Question 1

If the government imposes a binding price ceiling on a market, then the price paid by buyers will

Accepted Answer

A) decrease, and the quantity sold in the market will decrease. 
B) increase, and the quantity sold in the market will increase. 
C) increase, and the quantity sold in the market will decrease. 
D) decrease, and the quantity sold in the market will increase. 
A) decrease, and the quantity sold in the market will decrease. 
B) increase, and the quantity sold in the market will increase. 
C) increase, and the quantity sold in the market will decrease. 
D) decrease, and the quantity sold in the market will increase.

Question 2

Figure 6-18
   ​
-Refer to Figure 6-18. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 3

Not all sellers benefit from a binding price floor.

Accepted Answer

A) True 
 B)False

Question 4

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

Accepted Answer

A) True 
 B)False

Question 5

Table 6-1
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.
​
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Price } \
\text { (Dollars per unit) }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { (Units) }
\end{array} & \begin{array} { c } 
\text { Quantity Supplied } \
\text { (Units) }
\end{array} \
\hline 0 & 15 & 0 \
\hline 1 & 13 & 3 \
\hline 2 & 11 & 6 \
\hline 3 & 9 & 9 \
\hline 4 & 7 & 12 \
\hline 5 & 5 & 15 \
\hline 6 & 3 & 18 \
\hline
\end{array}$$
-Refer to Table 6-1. Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is

Accepted Answer

A) $2. 
B) $3. 
C) $4. 
D) $5. 
A) $2. 
B) $3. 
C) $4. 
D) $5.

Question 6

Figure 6-17
   ​
-Refer to Figure 6-17. If the government places a $2 tax in the market, the buyer pays $4.

Accepted Answer

A) True 
 B)False

Question 7

Scenario 6-1
Suppose that demand in the market for good X is given by the equation
 $$Q ^ { D } = 30 - P$$ and that supply in the market for good X is given by the equation
 $$Q ^ { S } = 2 P$$
-Refer to Scenario 6-1. If the government set a price ceiling at $12, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $12 wou

Question 8

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Accepted Answer

A) the demand for treadmills will increase. 
B) the supply of treadmills will decrease. 
C) a shortage of treadmills will develop. 
D) a surplus of treadmills will develop. 
A) the demand for treadmills will increase. 
B) the supply of treadmills will decrease. 
C) a shortage of treadmills will develop. 
D) a surplus of treadmills will develop.

Question 9

Figure 6-21
   ​
-Refer to Figure 6-21. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

Accepted Answer

With a $6 tax per un

Question 10

Figure 6-16
​
   ​
-Refer to Figure 6-16. A price floor set at $60 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-10
The vertical distance between points A and B represents the tax in the market.
  
-Refer to Figure 6-10. The per-unit burden of the tax on buyers is

Accepted Answer

A) $6. 
B) $8. 
C) $14. 
D) $24. 
A) $6. 
B) $8. 
C) $14. 
D) $24.

Question 12

Figure 6-17
   ​
-Refer to Figure 6-17. If the government places a $2 tax in the market, the buyer pays $6.

Accepted Answer

A) True 
 B)False

Question 13

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for

Accepted Answer

A) unemployment compensation. 
B) the salaries of members of Congress. 
C) Social Security and Medicare. 
D) housing subsidies for low-income people. 
A) unemployment compensation. 
B) the salaries of members of Congress. 
C) Social Security and Medicare. 
D) housing subsidies for low-income people.

Question 14

A tax on sellers shifts the supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not correct?

Accepted Answer

A) Taxes levied on sellers and taxes levied on buyers are not equivalent. 
B) A tax places a wedge between the price that buyers pay and the price that sellers receive. 
C) The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers. 
D) In the new after-tax equilibrium, buyers and sellers share the burden of the tax. 
A) Taxes levied on sellers and taxes levied on buyers are not equivalent. 
B) A tax places a wedge between the price that buyers pay and the price that sellers receive. 
C) The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers. 
D) In the new after-tax equilibrium, buyers and sellers share the burden of the tax.

Question 16

Suppose sellers of cologne are required to send $2.25 to the government for every bottle of cologne they sell. Further, suppose this tax causes the price paid by buyers of cologne to rise by $1.35 per bottle. Which of the following statements is correct?

Accepted Answer

A) The effective price received by sellers is $0.90 per bottle less than it was before the tax. 
B) Sixty percent of the burden of the tax falls on sellers. 
C) This tax causes the demand curve for cologne to shift downward by $2.25 at each quantity of cologne. 
D) This tax does not change the quantity of cologne bought and sold. 
A) The effective price received by sellers is $0.90 per bottle less than it was before the tax. 
B) Sixty percent of the burden of the tax falls on sellers. 
C) This tax causes the demand curve for cologne to shift downward by $2.25 at each quantity of cologne. 
D) This tax does not change the quantity of cologne bought and sold.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A price floor set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 19

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Accepted Answer

A) True 
 B)False

Question 20

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

If the government imposes a binding price ceiling on a market, then the price paid by buyers will

Figure 6-18 ​ -Refer to Figure 6-18. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Not all sellers benefit from a binding price floor.

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

Figure 6-17 ​ -Refer to Figure 6-17. If the government places a $2 tax in the market, the buyer pays $4.

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Figure 6-21 ​ -Refer to Figure 6-21. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

Figure 6-16 ​ ​ -Refer to Figure 6-16. A price floor set at $60 would create a surplus of 20 units.

Figure 6-10 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-10. The per-unit burden of the tax on buyers is

Figure 6-17 ​ -Refer to Figure 6-17. If the government places a $2 tax in the market, the buyer pays $6.

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for

A tax on sellers shifts the supply curve to the left.

Which of the following is not correct?

Suppose sellers of cologne are required to send $2.25 to the government for every bottle of cologne they sell. Further, suppose this tax causes the price paid by buyers of cologne to rise by $1.35 per bottle. Which of the following statements is correct?

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

A price floor set above the equilibrium price is not binding.

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

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 6-18 -Refer to Figure 6-18. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-17 -Refer to Figure 6-17. If the government places a $2 tax in the market, the buyer pays $4.

Figure 6-21 -Refer to Figure 6-21. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

Figure 6-16 -Refer to Figure 6-16. A price floor set at $60 would create a surplus of 20 units.

Figure 6-17 -Refer to Figure 6-17. If the government places a $2 tax in the market, the buyer pays $6.