Question 1

Figure 6-11
​
  
-Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A) One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. 
B) One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. 
C) One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers. 
D) Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers. 
A) One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. 
B) One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. 
C) One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers. 
D) Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers.

Question 2

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Accepted Answer

@#IMG-DLM& ​
The tax burden fa

Question 3

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 4

A tax on the sellers of bottled water will increase the price of bottled water paid by buyers,

Accepted Answer

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

Question 5

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Accepted Answer

A) True 
 B)False

Question 6

Price controls often hurt those they are trying to help.

Accepted Answer

A) True 
 B)False

Question 7

A binding price floor causes quantity supplied to be less than quantity demanded.

Accepted Answer

A) True 
 B)False

Question 8

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) You will owe $300 per paycheck to pay the FICA tax for the remainder of the fiscal year regardless of your wages. 
B) Your employer is required by law to pay $150 to match half the $300 deducted from your check. 
C) This type of tax is an example of a sales tax. 
D) The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee. 
A) You will owe $300 per paycheck to pay the FICA tax for the remainder of the fiscal year regardless of your wages. 
B) Your employer is required by law to pay $150 to match half the $300 deducted from your check. 
C) This type of tax is an example of a sales tax. 
D) The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee.

Question 9

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 10

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Long lines and gasoline shortages during the 1970s can be attributed completely to the decision by OPEC to raise crude oil prices.

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-18
   ​
-Refer to Figure 6-18. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 14

Rent-control laws dictate

Accepted Answer

A) the exact rent that landlords must charge tenants. 
B) only a maximum rent that landlords may charge tenants. 
C) only a minimum rent that landlords may charge tenants. 
D) both a minimum rent and a maximum rent that landlords may charge tenants. 
A) the exact rent that landlords must charge tenants. 
B) only a maximum rent that landlords may charge tenants. 
C) only a minimum rent that landlords may charge tenants. 
D) both a minimum rent and a maximum rent that landlords may charge tenants.

Question 15

A binding price floor causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 16

The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

Accepted Answer

A) True 
 B)False

Question 17

A surplus results when a

Accepted Answer

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

Question 18

When a tax is placed on the buyers of bottled water, the

Accepted Answer

A) sellers bear the entire burden of the tax. 
B) buyers bear the entire burden of the tax. 
C) burden of the tax will always be equally divided between the buyers and the sellers. 
D) burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal. 
A) sellers bear the entire burden of the tax. 
B) buyers bear the entire burden of the tax. 
C) burden of the tax will always be equally divided between the buyers and the sellers. 
D) burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

Question 19

Table 6-2
 $$\begin{array} { | l | l | l | } 
\hline \text { Price (\$) } & \begin{array} { l } 
\text { Quantity } \
\text { Demanded }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Supplied }
\end{array} \
\hline 0 & 21 & 0 \
\hline 1 & 18 & 4 \
\hline 2 & 15 & 8 \
\hline 3 & 12 & 12 \
\hline 4 & 9 & 16 \
\hline 5 & 6 & 20 \
\hline 6 & 3 & 24 \
\hline 7 & 0 & 28 \
\hline
\end{array}$$
-Refer to Table 6-2. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set

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

Figure 6-11 ​ -Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

A tax on the sellers of bottled water will increase the price of bottled water paid by buyers,

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Price controls often hurt those they are trying to help.

A binding price floor causes quantity supplied to be less than quantity demanded.

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?

Price ceilings and price floors that are binding

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

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

Long lines and gasoline shortages during the 1970s can be attributed completely to the decision by OPEC to raise crude oil prices.

Figure 6-18 ​ -Refer to Figure 6-18. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

Rent-control laws dictate

A binding price floor causes a shortage in the market.

The housing shortages caused by rent control are larger in the long run than in the short run because both the supply of housing and the demand for housing are more elastic in the long run.

A surplus results when a

When a tax is placed on the buyers of bottled water, the

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 Nations 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

Figure 6-11 -Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Figure 6-18 -Refer to Figure 6-18. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?