Mankiw Chapter 6 Exam Review
MULTIPLE CHOICE
1. In a competitive market free of government regulation…
2. Policymakers use taxes for…
3. The presence of a price control in a market for a good or service usually is an indication that…
4. Minimum-wage laws dictate…
5. Rent-control laws dictate…
Figure 6-8
price of gasoline S2
P3 S1
P2 price ceiling
P1
D Q3 Q1 quantity of gasoline
6. Refer to Figure 6-8. When the price ceiling applies in this market and the supply curve for gasoline
shifts from S2 to S1…
7. Refer to Figure 6-8. When the price ceiling applies in this market and the supply curve for gasoline
shifts from S1 to S2, the resulting quantity of gasoline that is bought and sold is…
8. Refer to Figure 6-8. Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s…
Figure 6-4 price 10 S 9
8
7
6
5
4
3 D 2
1
10 20 30 40 50 60 70 80 quantity
9. Refer to Figure 6-4. For a price ceiling to be binding in this market, it would have to be set at…
10. Refer to Figure 6-4. For a price floor to be binding in this market, it would have to be set at…
11. Refer to Figure 6-4. Which of the following price controls would cause a shortage of twenty units of the good?
12. Refer to Figure 6-4. Which of the following price controls would cause a surplus of twenty units of the good?
13. Refer to Figure 6-4. Suppose a price ceiling of $5 is imposed on this market. As a result…
14. Refer to Figure 6-4. Suppose a price floor of $7 is imposed on this market. As a result…
15. Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?
16. If a price ceiling is not binding, then…
17. If a nonbinding price ceiling is imposed on a market, then…
18. A price ceiling is binding when it is set…
19. If a price ceiling is a binding constraint on a market, then…
20. Suppose the government has imposed a price ceiling on televisions. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?
21. If the government removes a binding price ceiling from a market, then the price paid by buyers will…
22. In response to a shortage caused by the imposition of a binding price ceiling on a market…
24. In a free, competitive market, what is the rationing mechanism?
25. Rent control does what?
26. Which of the following statements about the effects of rent control is correct? 27. One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?
28. Under rent control, tenants can expect…
29. A legal minimum on the price at which a good can be sold is called a price ______.
30. A price floor is…
31. If a price floor is not binding, then…
32. A price floor is binding when it is set…
35. If the minimum wage exceeds the equilibrium wage, then…
36. A minimum wage that is set above a market's equilibrium wage will result in…
37. A minimum wage that is set below a market's equilibrium wage will result in…
39. Price ceilings and price floors that are binding
Table 6-1
Price Quantity Quantity Demanded Supplied $0 12 0 $1 10 2 $2 8 4 $3 6 6 $4 4 8 $5 2 10 $6 0 12
40. Refer to Table 6-1. Which of the following price ceilings would be binding in this market?
41. Refer to Table 6-1. Which of the following price floors would be binding in this market?
42. Refer to Table 6-1. Suppose the government imposes a price ceiling of $1 on this market. What will be the size of the shortage in this market?
43. Refer to Table 6-1. Suppose the government imposes a price ceiling of $5 on this market. What will be the size of the shortage in this market?
44. Refer to Table 6-1. Suppose the government imposes a price floor of $1 on this market. What will be the size of the surplus in this market?
45. Refer to Table 6-1. Suppose the government imposes a price floor of $5 on this market. What will be the size of the surplus in this market?
Figure 6-12 price S after tax 9
8
7 S 6
5
4
3
2 D 1
2 4 6 8 10 12 14 16 quantity
46. Refer to Figure 6-12. The price paid by buyers after the tax is imposed is ______.
47. Refer to Figure 6-12. The effective price received by sellers after the tax is imposed is ______.
50. Refer to Figure 6-12. How much tax revenue does this tax produce for the government? _____.