Question 1

To determine the incidence of a tax, it is necessary to have information on both the elasticity of demand and the elasticity of supply.
​

Accepted Answer

A) True 
 B)False

Question 2

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Accepted Answer

A) Improvements in production technology reduce the costs of producing laptop computers. 
B) The number of firms selling laptop computers decreases. 
C) Consumers' income decreases, and laptop computers are a normal good. 
D) The number of consumers buying laptop computers decreases. 
A) Improvements in production technology reduce the costs of producing laptop computers. 
B) The number of firms selling laptop computers decreases. 
C) Consumers' income decreases, and laptop computers are a normal good. 
D) The number of consumers buying laptop computers decreases.

Question 3

When a tax is imposed on a good, the result is always a shortage of the good.

Accepted Answer

A) True 
 B)False

Question 4

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. How many units of the good are sold after the imposition of the price floor?

Accepted Answer

A) 5 
B) 9 
C) 10 
D) 15 
A) 5 
B) 9 
C) 10 
D) 15

Question 5

When free markets ration goods with prices, it is both efficient and impersonal.

Accepted Answer

A) True 
 B)False

Question 6

Figure 6-12  
-Refer to Figure 6-12. Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

Accepted Answer

A) Buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. 
B) Buyers of gasoline paid a price of P1 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. 
C) Buyers of gasoline paid a price of P2 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, with no shortage of gasoline at that price. 
D) The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973. 
A) Buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. 
B) Buyers of gasoline paid a price of P1 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. 
C) Buyers of gasoline paid a price of P2 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, with no shortage of gasoline at that price. 
D) The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973.

Question 7

Table 6-6  
-Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

Accepted Answer

A price floor must be set abov

Question 8

Table 6-5  
-Refer to Table 6-5. Which of the following price floors would be binding in this market?

Accepted Answer

A) $3 
B) $6 
C) $9 
D) None of the above price floors would be binding. 
A) $3 
B) $6 
C) $9 
D) None of the above price floors would be binding.

Question 9

Congress intended that

Accepted Answer

A) the entire FICA tax be paid by workers. 
B) the entire FICA tax be paid by firms. 
C) one-quarter of the FICA tax be paid by workers, and three-quarters be paid by firms. 
D) half the FICA tax be paid by workers, and half be paid by firms. 
A) the entire FICA tax be paid by workers. 
B) the entire FICA tax be paid by firms. 
C) one-quarter of the FICA tax be paid by workers, and three-quarters be paid by firms. 
D) half the FICA tax be paid by workers, and half be paid by firms.

Question 10

A price floor is a legal minimum on the price at which a good or service can be sold.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-35  
-Refer to Figure 6-35. A price floor set at $60 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 12

Figure 6-25  
-Refer to Figure 6-25. The effective price that sellers receive after the tax is imposed is

Accepted Answer

A) $5. 
B) $6. 
C) $7. 
D) $8. 
A) $5. 
B) $6. 
C) $7. 
D) $8.

Question 13

A tax imposed on the buyers of a good will lower the

Accepted Answer

A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity. 
A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity.

Question 14

Long lines

Accepted Answer

A) and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B) and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C) are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D) are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time. 
A) and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B) and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C) are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D) are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.

Question 15

If a nonbinding price floor is imposed on a market, then the

Accepted Answer

A) quantity sold in the market will decrease. 
B) quantity sold in the market will stay the same. 
C) price in the market will increase. 
D) price in the market will decrease. 
A) quantity sold in the market will decrease. 
B) quantity sold in the market will stay the same. 
C) price in the market will increase. 
D) price in the market will decrease.

Question 16

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Accepted Answer

A) the actual tax incidence is unaffected by the legislated tax incidence. 
B) the employer now is required by law to pay more than 50 percent of the tax. 
C) the employee now is required by law to pay more than 50 percent of the tax. 
D) employers are no longer required by law to pay any portion of the tax. 
A) the actual tax incidence is unaffected by the legislated tax incidence. 
B) the employer now is required by law to pay more than 50 percent of the tax. 
C) the employee now is required by law to pay more than 50 percent of the tax. 
D) employers are no longer required by law to pay any portion of the tax.

Question 17

Figure 6-28  
-Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A) $4 
B) between $4 and $7 
C) between $7 and $10 
D) $10 
A) $4 
B) between $4 and $7 
C) between $7 and $10 
D) $10

Question 18

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 19

Price controls often hurt those they are trying to help.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 6: Supply, Demand, and Government Policies

To determine the incidence of a tax, it is necessary to have information on both the elasticity of demand and the elasticity of supply. ​

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

When a tax is imposed on a good, the result is always a shortage of the good.

When free markets ration goods with prices, it is both efficient and impersonal.

Figure 6-12 -Refer to Figure 6-12. Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

Table 6-6 -Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

Table 6-5 -Refer to Table 6-5. Which of the following price floors would be binding in this market?

Congress intended that

A price floor is a legal minimum on the price at which a good or service can be sold.

Figure 6-35 -Refer to Figure 6-35. A price floor set at $60 would create a surplus of 20 units.

Figure 6-25 -Refer to Figure 6-25. The effective price that sellers receive after the tax is imposed is

A tax imposed on the buyers of a good will lower the

Long lines

If a nonbinding price floor is imposed on a market, then the

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

The burden of a luxury tax falls

Price controls often hurt those they are trying to help.

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?

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

To determine the incidence of a tax, it is necessary to have information on both the elasticity of demand and the elasticity of supply.