Question 1

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,

Accepted Answer

A) quantity demanded decreases. 
B) quantity supplied increases. 
C) there is a surplus. 
D) All of the above are correct. 
A) quantity demanded decreases. 
B) quantity supplied increases. 
C) there is a surplus. 
D) All of the above are correct.

Question 2

A tax on buyers will shift the

Accepted Answer

A) demand curve upward by the amount of the tax. 
B) demand curve downward by the amount of the tax. 
C) supply curve upward by the amount of the tax. 
D) supply curve downward by the amount of the tax. 
A) demand curve upward by the amount of the tax. 
B) demand curve downward by the amount of the tax. 
C) supply curve upward by the amount of the tax. 
D) supply curve downward by the amount of the tax.

Question 3

A price ceiling is binding when it is set

Accepted Answer

A) above the equilibrium price, causing a shortage. 
B) above the equilibrium price, causing a surplus. 
C) below the equilibrium price, causing a shortage. 
D) below the equilibrium price, causing a surplus. 
A) above the equilibrium price, causing a shortage. 
B) above the equilibrium price, causing a surplus. 
C) below the equilibrium price, causing a shortage. 
D) below the equilibrium price, causing a surplus.

Question 4

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A) buyers will bear a greater burden of the tax than the sellers. 
B) sellers will bear a greater burden of the tax than the buyers. 
C) buyers and sellers are likely to share the burden of the tax equally. 
D) buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information. 
A) buyers will bear a greater burden of the tax than the sellers. 
B) sellers will bear a greater burden of the tax than the buyers. 
C) buyers and sellers are likely to share the burden of the tax equally. 
D) buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

Question 5

If a tax is levied on the buyers of a product, then there will be a(n)

Accepted Answer

A) upward shift of the demand curve. 
B) downward shift of the demand curve. 
C) movement up and to the left along the demand curve. 
D) movement down and to the right along the demand curve. 
A) upward shift of the demand curve. 
B) downward shift of the demand curve. 
C) movement up and to the left along the demand curve. 
D) movement down and to the right along the demand curve.

Question 6

Figure 6-6  
-Refer to Figure 6-6. If the government imposes a price floor of $6 on this market, then there will be

Accepted Answer

A) no surplus. 
B) a surplus of 20 units. 
C) a surplus of 30 units. 
D) a surplus of 40 units. 
A) no surplus. 
B) a surplus of 20 units. 
C) a surplus of 30 units. 
D) a surplus of 40 units.

Question 7

Which of the following is correct? A tax burden

Accepted Answer

A) falls more heavily on the side of the market that is more elastic. 
B) falls more heavily on the side of the market that is less elastic. 
C) falls more heavily on the side of the market that is closest to unit elastic. 
D) is distributed independently of the relative elasticities of supply and demand. 
A) falls more heavily on the side of the market that is more elastic. 
B) falls more heavily on the side of the market that is less elastic. 
C) falls more heavily on the side of the market that is closest to unit elastic. 
D) is distributed independently of the relative elasticities of supply and demand.

Question 8

Scenario 6-2
Suppose demand for a product is given by the equation   and supply for the product is given by the equation  
-Refer to Scenario 6-2. What are the equilibrium price and equilibrium quantity in the market for this product?

Accepted Answer

The equilibrium pric

Question 9

Figure 6-32  
-Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at $55 would

Question 10

Figure 6-2  
-Refer to Figure 6-2. The price ceiling

Accepted Answer

A) causes a shortage of 40 units. 
B) is not binding, because it is set above the equilibrium price. 
C) causes a shortage of 45 units. 
D) causes a shortage of 85 units. 
A) causes a shortage of 40 units. 
B) is not binding, because it is set above the equilibrium price. 
C) causes a shortage of 45 units. 
D) causes a shortage of 85 units.

Question 11

Figure 6-33  
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. What is the effective price that sellers will receive for the good after the tax is imposed?

Accepted Answer

The effective price

Question 12

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not correct?

Accepted Answer

A) Taxes levied on sellers and taxes levied on buyers are not equivalent. 
B) A tax places a wedge between the price that buyers pay and the price that sellers receive. 
C) The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers. 
D) In the new after-tax equilibrium, buyers and sellers share the burden of the tax. 
A) Taxes levied on sellers and taxes levied on buyers are not equivalent. 
B) A tax places a wedge between the price that buyers pay and the price that sellers receive. 
C) The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers. 
D) In the new after-tax equilibrium, buyers and sellers share the burden of the tax.

Question 14

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. 
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.

Question 15

A surplus results when a

Accepted Answer

A) nonbinding price floor is imposed on a market. 
B) nonbinding price floor is removed from a market. 
C) binding price floor is imposed on a market. 
D) binding price floor is removed from a market. 
A) nonbinding price floor is imposed on a market. 
B) nonbinding price floor is removed from a market. 
C) binding price floor is imposed on a market. 
D) binding price floor is removed from a market.

Question 16

Workers with high skills and much experience are not typically affected by the minimum wage.

Accepted Answer

A) True 
 B)False

Question 17

Table 6-3
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $2 above the equilibrium price in this market.  
-Refer to Table 6-3. Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting shortage is

Accepted Answer

A) 0 units. 
B) 2 units. 
C) 5 units. 
D) 7 units. 
A) 0 units. 
B) 2 units. 
C) 5 units. 
D) 7 units.

Question 18

A tax imposed on the sellers of a good will

Accepted Answer

A) raise both the price buyers pay and the effective price sellers receive. 
B) raise the price buyers pay and lower the effective price sellers receive. 
C) lower the price buyers pay and raise the effective price sellers receive. 
D) lower both the price buyers pay and the effective price sellers receive. 
A) raise both the price buyers pay and the effective price sellers receive. 
B) raise the price buyers pay and lower the effective price sellers receive. 
C) lower the price buyers pay and raise the effective price sellers receive. 
D) lower both the price buyers pay and the effective price sellers receive.

Question 19

Figure 6-32  
-Refer to Figure 6-32. If the government set a price ceiling at $80, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $80 wou

Question 20

Which of the following is not correct?

Accepted Answer

A) Economists have two roles: scientist and policy adviser. 
B) As scientists, economists develop and test theories to explain the world around them. 
C) Economic policies rarely have effects that their architects did not intend or anticipate. 
D) As policy advisers, economists use their theories to help change the world for the better. 
A) Economists have two roles: scientist and policy adviser. 
B) As scientists, economists develop and test theories to explain the world around them. 
C) Economic policies rarely have effects that their architects did not intend or anticipate. 
D) As policy advisers, economists use their theories to help change the world for the better.

Exam 6: Supply, Demand, and Government Policies

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,

A tax on buyers will shift the

A price ceiling is binding when it is set

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

If a tax is levied on the buyers of a product, then there will be a(n)

Figure 6-6 -Refer to Figure 6-6. If the government imposes a price floor of $6 on this market, then there will be

Which of the following is correct? A tax burden

Scenario 6-2 Suppose demand for a product is given by the equation and supply for the product is given by the equation -Refer to Scenario 6-2. What are the equilibrium price and equilibrium quantity in the market for this product?

Figure 6-32 -Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-2 -Refer to Figure 6-2. The price ceiling

Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. What is the effective price that sellers will receive for the good after the tax is imposed?

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Which of the following is not correct?

Which of the following causes a surplus of a good?

A surplus results when a

Workers with high skills and much experience are not typically affected by the minimum wage.

A tax imposed on the sellers of a good will

Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $80, would there be a shortage or surplus, and how large would be the shortage/surplus?

Which of the following is not 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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