Question 1

Figure 6-23  
-Refer to Figure 6-23. Which of the following is correct?

Accepted Answer

A) The entire burden of the tax falls on sellers, and none of the burden of the tax falls on buyers. 
B) One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers. 
C) One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers. 
D) Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers. 
A) The entire burden of the tax falls on sellers, and none of the burden of the tax falls on buyers. 
B) One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers. 
C) One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers. 
D) Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers.

Question 2

A binding minimum wage

Accepted Answer

A) alters both the quantity demanded and quantity supplied of labor. 
B) affects only the quantity of labor demanded; it does not affect the quantity of labor supplied. 
C) has no effect on the quantity of labor demanded or the quantity of labor supplied. 
D) causes only temporary unemployment because the market will adjust and eliminate any temporary surplus of workers. 
A) alters both the quantity demanded and quantity supplied of labor. 
B) affects only the quantity of labor demanded; it does not affect the quantity of labor supplied. 
C) has no effect on the quantity of labor demanded or the quantity of labor supplied. 
D) causes only temporary unemployment because the market will adjust and eliminate any temporary surplus of workers.

Question 3

A binding price ceiling
(i)causes a surplus.
(ii)causes a shortage.
(iii)is set at a price above the equilibrium price.
(iv)is set at a price below the equilibrium price.

Accepted Answer

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

Question 4

Scenario 6-2
Suppose demand for a product is given by the equation   and supply for the product is given by the equation  
-Refer to Scenario 6-2. Suppose the government sets a price ceiling at $12 for this product. Is this price ceiling binding, and what will be the size of the shortage/surplus in this market?

Accepted Answer

The price ceiling wi

Question 5

The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 6

Workers, rather than firms, bear most of the burden of the payroll tax.

Accepted Answer

A) True 
 B)False

Question 7

A price floor set below the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-7  
-Refer to Figure 6-7. Which of the following price controls would cause a surplus of 20 units of the good?

Accepted Answer

A) a price ceiling set at $6 
B) a price ceiling set at $5 
C) a price floor set at $9 
D) a price floor set at $8 
A) a price ceiling set at $6 
B) a price ceiling set at $5 
C) a price floor set at $9 
D) a price floor set at $8

Question 9

Figure 6-20  
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A) Buyers and sellers will share the burden of the tax equally. 
B) Buyers will bear more of the burden of the tax than sellers will. 
C) Sellers will bear more of the burden of the tax than buyers will. 
D) Any of the above is possible. 
A) Buyers and sellers will share the burden of the tax equally. 
B) Buyers will bear more of the burden of the tax than sellers will. 
C) Sellers will bear more of the burden of the tax than buyers will. 
D) Any of the above is possible.

Question 10

A tax on sellers will shift the

Accepted Answer

A) demand curve upward by the amount of the tax. 
B) demand curve downward by the amount of the tax. 
C) supply curve upward by the amount of the tax. 
D) supply curve downward by the amount of the tax. 
A) demand curve upward by the amount of the tax. 
B) demand curve downward by the amount of the tax. 
C) supply curve upward by the amount of the tax. 
D) supply curve downward by the amount of the tax.

Question 11

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

Accepted Answer

A) This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. 
B) The price paid by buyers is $0.30 per drink more than it was before the tax. 
C) Forty percent of the burden of the tax falls on sellers. 
D) All of the above are correct. 
A) This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. 
B) The price paid by buyers is $0.30 per drink more than it was before the tax. 
C) Forty percent of the burden of the tax falls on sellers. 
D) All of the above are correct.

Question 12

Price ceilings and price floors that are binding

Accepted Answer

A) are desirable because they make markets more efficient and more fair. 
B) cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price. 
C) can have the effect of restoring a market to equilibrium. 
D) are imposed because they can make the poor in the economy better off without causing adverse effects. 
A) are desirable because they make markets more efficient and more fair. 
B) cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price. 
C) can have the effect of restoring a market to equilibrium. 
D) are imposed because they can make the poor in the economy better off without causing adverse effects.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a result of rent control?

Accepted Answer

A) fewer new apartments offered for rent 
B) less maintenance provided by landlords 
C) bribery 
D) higher quality housing 
A) fewer new apartments offered for rent 
B) less maintenance provided by landlords 
C) bribery 
D) higher quality housing

Question 15

Figure 6-3
Panel (a)
Panel (b)    
-Refer to Figure 6-3. In panel (a), there will be

Accepted Answer

A) a shortage. 
B) equilibrium in the market. 
C) a surplus. 
D) lines of people waiting to buy the good. 
A) a shortage. 
B) equilibrium in the market. 
C) a surplus. 
D) lines of people waiting to buy the good.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The economy contains many labor markets for different types of workers.

Accepted Answer

A) True 
 B)False

Question 18

The price paid by buyers in a market will increase if the government
(i)increases a binding price floor in that market.
(ii)increases a binding price ceiling in that market.
(iii)decreases a tax on the good sold in that market.

Accepted Answer

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

Question 19

You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

Accepted Answer

A) The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee. 
B) Your employer is required by law to pay $300 to match the $300 deducted from your check. 
C) This type of tax is an example of a payroll tax. 
D) All of the above are correct. 
A) The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee. 
B) Your employer is required by law to pay $300 to match the $300 deducted from your check. 
C) This type of tax is an example of a payroll tax. 
D) All of the above are correct.

Question 20

A price floor is binding when it is set

Accepted Answer

A) above the equilibrium price, causing a shortage. 
B) above the equilibrium price, causing a surplus. 
C) below the equilibrium price, causing a shortage. 
D) below the equilibrium price, causing a surplus. 
A) above the equilibrium price, causing a shortage. 
B) above the equilibrium price, causing a surplus. 
C) below the equilibrium price, causing a shortage. 
D) below the equilibrium price, causing a surplus.

Exam 6: Supply, Demand, and Government Policies

Figure 6-23 -Refer to Figure 6-23. Which of the following is correct?

A binding minimum wage

A binding price ceiling (i)causes a surplus. (ii)causes a shortage. (iii)is set at a price above the equilibrium price. (iv)is set at a price below the equilibrium price.

The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.

Workers, rather than firms, bear most of the burden of the payroll tax.

A price floor set below the equilibrium price causes a surplus in the market.

Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a surplus of 20 units of the good?

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

A tax on sellers will shift the

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

Price ceilings and price floors that are binding

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

Which of the following is not a result of rent control?

Figure 6-3 Panel (a) Panel (b) -Refer to Figure 6-3. In panel (a), there will be

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

The economy contains many labor markets for different types of workers.

The price paid by buyers in a market will increase if the government (i)increases a binding price floor in that market. (ii)increases a binding price ceiling in that market. (iii)decreases a tax on the good sold in that market.

You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

A price floor is binding when it is set

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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