Question 1

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

Accepted Answer

A) True 
 B)False

Question 2

A price floor set above the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 3

Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.

Accepted Answer

A) True 
 B)False

Question 4

Figure 6-5  
-Refer to Figure 6-5. If government imposes a price floor at $9, then the price floor causes

Accepted Answer

A) quantity demanded to decrease by 40 units. 
B) quantity supplied to increase by 20 units. 
C) a surplus of 60 units. 
D) All of the above are correct. 
A) quantity demanded to decrease by 40 units. 
B) quantity supplied to increase by 20 units. 
C) a surplus of 60 units. 
D) All of the above are correct.

Question 5

Figure 6-22  
-Refer to Figure 6-22. The equilibrium price in the market before the tax is imposed is

Accepted Answer

A) $3.50. 
B) $5.00. 
C) $2.00. 
D) $1.50. 
A) $3.50. 
B) $5.00. 
C) $2.00. 
D) $1.50.

Question 6

Buyers of a good bear the larger share of the tax burden when the
(i)supply is more elastic than the demand for the product.
(ii)demand in more elastic than the supply for the product.
(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 (iii) only 
D) (i) and (iv) only 
A) (i) only 
B) (ii) only 
C) (i) and (iii) only 
D) (i) and (iv) only

Question 7

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

Accepted Answer

A) True 
 B)False

Question 8

Price controls are usually enacted

Accepted Answer

A) as a means of raising revenue for public purposes. 
B) when policymakers believe that the market price of a good or service is unfair to buyers or sellers. 
C) when policymakers tax a good. 
D) All of the above are correct. 
A) as a means of raising revenue for public purposes. 
B) when policymakers believe that the market price of a good or service is unfair to buyers or sellers. 
C) when policymakers tax a good. 
D) All of the above are correct.

Question 9

A tax on sellers shifts the supply curve but not the demand curve.

Accepted Answer

A) True 
 B)False

Question 10

A tax on the buyers of sofas

Accepted Answer

A) increases the size of the sofa market. 
B) decreases the size of the sofa market. 
C) has no effect on the size of the sofa market. 
D) may increase, decrease, or have no effect on the size of the sofa market. 
A) increases the size of the sofa market. 
B) decreases the size of the sofa market. 
C) has no effect on the size of the sofa market. 
D) may increase, decrease, or have no effect on the size of the sofa market.

Question 11

In a free, competitive market, what is the rationing mechanism?

Accepted Answer

A) seller bias 
B) buyer bias 
C) government law 
D) price 
A) seller bias 
B) buyer bias 
C) government law 
D) price

Question 12

Prices are inefficient rationing devices.

Accepted Answer

A) True 
 B)False

Question 13

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Accepted Answer

A) demand for labor is more elastic than the supply of labor. 
B) supply of labor is more elastic than the demand for labor. 
C) demand for labor and supply of labor are equally elastic. 
D) It is not possible for the tax burden to fall equally on firms and workers. 
A) demand for labor is more elastic than the supply of labor. 
B) supply of labor is more elastic than the demand for labor. 
C) demand for labor and supply of labor are equally elastic. 
D) It is not possible for the tax burden to fall equally on firms and workers.

Question 14

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 15

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un

Question 16

The United States is the only country in the world with minimum-wage laws.

Accepted Answer

A) True 
 B)False

Question 17

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

Accepted Answer

A) increase, and the price received by sellers will increase. 
B) increase, and the price received by sellers will not change. 
C) not change, and the price received by sellers will increase. 
D) not change, and the price received by sellers will not change. 
A) increase, and the price received by sellers will increase. 
B) increase, and the price received by sellers will not change. 
C) not change, and the price received by sellers will increase. 
D) not change, and the price received by sellers will not change.

Question 18

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

Accepted Answer

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

Question 19

The price paid by buyers in a market will decrease if the government

Accepted Answer

A) imposes 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) decreases a binding price floor in that market. 
A) imposes 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) decreases a binding price floor in that market.

Question 20

Figure 6-27
This figure shows the market demand and market supply curves for good Z.  
-Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A) $16 
B) between $16 and $20 
C) between $20 and $22 
D) $22 
A) $16 
B) between $16 and $20 
C) between $20 and $22 
D) $22

Exam 6: Supply, Demand, and Government Policies

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

A price floor set above the equilibrium price is binding.

Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.

Figure 6-5 -Refer to Figure 6-5. If government imposes a price floor at $9, then the price floor causes

Figure 6-22 -Refer to Figure 6-22. The equilibrium price in the market before the tax is imposed is

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

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

Price controls are usually enacted

A tax on sellers shifts the supply curve but not the demand curve.

A tax on the buyers of sofas

In a free, competitive market, what is the rationing mechanism?

Prices are inefficient rationing devices.

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

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

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

The United States is the only country in the world with minimum-wage laws.

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

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

The price paid by buyers in a market will decrease if the government

Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit 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

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