Question 1

If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

Accepted Answer

A) True 
 B)False

Question 2

The tax burden will fall most heavily on buyers of the good when the demand curve

Accepted Answer

A) is relatively steep, and the supply curve is relatively flat. 
B) is relatively flat, and the supply curve is relatively steep. 
C) and the supply curve are both relatively flat. 
D) and the supply curve are both relatively steep. 
A) is relatively steep, and the supply curve is relatively flat. 
B) is relatively flat, and the supply curve is relatively steep. 
C) and the supply curve are both relatively flat. 
D) and the supply curve are both relatively steep.

Question 3

The impact of the minimum wage depends on the skill and experience of the worker.

Accepted Answer

A) True 
 B)False

Question 4

The goal of rent control is to

Accepted Answer

A) facilitate controlled economic experiments in urban areas. 
B) help landlords by assuring them a low vacancy rate for their apartments. 
C) help the poor by assuring them an adequate supply of apartments. 
D) help the poor by making housing more affordable. 
A) facilitate controlled economic experiments in urban areas. 
B) help landlords by assuring them a low vacancy rate for their apartments. 
C) help the poor by assuring them an adequate supply of apartments. 
D) help the poor by making housing more affordable.

Question 5

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $2 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 6

The effects of rent control in the long run include lower rents and lower-quality housing.

Accepted Answer

A) True 
 B)False

Question 7

A binding price ceiling may not help all consumers, but it does not hurt any consumers.

Accepted Answer

A) True 
 B)False

Question 8

Table 6-1  
-Refer to Table 6-1. Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?

Accepted Answer

A) 0 units 
B) 400 units 
C) 1200 units 
D) 1600 units 
A) 0 units 
B) 400 units 
C) 1200 units 
D) 1600 units

Question 9

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A) no sellers actually benefit. 
B) some sellers benefit, but no sellers are harmed. 
C) some sellers benefit, and some sellers are harmed. 
D) all sellers benefit. 
A) no sellers actually benefit. 
B) some sellers benefit, but no sellers are harmed. 
C) some sellers benefit, and some sellers are harmed. 
D) all sellers benefit.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

A tax on the buyers of cameras encourages

Accepted Answer

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

Question 12

Figure 6-21  
-Refer to Figure 6-21. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. Acme is left with how much money?

Accepted Answer

A) $8.00 
B) $9.00 
C) $10.50 
D) $12.00 
A) $8.00 
B) $9.00 
C) $10.50 
D) $12.00

Question 13

You have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia. George, who is one of your advisors, says that the best way to avoid a shortage of oranges is to take no action at all. Charles, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop. Otto, a third advisor, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Which of your three advisors is most likely to have studied economics?

Accepted Answer

A) George 
B) Charles 
C) Otto 
D) Apparently, all three advisors have studied economics, but their views on positive economics are different. 
A) George 
B) Charles 
C) Otto 
D) Apparently, all three advisors have studied economics, but their views on positive economics are different.

Question 14

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 15

Opponents of the minimum wage point out that the minimum wage

Accepted Answer

A) encourages teenagers to drop out of school. 
B) prevents some workers from getting needed on-the-job training. 
C) contributes to the problem of unemployment. 
D) All of the above are correct. 
A) encourages teenagers to drop out of school. 
B) prevents some workers from getting needed on-the-job training. 
C) contributes to the problem of unemployment. 
D) All of the above are correct.

Question 16

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

Accepted Answer

A) This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor. 
B) The effective price received by sellers is $5.00 per bottle less than it was before the tax. 
C) Forty percent of the burden of the tax falls on buyers. 
D) All of the above are correct. 
A) This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor. 
B) The effective price received by sellers is $5.00 per bottle less than it was before the tax. 
C) Forty percent of the burden of the tax falls on buyers. 
D) All of the above are correct.

Question 17

When a tax is imposed in a market, it will​

Accepted Answer

A) ​alter the behavior of buyers. 
B) ​alter the behavior of sellers. 
C) ​have no effect on the behavior or either buyers or sellers. 
D) ​affect the behavior of both buyers and sellers. 
A) ​alter the behavior of buyers. 
B) ​alter the behavior of sellers. 
C) ​have no effect on the behavior or either buyers or sellers. 
D) ​affect the behavior of both buyers and sellers.

Question 18

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. Which of the following statements is correct?

Accepted Answer

A) A price ceiling set at $6 would be binding, but a price ceiling set at $4 would not be binding. 
B) A price floor set at $4 would be binding, but a price ceiling set at $4 would not be binding. 
C) A price ceiling set at $3.50 would result in a surplus. 
D) A price floor set at $6.50 would result in a surplus. 
A) A price ceiling set at $6 would be binding, but a price ceiling set at $4 would not be binding. 
B) A price floor set at $4 would be binding, but a price ceiling set at $4 would not be binding. 
C) A price ceiling set at $3.50 would result in a surplus. 
D) A price floor set at $6.50 would result in a surplus.

Question 19

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Accepted Answer

A) True 
 B)False

Question 20

Figure 6-25  
-Refer to Figure 6-25. As the figure is drawn, who sends the tax payment to the government?

Accepted Answer

A) The buyers send the tax payment. 
B) The sellers send the tax payment. 
C) A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers. 
D) The question of who sends the tax payment cannot be determined from the figure. 
A) The buyers send the tax payment. 
B) The sellers send the tax payment. 
C) A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers. 
D) The question of who sends the tax payment cannot be determined from the figure.

Exam 6: Supply, Demand, and Government Policies

If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

The tax burden will fall most heavily on buyers of the good when the demand curve

The impact of the minimum wage depends on the skill and experience of the worker.

The goal of rent control is to

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $2 of the tax burden.

The effects of rent control in the long run include lower rents and lower-quality housing.

A binding price ceiling may not help all consumers, but it does not hurt any consumers.

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?

When a binding price floor is imposed on a market to benefit sellers,

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

A tax on the buyers of cameras encourages

Figure 6-21 -Refer to Figure 6-21. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. Acme is left with how much money?

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.

Opponents of the minimum wage point out that the minimum wage

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

When a tax is imposed in a market, it will​

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following statements is correct?

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Figure 6-25 -Refer to Figure 6-25. As the figure is drawn, who sends the tax payment to the government?

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

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

When a tax is imposed in a market, it will