Question 1

A tax on bicycles that buyers of bicycles are required to pay shifts

Accepted Answer

A) the demand curve downward, causing both the price received by sellers and the equilibrium quantity to fall. 
B) the demand curve upward, causing both the price received by sellers and the equilibrium quantity to rise. 
C) the supply curve downward, causing the price received by sellers to fall and the equilibrium quantity to rise. 
D) the supply curve upward, causing the price received by sellers to rise and the equilibrium quantity to fall. 
A) the demand curve downward, causing both the price received by sellers and the equilibrium quantity to fall. 
B) the demand curve upward, causing both the price received by sellers and the equilibrium quantity to rise. 
C) the supply curve downward, causing the price received by sellers to fall and the equilibrium quantity to rise. 
D) the supply curve upward, causing the price received by sellers to rise and the equilibrium quantity to fall.

Question 2

Policymakers sometimes are attracted to price controls because

Accepted Answer

A) they view the market's outcome as inefficient. 
B) they view the market's outcome as unfair. 
C) it is politically popular to impose price controls in markets in which the demand for the good or service is inelastic. 
D) they are required to do so under the Employment Act of 1946. 
A) they view the market's outcome as inefficient. 
B) they view the market's outcome as unfair. 
C) it is politically popular to impose price controls in markets in which the demand for the good or service is inelastic. 
D) they are required to do so under the Employment Act of 1946.

Question 3

Figure 6-2
  
-Refer to Figure 6-2.In which of the following cases would sellers have to develop a rationing mechanism?

Accepted Answer

A) A price ceiling is set at $8. 
B) A price ceiling is set at $12. 
C) A price floor is set at $8. 
D) A price floor is set at $10. 
A) A price ceiling is set at $8. 
B) A price ceiling is set at $12. 
C) A price floor is set at $8. 
D) A price floor is set at $10.

Question 4

In which of these cases will the tax burden fall most heavily on buyers of the good?

Accepted Answer

A) The demand curve is relatively steep and the supply curve is relatively flat. 
B) The demand curve is relatively flat and the supply curve is relatively steep. 
C) The demand curve and the supply curve are both relatively flat. 
D) The demand curve and the supply curve are both relatively steep. 
A) The demand curve is relatively steep and the supply curve is relatively flat. 
B) The demand curve is relatively flat and the supply curve is relatively steep. 
C) The demand curve and the supply curve are both relatively flat. 
D) The demand curve and the supply curve are both relatively steep.

Question 5

Suppose the demand for picture frames is inelastic and the supply of picture frames is elastic.A tax of $1 per frame levied on buyers of picture frames will increase the equilibrium price paid by buyers of picture frames by

Accepted Answer

A) $1. 
B) more than $0.50 but less than $1.00. 
C) a positive amount but less than $0.50. 
D) It is impossible to say without more information. 
A) $1. 
B) more than $0.50 but less than $1.00. 
C) a positive amount but less than $0.50. 
D) It is impossible to say without more information.

Question 6

A price floor

Accepted Answer

A) is a legal minimum on the price at which a good can be sold. 
B) can result when sellers of a good are successful in their attempts to convince the government that the market outcome without a price floor is unfair to them. 
C) can create inequities in a market. 
D) All of the above are correct. 
A) is a legal minimum on the price at which a good can be sold. 
B) can result when sellers of a good are successful in their attempts to convince the government that the market outcome without a price floor is unfair to them. 
C) can create inequities in a market. 
D) All of the above are correct.

Question 7

Most economists are in favor of price controls as a way of allocating resources in the economy.

Accepted Answer

A) True 
 B)False

Question 8

When a price ceiling is imposed in a market and the ceiling is binding,

Accepted Answer

A) price no longer serves as a rationing device. 
B) the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling. 
C) buyers and sellers both benefit in equal measure. 
D) buyers and sellers both are harmed in equal measure. 
A) price no longer serves as a rationing device. 
B) the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling. 
C) buyers and sellers both benefit in equal measure. 
D) buyers and sellers both are harmed in equal measure.

Question 9

When a tax is placed on the sellers of lemonade,

Accepted Answer

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

Question 10

When a binding price ceiling is imposed to benefit buyers,a result is that

Accepted Answer

A) every buyer in the market benefits. 
B) every seller in the market benefits, but the overall benefit to sellers is smaller than the overall benefit to buyers. 
C) every buyer in the market benefits and every seller in the market is harmed. 
D) some buyers will not be able to buy any amount of the good. 
A) every buyer in the market benefits. 
B) every seller in the market benefits, but the overall benefit to sellers is smaller than the overall benefit to buyers. 
C) every buyer in the market benefits and every seller in the market is harmed. 
D) some buyers will not be able to buy any amount of the good.

Question 11

Most labor economists believe that the supply of labor is

Accepted Answer

A) less elastic than demand and, therefore, firms bear most of the burden of the payroll tax. 
B) less elastic than demand and, therefore, workers bear most of the burden of the payroll tax. 
C) more elastic than demand and, therefore, workers bear most of the burden of the payroll tax. 
D) more elastic than demand and, therefore, firms bear most of the burden of the payroll tax. 
A) less elastic than demand and, therefore, firms bear most of the burden of the payroll tax. 
B) less elastic than demand and, therefore, workers bear most of the burden of the payroll tax. 
C) more elastic than demand and, therefore, workers bear most of the burden of the payroll tax. 
D) more elastic than demand and, therefore, firms bear most of the burden of the payroll tax.

Question 12

Unlike minimum wage laws,wage subsidies

Accepted Answer

A) discourage firms from hiring the working poor. 
B) cause unemployment. 
C) help only wealthy workers. 
D) raise living standards of the working poor without creating unemployment. 
A) discourage firms from hiring the working poor. 
B) cause unemployment. 
C) help only wealthy workers. 
D) raise living standards of the working poor without creating unemployment.

Question 13

The term tax incidence refers to the

Accepted Answer

A) widespread view that taxes always will be a fact of life. 
B) ongoing debate about which types of taxes make the most economic sense. 
C) division of the tax burden between buyers and sellers. 
D) division of the tax burden between sales taxes and income taxes. 
A) widespread view that taxes always will be a fact of life. 
B) ongoing debate about which types of taxes make the most economic sense. 
C) division of the tax burden between buyers and sellers. 
D) division of the tax burden between sales taxes and income taxes.

Question 14

Economic policies often have effects that their architects did not intend or anticipate.

Accepted Answer

A) True 
 B)False

Question 15

Figure 6-11. On the graph below, the shift of the supply curve from S₁ to S₂ represents the imposition of a tax on a good. On the axes, Q represents the quantity of the good and P represents the price.
  
-Consider Figure 6-11.Suppose the demand curve is not the one drawn on the graph;instead,the demand curve is a vertical line passing through the point (Q = 10,P = 5).Using the two supply curves that are drawn,which of the following statements would describe the effects of the tax correctly?

Accepted Answer

A) The price paid by buyers would be $9. 
B) The price received by sellers (after paying the tax) would be $6.50. 
C) The government would collect $27 from the tax. 
D) Buyers of the good would bear 100 percent of the burden of the tax. 
A) The price paid by buyers would be $9. 
B) The price received by sellers (after paying the tax) would be $6.50. 
C) The government would collect $27 from the tax. 
D) Buyers of the good would bear 100 percent of the burden of the tax.

Question 16

Figure 6-4
  
-Refer to Figure 6-4.For a price ceiling to be binding,it would have to be set at

Accepted Answer

A) any price below $6.00. 
B) a price between $4.00 and $6.00. 
C) a price between $6.00 and $8.00. 
D) any price above $6.00. 
A) any price below $6.00. 
B) a price between $4.00 and $6.00. 
C) a price between $6.00 and $8.00. 
D) any price above $6.00.

Question 17

Figure 6-9
  
-Refer to Figure 6-9.The effective price paid by buyers after the tax is imposed is

Accepted Answer

A) $18. 
B) $14. 
C) $12. 
D) $8. 
A) $18. 
B) $14. 
C) $12. 
D) $8.

Question 18

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A) a surplus in the market. 
B) a shortage in the market. 
C) a nonbinding price control. 
D) long lines of frustrated buyers. 
A) a surplus in the market. 
B) a shortage in the market. 
C) a nonbinding price control. 
D) long lines of frustrated buyers.

Question 19

Suppose a price ceiling is not binding;this means that

Accepted Answer

A) the equilibrium price is above the price ceiling. 
B) the equilibrium price is below the price ceiling. 
C) it has no legal enforcement mechanism. 
D) people are finding a way to circumvent the law. 
A) the equilibrium price is above the price ceiling. 
B) the equilibrium price is below the price ceiling. 
C) it has no legal enforcement mechanism. 
D) people are finding a way to circumvent the law.

Question 20

A tax on the sellers of TVs

Accepted Answer

A) leads sellers to supply a smaller quantity at every price. 
B) leads buyers to demand a smaller quantity at every price. 
C) leads sellers to supply a larger quantity at every price. 
D) causes the supply curve to shift to the right. 
A) leads sellers to supply a smaller quantity at every price. 
B) leads buyers to demand a smaller quantity at every price. 
C) leads sellers to supply a larger quantity at every price. 
D) causes the supply curve to shift to the right.

Exam 6: Supply, demand, and Government Policies

A tax on bicycles that buyers of bicycles are required to pay shifts

Policymakers sometimes are attracted to price controls because

Figure 6-2 -Refer to Figure 6-2.In which of the following cases would sellers have to develop a rationing mechanism?

In which of these cases will the tax burden fall most heavily on buyers of the good?

Suppose the demand for picture frames is inelastic and the supply of picture frames is elastic.A tax of $1 per frame levied on buyers of picture frames will increase the equilibrium price paid by buyers of picture frames by

A price floor

Most economists are in favor of price controls as a way of allocating resources in the economy.

When a price ceiling is imposed in a market and the ceiling is binding,

When a tax is placed on the sellers of lemonade,

When a binding price ceiling is imposed to benefit buyers,a result is that

Most labor economists believe that the supply of labor is

Unlike minimum wage laws,wage subsidies

The term tax incidence refers to the

Economic policies often have effects that their architects did not intend or anticipate.

Figure 6-4 -Refer to Figure 6-4.For a price ceiling to be binding,it would have to be set at

Figure 6-9 -Refer to Figure 6-9.The effective price paid by buyers after the tax is imposed is

An outcome that can result from either a price ceiling or a price floor is

Suppose a price ceiling is not binding;this means that

A tax on the sellers of TVs

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

Consumers, producers, and the Efficiency of Markets

Application: 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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

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 Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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