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Chapter 6 practice questions



Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
 

1. 

A binding price ceiling causes
a.
a shortage, which cannot be eliminated through market adjustment.
b.
a surplus, which cannot be eliminated through market adjustment.
c.
a shortage, which is temporary, since market adjustment will cause price to rise.
d.
a surplus, which is temporary, since market adjustment will cause price to rise.
 

2. 

A price ceiling that is not binding will
a.
cause a surplus in the market.
b.
cause a shortage in the market.
c.
cause the market to be less efficient.
d.
have no effect on the market price.
 
 
Figure 6-1
chapter_6_practice__files/i0040000.jpg
 

3. 

Refer to Figure 6-1. A binding price ceiling is shown in
a.
panel (a).
b.
panel (b).
c.
both panel (a) and panel (b).
d.
neither panel (a) nor panel (b).
 
 
Figure 6-2
chapter_6_practice__files/i0060000.jpg
 

4. 

Refer to Figure 6-2. If the government imposes a binding price floor of $14.00 in this market, the result would be a
a.
surplus of 20.
b.
surplus of 40.
c.
shortage of 20.
d.
shortage of 40.
 

5. 

Over time, housing shortages caused by rent control
a.
increase, because the demand and supply curves for housing are more elastic in the long run.
b.
increase, because the demand and supply curves for housing are more inelastic in the long run.
c.
decrease, because the demand and supply curves for housing are more inelastic in the long run.
d.
change very little since price is not allowed to adjust.
 

6. 

Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because
a.
with shortages and waiting lists, they have no incentive to maintain and improve their property.
b.
they know they can never please their tenants.
c.
the law no longer requires them to maintain their buildings.
d.
it becomes the government's responsibility.
 

7. 

The equilibrium wages of teenagers tend to be
a.
low because teenagers are among the least skilled and least experienced workers.
b.
high because teenagers are among the strongest and most energetic workers.
c.
low because most teenagers live at home and do not require high wages.
d.
high because teenagers tend to join unions.
 
 
Figure 6-8
chapter_6_practice__files/i0110000.jpg
 

8. 

Refer to Figure 6-8. The price sellers receive after the tax is imposed is
a.
$8.00.
b.
$6.00.
c.
$5.00.
d.
$3.00.
 

9. 

Refer to Figure 6-8. The amount of the tax that sellers would pay would be
a.
$1.00.
b.
$1.50.
c.
$2.00.
d.
$3.00.
 

10. 

Although lawmakers legislated a fifty-fifty division in the payment of the FICA tax
a.
the same outcome would occur if the entire tax had been levied on only the worker or only on the firm.
b.
the employer now is required by law to pay a larger percentage of the tax.
c.
the employee now is required by law to pay a larger percentage of the tax.
d.
employers are no longer required by law to pay their portion of the tax.
 



 
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