Question 1

Which of the following is not correct? In a 2006 survey of Ph.D. economists,

Accepted Answer

A) 47 percent favored eliminating the minimum wage. 
B) 14 percent would maintain the minimum wage at its current level. 
C) 38 percent would increase the minimum wage. 
D) 10 percent would decrease the minimum wage. 
A) 47 percent favored eliminating the minimum wage. 
B) 14 percent would maintain the minimum wage at its current level. 
C) 38 percent would increase the minimum wage. 
D) 10 percent would decrease the minimum wage.

Question 2

Figure 6-5  
-Refer to Figure 6-5. Suppose the market is initially in equilibrium. Then the government imposes a price control, as represented by the solid horizontal line on the graph. If the price control is a price floor, then the price control

Accepted Answer

A) causes the quantity demanded to decrease by 50 units, relative to the initial equilibrium. 
B) causes the quantity supplied to increase by 40 units, relative to the initial equilibrium. 
C) means that some firms will not be able to sell all that they want 
D) All of the above are correct. 
A) causes the quantity demanded to decrease by 50 units, relative to the initial equilibrium. 
B) causes the quantity supplied to increase by 40 units, relative to the initial equilibrium. 
C) means that some firms will not be able to sell all that they want 
D) All of the above are correct.

Question 3

Price ceilings are typically imposed to benefit sellers.

Accepted Answer

A) True 
 B)False

Question 4

Figure 6-33  
-Refer to Figure 6-33. Suppose a $4 per-unit tax is imposed on the sellers of this good. How many units of this good will be sold after the tax is imposed?

Accepted Answer

With a $4 per-unit t

Question 5

Figure 6-17
This figure shows the market demand and market supply curves for good Y  
-Refer to Figure 6-17. A government-imposed price of $12 in this market is an example of a

Accepted Answer

A) binding price ceiling that creates a shortage. 
B) non-binding price ceiling that creates a shortage. 
C) binding price floor that creates a surplus. 
D) non-binding price floor that creates a surplus. 
A) binding price ceiling that creates a shortage. 
B) non-binding price ceiling that creates a shortage. 
C) binding price floor that creates a surplus. 
D) non-binding price floor that creates a surplus.

Question 6

A tax on sellers increases the quantity of the good sold in the market.

Accepted Answer

A) True 
 B)False

Question 7

The price received by sellers in a market will increase if the government

Accepted Answer

A) decreases a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) increases a tax on the good sold in that market. 
D) imposes a binding price ceiling in that market. 
A) decreases a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) increases a tax on the good sold in that market. 
D) imposes a binding price ceiling in that market.

Question 8

The price paid by buyers in a market will increase if the government (i)
Increases a binding price floor in that market.
(ii)
Increases a binding price ceiling in that market.
(iii)
Decreases a tax on the good sold in that market.

Accepted Answer

A) (ii) only 
B) (iii) only 
C) (i) and (ii) only 
D) (i), (ii), and (iii) 
A) (ii) only 
B) (iii) only 
C) (i) and (ii) only 
D) (i), (ii), and (iii)

Question 9

Figure 6-22  
-Refer to Figure 6-22. The amount of the tax per unit is

Accepted Answer

A) $2.00. 
B) $1.50. 
C) $3.00. 
D) $0.50. 
A) $2.00. 
B) $1.50. 
C) $3.00. 
D) $0.50.

Question 10

Price floors are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 11

A $0.10 tax levied on the sellers of chocolate bars will cause the

Accepted Answer

A) supply curve for chocolate bars to shift down by $0.10. 
B) supply curve for chocolate bars to shift up by $0.10. 
C) demand curve for chocolate bars to shift down by $0.10. 
D) demand curve for chocolate bars to shift up by $0.10. 
A) supply curve for chocolate bars to shift down by $0.10. 
B) supply curve for chocolate bars to shift up by $0.10. 
C) demand curve for chocolate bars to shift down by $0.10. 
D) demand curve for chocolate bars to shift up by $0.10.

Question 12

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 13

FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-27
This figure shows the market demand and market supply curves for good Z.  
-Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A) less than 8 units 
B) 8 units 
C) between 8 units and 10 units 
D) greater than 10 units 
A) less than 8 units 
B) 8 units 
C) between 8 units and 10 units 
D) greater than 10 units

Question 15

The tax burden falls more heavily on the side of the market that is more inelastic.

Accepted Answer

A) True 
 B)False

Question 16

When a tax is placed on the sellers of a product, the

Accepted Answer

A) size of the market decreases. 
B) effective price received by sellers decreases, and the price paid by buyers increases. 
C) supply of the product decreases. 
D) All of the above are correct. 
A) size of the market decreases. 
B) effective price received by sellers decreases, and the price paid by buyers increases. 
C) supply of the product decreases. 
D) All of the above are correct.

Question 17

If a price floor is not binding, then

Accepted Answer

A) there will be a surplus in the market. 
B) there will be a shortage in the market. 
C) there will be no effect on the market price or quantity sold. 
D) the market will be less efficient than it would be without the price floor. 
A) there will be a surplus in the market. 
B) there will be a shortage in the market. 
C) there will be no effect on the market price or quantity sold. 
D) the market will be less efficient than it would be without the price floor.

Question 18

Figure 6-26  
-Refer to Figure 6-26. How much tax revenue does this tax produce for the government?

Accepted Answer

A) $480 
B) $640 
C) $360 
D) $120 
A) $480 
B) $640 
C) $360 
D) $120

Question 19

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. If the government imposes a price floor of $7 on this market, then there will be

Accepted Answer

A) no surplus. 
B) a surplus of 10 units. 
C) a surplus of 15 units. 
D) a surplus of 20 units. 
A) no surplus. 
B) a surplus of 10 units. 
C) a surplus of 15 units. 
D) a surplus of 20 units.

Question 20

Which of the following statements is correct?

Accepted Answer

A) A tax levied on buyers will never be partially paid by sellers. 
B) Who actually pays a tax depends on the price elasticities of supply and demand. 
C) Government can decide who actually pays a tax. 
D) A tax levied on sellers always will be passed on completely to buyers. 
A) A tax levied on buyers will never be partially paid by sellers. 
B) Who actually pays a tax depends on the price elasticities of supply and demand. 
C) Government can decide who actually pays a tax. 
D) A tax levied on sellers always will be passed on completely to buyers.

Exam 6: Supply, Demand, and Government Policies

Which of the following is not correct? In a 2006 survey of Ph.D. economists,

Figure 6-5 -Refer to Figure 6-5. Suppose the market is initially in equilibrium. Then the government imposes a price control, as represented by the solid horizontal line on the graph. If the price control is a price floor, then the price control

Price ceilings are typically imposed to benefit sellers.

Figure 6-33 -Refer to Figure 6-33. Suppose a $4 per-unit tax is imposed on the sellers of this good. How many units of this good will be sold after the tax is imposed?

Figure 6-17 This figure shows the market demand and market supply curves for good Y -Refer to Figure 6-17. A government-imposed price of $12 in this market is an example of a

A tax on sellers increases the quantity of the good sold in the market.

The price received by sellers in a market will increase if the government

The price paid by buyers in a market will increase if the government (i) Increases a binding price floor in that market. (ii) Increases a binding price ceiling in that market. (iii) Decreases a tax on the good sold in that market.

Figure 6-22 -Refer to Figure 6-22. The amount of the tax per unit is

Price floors are typically imposed to benefit buyers.

A $0.10 tax levied on the sellers of chocolate bars will cause the

Price ceilings are typically imposed to benefit buyers.

FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

The tax burden falls more heavily on the side of the market that is more inelastic.

When a tax is placed on the sellers of a product, the

If a price floor is not binding, then

Figure 6-26 -Refer to Figure 6-26. How much tax revenue does this tax produce for the government?

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price floor of $7 on this market, then there will be

Which of the following statements is correct?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

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