Question 1

If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers.

Accepted Answer

A) True 
 B)False

Question 2

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A) buyers will bear a greater burden of the tax than the sellers. 
B) sellers will bear a greater burden of the tax than the buyers. 
C) buyers and sellers are likely to share the burden of the tax equally. 
D) buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information. 
A) buyers will bear a greater burden of the tax than the sellers. 
B) sellers will bear a greater burden of the tax than the buyers. 
C) buyers and sellers are likely to share the burden of the tax equally. 
D) buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

Question 3

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. Workers will bear

Accepted Answer

A) an equal share of the tax in comparison to firms. 
B) a greater share of the tax in comparison to firms. 
C) a smaller share of the tax in comparison to firms. 
D) All of the above are possible. 
A) an equal share of the tax in comparison to firms. 
B) a greater share of the tax in comparison to firms. 
C) a smaller share of the tax in comparison to firms. 
D) All of the above are possible.

Question 4

A tax imposed on the sellers of a good will raise 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 5

Which of the following is not correct?

Accepted Answer

A) Some states in the U.S. mandate minimum wages above the federal level. 
B) Most European nations have minimum-wage laws. 
C) The U.S. minimum wage is significantly higher than the minimum wages in France and the United Kingdom. 
D) The U.S. Congress first instituted a minimum wage with the Fair Labor Standards Act. 
A) Some states in the U.S. mandate minimum wages above the federal level. 
B) Most European nations have minimum-wage laws. 
C) The U.S. minimum wage is significantly higher than the minimum wages in France and the United Kingdom. 
D) The U.S. Congress first instituted a minimum wage with the Fair Labor Standards Act.

Question 6

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Accepted Answer

A) True 
 B)False

Question 7

In a free market, the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

Accepted Answer

A) True 
 B)False

Question 8

If a tax is levied on the buyers of dog food, then

Accepted Answer

A) buyers will bear the entire burden of the tax. 
B) sellers will bear the entire burden of the tax. 
C) buyers and sellers will share the burden of the tax. 
D) the government will bear the entire burden of the tax. 
A) buyers will bear the entire burden of the tax. 
B) sellers will bear the entire burden of the tax. 
C) buyers and sellers will share the burden of the tax. 
D) the government will bear the entire burden of the tax.

Question 9

Which of the following is not a short-run effect of rent control on the housing market?

Accepted Answer

A) reduced rents 
B) a large shortage 
C) a small increase in quantity demanded 
D) a small decrease in quantity supplied 
A) reduced rents 
B) a large shortage 
C) a small increase in quantity demanded 
D) a small decrease in quantity supplied

Question 10

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

Accepted Answer

With a $6 tax per unit, the am

Question 11

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

Question 12

To say that a price ceiling is nonbinding is to say that the price ceiling

Accepted Answer

A) results in a surplus. 
B) is set above the equilibrium price. 
C) causes quantity demanded to exceed quantity supplied. 
D) All of the above are correct. 
A) results in a surplus. 
B) is set above the equilibrium price. 
C) causes quantity demanded to exceed quantity supplied. 
D) All of the above are correct.

Question 13

If a binding price floor is imposed on the video game market, then

Accepted Answer

A) the demand for video games will decrease. 
B) the supply of video games will increase. 
C) a surplus of video games will develop. 
D) All of the above are correct. 
A) the demand for video games will decrease. 
B) the supply of video games will increase. 
C) a surplus of video games will develop. 
D) All of the above are correct.

Question 14

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Accepted Answer

A) demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20. 
B) demand curve will shift upward by $20, and the price paid by buyers will decrease by $20. 
C) supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20. 
D) supply curve will shift downward by $20, and the effective price received by sellers will increase by $20. 
A) demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20. 
B) demand curve will shift upward by $20, and the price paid by buyers will decrease by $20. 
C) supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20. 
D) supply curve will shift downward by $20, and the effective price received by sellers will increase by $20.

Question 15

Table 6-2  
-Refer to Table 6-2. A price ceiling set at $5 will

Accepted Answer

A) be binding and will result in a shortage of 50 units. 
B) be binding and will result in a shortage of 250 units. 
C) be binding and will result in a shortage of 300 units. 
D) not be binding. 
A) be binding and will result in a shortage of 50 units. 
B) be binding and will result in a shortage of 250 units. 
C) be binding and will result in a shortage of 300 units. 
D) not be binding.

Question 16

When a tax is placed on the buyers of a product, buyers pay

Accepted Answer

A) more and sellers receive more than they did before the tax. 
B) more and sellers receive less than they did before the tax. 
C) less and sellers receive more than they did before the tax. 
D) less and sellers receive less than they did before the tax. 
A) more and sellers receive more than they did before the tax. 
B) more and sellers receive less than they did before the tax. 
C) less and sellers receive more than they did before the tax. 
D) less and sellers receive less than they did before the tax.

Question 17

A shortage results when a

Accepted Answer

A) nonbinding price ceiling is imposed on a market. 
B) nonbinding price ceiling is removed from a market. 
C) binding price ceiling is imposed on a market. 
D) binding price ceiling is removed from a market. 
A) nonbinding price ceiling is imposed on a market. 
B) nonbinding price ceiling is removed from a market. 
C) binding price ceiling is imposed on a market. 
D) binding price ceiling is removed from a market.

Question 18

Figure 6-33  
-Refer to Figure 6-33. Suppose a $4 per-unit tax is imposed on the sellers of this good. How many units of this good will be sold after the tax is imposed?

Accepted Answer

With a $4 per-unit t

Question 19

A tax on the buyers of cereal will increase the price of cereal paid by buyers,

Accepted Answer

A) decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. 
B) decrease the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal. 
C) increase the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. 
D) increase the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal. 
A) decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. 
B) decrease the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal. 
C) increase the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. 
D) increase the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal.

Question 20

The price received by sellers in a market will decrease if the government

Accepted Answer

A) increases a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) decreases a tax on the good sold in that market. 
D) None of the above is correct. 
A) increases a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) decreases a tax on the good sold in that market. 
D) None of the above is correct.

Exam 6: Supply, Demand, and Government Policies

If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers.

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

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. Workers will bear

A tax imposed on the sellers of a good will raise the

Which of the following is not correct?

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

In a free market, the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

If a tax is levied on the buyers of dog food, then

Which of the following is not a short-run effect of rent control on the housing market?

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

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

To say that a price ceiling is nonbinding is to say that the price ceiling

If a binding price floor is imposed on the video game market, then

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Table 6-2 -Refer to Table 6-2. A price ceiling set at $5 will

When a tax is placed on the buyers of a product, buyers pay

A shortage results when a

Figure 6-33 -Refer to Figure 6-33. Suppose a $4 per-unit tax is imposed on the sellers of this good. How many units of this good will be sold after the tax is imposed?

A tax on the buyers of cereal will increase the price of cereal paid by buyers,

The price received by sellers in a market will decrease if 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

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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