the rent controls?

Correct Answer
verified

Which of the following causes a surplus of a good?

Correct Answer
verified

Exam 8: Supply, Demand and Government Policies

Using the graph below, analyse the effect a €700 price floor would have on this market for ten-speed bicycles. Would this be a binding price floor?

Correct AnswerverifiedFor this example, a €700 price floor wou...View AnswerShow Answer

A price floor set above the equilibrium price is a binding constraint.

Correct AnswerverifiedShow Answer

Which side of the market is more likely to lobby government for a price floor?

Correct AnswerverifiedShow Answer

Within the supply and demand model, a tax collected from the sellers of a good shifts the

Correct AnswerverifiedShow Answer

Within the supply and demand model, a tax collected from the buyers of a good shifts the

Correct AnswerverifiedShow Answer

A tax collected from buyers has an equivalent impact to a same size tax collected from sellers.

Correct AnswerverifiedShow Answer

A binding price ceiling creates

Correct AnswerverifiedShow Answer

Correct Answerverifieda. It doesn't matter whether the tax is ...View AnswerShow Answer

Subsidies are levied when a government wants to:

Correct AnswerverifiedShow Answer

Suppose the equilibrium price for apartments is €500 per month and the government imposes rent controls of €250. Which of the following is unlikely to occur as a result of the rent controls?

Correct AnswerverifiedShow Answer

Which of the following causes a surplus of a good?

Correct AnswerverifiedShow Answer

Correct Answer
verified
For this example, a €700 price floor wou...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. It doesn't matter whether the tax is ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified