Question 1

Economists use the term tax incidence to refer to who is legally responsible for paying the tax.

Accepted Answer

A) True 
 B)False

Question 2

When a tax is placed on the buyers of milk,the

Accepted Answer

A) size of the milk market is reduced. 
B) effective price of milk paid by buyers decreases. 
C) supply of milk decreases. 
D) price of milk received by sellers decreases, and the size of the milk market is unchanged. 
A) size of the milk market is reduced. 
B) effective price of milk paid by buyers decreases. 
C) supply of milk decreases. 
D) price of milk received by sellers decreases, and the size of the milk market is unchanged.

Question 3

Figure 6-9
  
-Refer to Figure 6-9.The per-unit burden of the tax is

Accepted Answer

A) $4 on buyers and $4 on sellers. 
B) $5 on buyers and $5 on sellers. 
C) $4 on buyers and $6 on sellers. 
D) $6 on buyers and $4 on sellers. 
A) $4 on buyers and $4 on sellers. 
B) $5 on buyers and $5 on sellers. 
C) $4 on buyers and $6 on sellers. 
D) $6 on buyers and $4 on sellers.

Question 4

When free markets ration goods with prices it is both efficient and impersonal.

Accepted Answer

A) True 
 B)False

Question 5

A $2.00 tax placed on the sellers of mailboxes will shift the supply curve

Accepted Answer

A) upward by exactly $2.00. 
B) upward by less than $2.00. 
C) downward by exactly $2.00. 
D) downward by less than $2.00. 
A) upward by exactly $2.00. 
B) upward by less than $2.00. 
C) downward by exactly $2.00. 
D) downward by less than $2.00.

Question 6

Policymakers use taxes

Accepted Answer

A) to raise revenue for public purposes, but not to influence market outcomes. 
B) both to raise revenue for public purposes and to influence market outcomes. 
C) when they realize that price controls alone are insufficient to correct market inequities. 
D) only in those markets in which the burden of the tax falls clearly on the sellers. 
A) to raise revenue for public purposes, but not to influence market outcomes. 
B) both to raise revenue for public purposes and to influence market outcomes. 
C) when they realize that price controls alone are insufficient to correct market inequities. 
D) only in those markets in which the burden of the tax falls clearly on the sellers.

Question 7

Suppose there is currently a tax of $50 per ticket on airline tickets.The supply curve for airline tickets slopes upward and the demand curve for airline tickets slopes downward.Sellers of tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then

Accepted Answer

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

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-12
  
-Refer to Figure 6-12.In which market will the majority of the tax burden fall on the buyer?

Accepted Answer

A) market (a) 
B) market (b) 
C) market (c) 
D) All of the above are correct. 
A) market (a) 
B) market (b) 
C) market (c) 
D) All of the above are correct.

Question 10

A law is passed that requires the buyers of a good to pay a tax on each unit of the good they buy.The initial effect of the tax is on

Accepted Answer

A) the supply of the good. 
B) the demand for the good. 
C) both the supply of the good and the demand for the good. 
D) the price of the good. 
A) the supply of the good. 
B) the demand for the good. 
C) both the supply of the good and the demand for the good. 
D) the price of the good.

Question 11

Figure 6-8
  
-Refer to Figure 6-8.The burden of the tax on buyers is

Accepted Answer

A) $1.00 per unit. 
B) $1.50 per unit. 
C) $2.00 per unit. 
D) $3.00 per unit. 
A) $1.00 per unit. 
B) $1.50 per unit. 
C) $2.00 per unit. 
D) $3.00 per unit.

Question 12

Figure 6-8
  
-Refer to Figure 6-8.The burden of the tax on sellers is

Accepted Answer

A) $1.00 per unit. 
B) $1.50 per unit. 
C) $2.00 per unit. 
D) $3.00 per unit. 
A) $1.00 per unit. 
B) $1.50 per unit. 
C) $2.00 per unit. 
D) $3.00 per unit.

Question 13

Figure 6-2
  
-Refer to Figure 6-2.If the government imposes a price ceiling of $12 in this market,the result would be

Accepted Answer

A) a surplus of 10. 
B) a surplus of 20. 
C) a shortage of 20. 
D) neither a surplus nor a shortage. 
A) a surplus of 10. 
B) a surplus of 20. 
C) a shortage of 20. 
D) neither a surplus nor a shortage.

Question 14

Which of the following statements about the effects of rent control is correct?

Accepted Answer

A) The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments. 
B) The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments. 
C) In the long run, rent control leads to a shortage of apartments, and the quality of available apartments is improved by rent control. 
D) The effects of rent control are very noticeable to the public in the short run, because the primary effects of rent control occur very quickly. 
A) The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments. 
B) The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments. 
C) In the long run, rent control leads to a shortage of apartments, and the quality of available apartments is improved by rent control. 
D) The effects of rent control are very noticeable to the public in the short run, because the primary effects of rent control occur very quickly.

Question 15

There are several criticisms of the minimum wage.Which of the following is not one of those criticisms?

Accepted Answer

A) The minimum wage often hurts those people who it is intended to help. 
B) The minimum wage results in an excess supply of low-skilled labor. 
C) The minimum wage prevents some younger workers from getting needed on-the-job training. 
D) The minimum wage fails to raise the wage of any employed person. 
A) The minimum wage often hurts those people who it is intended to help. 
B) The minimum wage results in an excess supply of low-skilled labor. 
C) The minimum wage prevents some younger workers from getting needed on-the-job training. 
D) The minimum wage fails to raise the wage of any employed person.

Question 16

Figure 6-10
  
-Refer to Figure 6-10.Sellers effectively pay how much of the tax per unit?

Accepted Answer

A) $1.00. 
B) $1.50. 
C) $2.50. 
D) $3.00. 
A) $1.00. 
B) $1.50. 
C) $2.50. 
D) $3.00.

Question 17

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

Accepted Answer

A) an enhancement of efficiency. 
B) undesirable rationing mechanisms. 
C) excess supply. 
D) excess demand. 
A) an enhancement of efficiency. 
B) undesirable rationing mechanisms. 
C) excess supply. 
D) excess demand.

Question 18

When,in a particular market,the law of demand and the law of supply both apply,the imposition of a binding price ceiling in that market causes quantity demanded to be

Accepted Answer

A) greater than quantity supplied. 
B) less than quantity supplied. 
C) equal to quantity supplied. 
D) Any of the above is possible. 
A) greater than quantity supplied. 
B) less than quantity supplied. 
C) equal to quantity supplied. 
D) Any of the above is possible.

Question 19

Figure 6-13
  
-Refer to Figure 6-13 The per-unit burden of the tax on sellers is

Accepted Answer

A) P₂ minus P₀. 
B) P₂ minus P₁. 
C) P₁ minus P₀. 
D) Q₁ minus Q₀. 
A) P₂ minus P₀. 
B) P₂ minus P₁. 
C) P₁ minus P₀. 
D) Q₁ minus Q₀.

Question 20

In New York City,rent-control laws have resulted in

Accepted Answer

A) substantial benefits to people who are relatively wealthy and few, if any, benefits to the poor. 
B) the passage of other laws that make it almost impossible for landlords to evict tenants. 
C) a very slow rate of growth of the housing supply. 
D) All of the above are correct. 
A) substantial benefits to people who are relatively wealthy and few, if any, benefits to the poor. 
B) the passage of other laws that make it almost impossible for landlords to evict tenants. 
C) a very slow rate of growth of the housing supply. 
D) All of the above are correct.

Exam 6: Supply, demand, and Government Policies

Economists use the term tax incidence to refer to who is legally responsible for paying the tax.

When a tax is placed on the buyers of milk,the

Figure 6-9 -Refer to Figure 6-9.The per-unit burden of the tax is

When free markets ration goods with prices it is both efficient and impersonal.

A $2.00 tax placed on the sellers of mailboxes will shift the supply curve

Policymakers use taxes

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

Figure 6-12 -Refer to Figure 6-12.In which market will the majority of the tax burden fall on the buyer?

A law is passed that requires the buyers of a good to pay a tax on each unit of the good they buy.The initial effect of the tax is on

Figure 6-8 -Refer to Figure 6-8.The burden of the tax on buyers is

Figure 6-8 -Refer to Figure 6-8.The burden of the tax on sellers is

Figure 6-2 -Refer to Figure 6-2.If the government imposes a price ceiling of $12 in this market,the result would be

Which of the following statements about the effects of rent control is correct?

There are several criticisms of the minimum wage.Which of the following is not one of those criticisms?

Figure 6-10 -Refer to Figure 6-10.Sellers effectively pay how much of the tax per unit?

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

When,in a particular market,the law of demand and the law of supply both apply,the imposition of a binding price ceiling in that market causes quantity demanded to be

Figure 6-13 -Refer to Figure 6-13 The per-unit burden of the tax on sellers is

In New York City,rent-control laws have resulted in

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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