Chapter 6Supply, Demand, and Government PoliciesTRUE/FALSE1. Econo mic policies ofte n have effects that their architects did n ot intend or an ticipate.ANS: TDIF:1REF: 6-0NAT: An alyticLOC:The study of econo mics and defi niti ons of econo micsTOP: Public policyMSC: Defi nitio nal2. Ren t-c on trol laws dictate a mini mum rent that Ian dlords may charge tenan ts.ANS: FDIF:1REF: 6-0NAT: An alyticLOC: Supply and dema ndTOP:Ren t co ntrolMSC:Defi nitio nal3. Mini mum-wage laws dictate the lowest wage that firms may pay workers.ANS: TDIF:1REF: 6-0NAT: An alyticLOC: Labor marketsTOP:Mi ni mum wageMSC:Defi nitio nal4. Price con trols are usually en acted whe n policymakers believe that the market price of a good or service is un fair to buyers or sellers.ANS:TDIF:1REF:6-0NAT:An alyticLOC:Supply and dema ndTOP:Price con trolsMSC:Defin iti onal5.Price con trols can gen erate in equities.ANS:TDIF:1REF:6-0NAT:An alyticLOC:Supply and dema ndTOP:Price con trolsMSC:Defin iti onal6.Policymakers use taxes to raise reve nue for public purposes and to in flue nce market outcomes.ANS:TDIF:1REF:6-0NAT:An alyticLOC:Supply and dema ndTOP:TaxesMSC: Defi nitio nal7. If a good or service is sold in a competitive market free of gover nment regulati on, the n the price of the good or service adjusts to bala nee supply and dema nd.ANS: TDIF:1REF: 6-1NAT:MSC:An alytic Defin iti onalLOC:Supply and dema ndTOP:Prices8.At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want tosell.ANS:TDIF:1REF:6-1NAT:An alyticLOC:Supply and dema ndTOP:PricesMSC:Defin iti onal9.A price ceili ng is a legal mini mum on the price at which a good or service can be sold.ANS:FDIF:1REF:6-1NAT:An alyticLOC:Supply and dema ndTOP:Price ceili ngsMSC:Defin iti onal10.A price ceiling set above the equilibrium price is not binding.ANS:TDIF:2REF:6-1NAT:An alyticLOC:Supply and dema ndTOP:Price ceili ngsMSC:In terpretive11. If a price ceiling is not binding, then it will have no effect on the market.ANS: T DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demand TOP: Price ceilingsMSC: Interpretive12. To be binding, a price ceiling must be set above the equilibrium price.ANS: F DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demand TOP: Price ceilingsMSC: Interpretive13. A price ceiling set below the equilibrium price is binding.ANS: T DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demand TOP: Price ceilingsMSC: Interpretive14. A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.ANS: T DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demand TOP: Price ceilings | Shortages MSC: Interpretive15. A price ceiling set above the equilibrium price causes quantity demanded to exceed quantity supplied.ANS: F DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demand TOP: Price ceilingsMSC: Interpretive16. A binding price ceiling causes quantity demanded to be less than quantity supplied.ANS: F DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demand TOP: Price ceilings | Shortages MSC: Interpretive17. A price ceiling set below the equilibrium price causes a shortage in the market.ANS: T DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demand TOP: Price ceilings | Shortages MSC: Interpretive18. A price ceiling set above the equilibrium price causes a surplus in the market.ANS: F DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demand TOP: Price ceilingsMSC: Interpretive19. A binding price ceiling causes a shortage in the market.ANS: T DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demand TOP: Price ceilings | Shortages MSC: Interpretive20. When a binding price ceiling is imposed on a market for a good, some people who want to buy the good cannot do so.ANS: T DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demand TOP: Price ceilings | Shortages MSC: Interpretive21. Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.ANS: T DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demand TOP: Price ceilingsMSC: Interpretive22. Price ceilings are typically imposed to benefit buyers.ANS: T DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demand TOP: Price ceilings MSC: Interpretive23. Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at alower price.ANS: F DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demandTOP: Price ceilingsMSC: Interpretive24. All buyers benefit from a binding price ceiling.ANS: F DIF: 2 REF: 6-1NAT: Analytic LOC: Supply and demandTOP: