Question 1

A tax on the buyers of personal computer external hard drives encourages

Accepted Answer

A) sellers to supply a smaller quantity at every price. 
B) buyers to demand a smaller quantity at every price. 
C) buyers to demand a larger quantity at every price. 
D) Both a and b are correct. 
A) sellers to supply a smaller quantity at every price. 
B) buyers to demand a smaller quantity at every price. 
C) buyers to demand a larger quantity at every price. 
D) Both a and b are correct.

Question 2

The burden of a luxury tax falls

Accepted Answer

A) more on the rich than on the middle class. 
B) more on the poor than on the rich. 
C) more on the middle class than on the rich. 
D) equally on the rich, the middle class, and the poor. 
A) more on the rich than on the middle class. 
B) more on the poor than on the rich. 
C) more on the middle class than on the rich. 
D) equally on the rich, the middle class, and the poor.

Question 3

After OPEC raised the price of crude oil in the 1970's, which of the following was the most important reason that there were shortages of gasoline?

Accepted Answer

A) ​Americans drove large, gas-guzzling vehicles. 
B) ​The increase in the price of crude oil by OPEC. 
C) ​The effects of a price ceiling on gasoline prices imposed by the US government. 
D) ​Increased commuting times resulting from traffic congestion. 
A) ​Americans drove large, gas-guzzling vehicles. 
B) ​The increase in the price of crude oil by OPEC. 
C) ​The effects of a price ceiling on gasoline prices imposed by the US government. 
D) ​Increased commuting times resulting from traffic congestion.

Question 4

The imposition of a binding price ceiling on a market causes

Accepted Answer

A) quantity demanded to be greater than quantity supplied. 
B) quantity demanded to be less than quantity supplied. 
C) quantity demanded to be equal to quantity supplied. 
D) the price of the good to be greater than its equilibrium price. 
A) quantity demanded to be greater than quantity supplied. 
B) quantity demanded to be less than quantity supplied. 
C) quantity demanded to be equal to quantity supplied. 
D) the price of the good to be greater than its equilibrium price.

Question 5

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i)
Supply is more elastic than the demand.(ii)
Demand in more elastic than the supply.
(iii)
Tax is placed on the sellers of the product.
(iv)
Tax is placed on the buyers of the product.

Accepted Answer

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

Question 6

To say that a price ceiling is nonbinding is to say that the price ceiling

Accepted Answer

A) results in a surplus. 
B) is set above the equilibrium price. 
C) causes quantity demanded to exceed quantity supplied. 
D) All of the above are correct. 
A) results in a surplus. 
B) is set above the equilibrium price. 
C) causes quantity demanded to exceed quantity supplied. 
D) All of the above are correct.

Question 7

The demand for salt is inelastic, and the supply of salt is elastic. The demand for caviar is elastic, and the supply of caviar is inelastic. Suppose that a tax of $1 per pound is levied on the sellers of salt, and a tax of $1 per pound is levied on the buyers of caviar. We would expect that most of the burden of these taxes will fall on

Accepted Answer

A) sellers of salt and the buyers of caviar. 
B) sellers of salt and the sellers of caviar. 
C) buyers of salt and the sellers of caviar. 
D) buyers of salt and the buyers of caviar. 
A) sellers of salt and the buyers of caviar. 
B) sellers of salt and the sellers of caviar. 
C) buyers of salt and the sellers of caviar. 
D) buyers of salt and the buyers of caviar.

Question 8

Since the FICA tax is split equally between employers and employees, we can conclude that the incidence of this tax is also equally shared.​

Accepted Answer

A) True 
 B)False

Question 9

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 10

A price ceiling set below the equilibrium price is nonbinding.

Accepted Answer

A) True 
 B)False

Question 11

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Accepted Answer

A) both taxes would fall more heavily on the buyers than on the sellers. 
B) the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C) the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D) both taxes would fall more heavily on the sellers than on the buyers. 
A) both taxes would fall more heavily on the buyers than on the sellers. 
B) the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C) the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D) both taxes would fall more heavily on the sellers than on the buyers.

Question 12

Figure 6-18
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-18. The effective price that sellers receive after the tax is imposed is

Accepted Answer

A) $6. 
B) $10. 
C) $16. 
D) $24. 
A) $6. 
B) $10. 
C) $16. 
D) $24.

Question 13

Scenario 6-1
Suppose that demand in the market for good X is given by the equation   and that supply in the market for good X is given by the equation  
-Refer to Scenario 6-1. If the government set a price ceiling at $12, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $12 wou

Question 14

Figure 6-6  
-Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?

Accepted Answer

A) a price ceiling set at $8 
B) a price ceiling set at $6 
C) a price floor set at $8 
D) a price floor set at $6 
A) a price ceiling set at $8 
B) a price ceiling set at $6 
C) a price floor set at $8 
D) a price floor set at $6

Question 15

A tax on golf clubs will cause buyers of golf clubs to pay a higher price, sellers of golf clubs to receive a lower price, and fewer golf clubs to be sold.

Accepted Answer

A) True 
 B)False

Question 16

​The distribution of the burden of a tax depends strictly on the elasticity of supply.

Accepted Answer

A) True 
 B)False

Question 17

A binding minimum wage may not help all workers, but it does not hurt any workers.

Accepted Answer

A) True 
 B)False

Question 18

When a payroll tax is enacted, the wage received by workers

Accepted Answer

A) falls, and the wage paid by firms rises. 
B) falls, and the wage paid by firms falls. 
C) rises, and the wage paid by firms falls. 
D) rises, and the wage paid by firms rises. 
A) falls, and the wage paid by firms rises. 
B) falls, and the wage paid by firms falls. 
C) rises, and the wage paid by firms falls. 
D) rises, and the wage paid by firms rises.

Question 19

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 20

A tax on sellers reduces the size of a market.

Accepted Answer

A) True 
 B)False

A tax on the buyers of personal computer external hard drives encourages

The burden of a luxury tax falls

After OPEC raised the price of crude oil in the 1970's, which of the following was the most important reason that there were shortages of gasoline?

The imposition of a binding price ceiling on a market causes

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i) Supply is more elastic than the demand.(ii) Demand in more elastic than the supply. (iii) Tax is placed on the sellers of the product. (iv) Tax is placed on the buyers of the product.

To say that a price ceiling is nonbinding is to say that the price ceiling

Since the FICA tax is split equally between employers and employees, we can conclude that the incidence of this tax is also equally shared.

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

A price ceiling set below the equilibrium price is nonbinding.

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The effective price that sellers receive after the tax is imposed is

Figure 6-6 -Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?

A tax on golf clubs will cause buyers of golf clubs to pay a higher price, sellers of golf clubs to receive a lower price, and fewer golf clubs to be sold.

The distribution of the burden of a tax depends strictly on the elasticity of supply.

A binding minimum wage may not help all workers, but it does not hurt any workers.

When a payroll tax is enacted, the wage received by workers

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

A tax on sellers reduces the size of a market.

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

Filters

Exam 6: Supply, Demand, and Government Policies

A tax on the buyers of personal computer external hard drives encourages

The burden of a luxury tax falls

After OPEC raised the price of crude oil in the 1970's, which of the following was the most important reason that there were shortages of gasoline?

The imposition of a binding price ceiling on a market causes

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i) Supply is more elastic than the demand.(ii) Demand in more elastic than the supply. (iii) Tax is placed on the sellers of the product. (iv) Tax is placed on the buyers of the product.

To say that a price ceiling is nonbinding is to say that the price ceiling

Since the FICA tax is split equally between employers and employees, we can conclude that the incidence of this tax is also equally shared.​

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

A price ceiling set below the equilibrium price is nonbinding.

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The effective price that sellers receive after the tax is imposed is

Figure 6-6 -Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?

A tax on golf clubs will cause buyers of golf clubs to pay a higher price, sellers of golf clubs to receive a lower price, and fewer golf clubs to be sold.

​The distribution of the burden of a tax depends strictly on the elasticity of supply.

A binding minimum wage may not help all workers, but it does not hurt any workers.

When a payroll tax is enacted, the wage received by workers

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

A tax on sellers reduces the size of a market.

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

Filters

Since the FICA tax is split equally between employers and employees, we can conclude that the incidence of this tax is also equally shared.

The distribution of the burden of a tax depends strictly on the elasticity of supply.