Question 1

A tax on sellers increases supply.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not an example of a public policy?

Accepted Answer

A) rent-control laws 
B) minimum-wage laws 
C) taxes 
D) equilibrium laws 
A) rent-control laws 
B) minimum-wage laws 
C) taxes 
D) equilibrium laws

Question 3

The following table shows the demand and supply schedules in a particular market.   
If the government sets a price floor $2 above the equilibrium price, how many units will be sold in this market?

Accepted Answer

The equilibrium price is $3, so the pric

Question 4

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 5

A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded.

Accepted Answer

A) True 
 B)False

Question 6

Using a supply and demand diagram, show a labor market with a binding minimum wage. Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

Accepted Answer

a.For this example, a $300 price ceiling

Question 7

One common example of a price floor is the minimum wage.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Consider the market for gasoline. Buyers

Accepted Answer

A) and sellers would lobby for a price ceiling. 
B) and sellers would lobby for a price floor. 
C) would lobby for a price ceiling, whereas sellers would lobby for a price floor. 
D) would lobby for a price floor, whereas sellers would lobby for a price ceiling. 
A) and sellers would lobby for a price ceiling. 
B) and sellers would lobby for a price floor. 
C) would lobby for a price ceiling, whereas sellers would lobby for a price floor. 
D) would lobby for a price floor, whereas sellers would lobby for a price ceiling.

Question 10

Figure 6-33  
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

Accepted Answer

The burden

Question 11

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

Accepted Answer

A) increase by less than $5. 
B) increase by exactly $5. 
C) increase by more than $5. 
D) decrease by an indeterminate amount. 
A) increase by less than $5. 
B) increase by exactly $5. 
C) increase by more than $5. 
D) decrease by an indeterminate amount.

Question 12

The minimum wage, if it is binding, raises the incomes of

Accepted Answer

A) no workers. 
B) only those workers who cannot find jobs. 
C) only those workers whose jobs would pay less than the minimum wage if it didn't exist. 
D) all workers. 
A) no workers. 
B) only those workers who cannot find jobs. 
C) only those workers whose jobs would pay less than the minimum wage if it didn't exist. 
D) all workers.

Question 13

If a price floor is a binding constraint on a market, then

Accepted Answer

A) the equilibrium price must be above the price floor. 
B) the quantity demanded must exceed the quantity supplied. 
C) sellers cannot sell all they want to sell at the price floor. 
D) buyers cannot buy all they want to buy at the price floor. 
A) the equilibrium price must be above the price floor. 
B) the quantity demanded must exceed the quantity supplied. 
C) sellers cannot sell all they want to sell at the price floor. 
D) buyers cannot buy all they want to buy at the price floor.

Question 14

The quantity sold in a market will decrease 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) All of the above are correct. 
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) All of the above are correct.

Question 15

Unlike minimum wage laws, wage subsidies

Accepted Answer

A) discourage firms from hiring the working poor. 
B) cause unemployment. 
C) help only wealthy workers. 
D) raise the living standards of the working poor without creating unemployment. 
A) discourage firms from hiring the working poor. 
B) cause unemployment. 
C) help only wealthy workers. 
D) raise the living standards of the working poor without creating unemployment.

Question 16

Figure 6-21  
-Refer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on sellers, the tax on buyers would result in

Accepted Answer

A) buyers bearing a larger share of the tax burden. 
B) sellers bearing a smaller share of the tax burden. 
C) the same amount of tax revenue for the government. 
D) Both a) and b) are correct. 
A) buyers bearing a larger share of the tax burden. 
B) sellers bearing a smaller share of the tax burden. 
C) the same amount of tax revenue for the government. 
D) Both a) and b) are correct.

Question 17

The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy.

Accepted Answer

A) True 
 B)False

Question 18

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Accepted Answer

A) less than one-third. 
B) between one-third and one-half. 
C) between one-half and two-thirds. 
D) greater than two-thirds. 
A) less than one-third. 
B) between one-third and one-half. 
C) between one-half and two-thirds. 
D) greater than two-thirds.

Question 19

Figure 6-35  
-Refer to Figure 6-35. A price floor set at $40 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 20

Price is the rationing mechanism in a free, competitive market.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

A tax on sellers increases supply.

Which of the following is not an example of a public policy?

The following table shows the demand and supply schedules in a particular market. If the government sets a price floor $2 above the equilibrium price, how many units will be sold in this market?

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.

A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded.

Using a supply and demand diagram, show a labor market with a binding minimum wage. Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

One common example of a price floor is the minimum wage.

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?

Consider the market for gasoline. Buyers

Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

The minimum wage, if it is binding, raises the incomes of

If a price floor is a binding constraint on a market, then

The quantity sold in a market will decrease if the government

Unlike minimum wage laws, wage subsidies

Figure 6-21 -Refer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on sellers, the tax on buyers would result in

The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy.

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Figure 6-35 -Refer to Figure 6-35. A price floor set at $40 would create a surplus of 20 units.

Price is the rationing mechanism in a free, competitive 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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters