Question 1

Figure 6-10
  
-Refer to Figure 6-10.What is the share of the tax burden per unit that buyers would pay

Accepted Answer

A) $1.00 
B) $1.50 
C) $2.50 
D) $3.50 
A) $1.00 
B) $1.50 
C) $2.50 
D) $3.50

Question 2

What will result from a binding price ceiling in the computer market

Accepted Answer

A) a surplus of computers 
B) a shortage of computers 
C) the quantity demanded of computers being equal to the quantity supplied 
D) an increase in the demand for computers 
A) a surplus of computers 
B) a shortage of computers 
C) the quantity demanded of computers being equal to the quantity supplied 
D) an increase in the demand for computers

Question 3

What will a tax placed on the seller of a product do to the equilibrium price and quantity

Accepted Answer

A) It will raise equilibrium price and lower equilibrium quantity. 
B) It will raise both equilibrium price and quantity. 
C) It will lower equilibrium price and raise equilibrium quantity. 
D) It will lower both equilibrium price and quantity. 
A) It will raise equilibrium price and lower equilibrium quantity. 
B) It will raise both equilibrium price and quantity. 
C) It will lower equilibrium price and raise equilibrium quantity. 
D) It will lower both equilibrium price and quantity.

Question 4

Market demand is given as QD = 210 - 5P.Market supply is given as QS = 2P.Which legally imposed price would constitute a binding price floor

Accepted Answer

A) $10 
B) $15 
C) $30 
D) $35 
A) $10 
B) $15 
C) $30 
D) $35

Question 5

If buyers are required to pay a $0.20 tax per bag on jelly beans,how will the demand for jelly beans shift

Accepted Answer

A) up by $0.10 per bag 
B) up by $0.20 per bag 
C) down by $0.20 per bag 
D) down by $0.10 per bag 
A) up by $0.10 per bag 
B) up by $0.20 per bag 
C) down by $0.20 per bag 
D) down by $0.10 per bag

Question 6

What does a tax placed on the seller of a good do to the price paid and received

Accepted Answer

A) It raises the price buyers pay and lowers the price sellers receive. 
B) It lowers the price buyers pay and raises the price sellers receive. 
C) It raises both the price buyers pay and the price sellers receive. 
D) It lowers both the price buyers pay and the price sellers receive. 
A) It raises the price buyers pay and lowers the price sellers receive. 
B) It lowers the price buyers pay and raises the price sellers receive. 
C) It raises both the price buyers pay and the price sellers receive. 
D) It lowers both the price buyers pay and the price sellers receive.

Question 7

What does the tax incidence depend on

Accepted Answer

A) if the entire tax is levied on the buyers or the sellers 
B) the government regulations 
C) the forces of supply and demand 
D) the size of the market 
A) if the entire tax is levied on the buyers or the sellers 
B) the government regulations 
C) the forces of supply and demand 
D) the size of the market

Question 8

Why was the minimum wage instituted

Accepted Answer

A) in order to ensure workers a middle-class standard of living 
B) in order to ensure workers employment 
C) in order to ensure workers a minimally adequate standard of living 
D) in order to ensure workers unemployment compensation 
A) in order to ensure workers a middle-class standard of living 
B) in order to ensure workers employment 
C) in order to ensure workers a minimally adequate standard of living 
D) in order to ensure workers unemployment compensation

Question 9

What will a price ceiling that is not binding do

Accepted Answer

A) It will cause a surplus in the market. 
B) It will cause a shortage in the market. 
C) It will cause the market to be less efficient. 
D) It will have no effect on the market price. 
A) It will cause a surplus in the market. 
B) It will cause a shortage in the market. 
C) It will cause the market to be less efficient. 
D) It will have no effect on the market price.

Question 10

What will result when a price ceiling is a binding constraint

Accepted Answer

A) The actual price will be below the price ceiling. 
B) The actual price will be above the price ceiling. 
C) The equilibrium price will equal the price ceiling. 
D) The actual price will equal the price ceiling. 
A) The actual price will be below the price ceiling. 
B) The actual price will be above the price ceiling. 
C) The equilibrium price will equal the price ceiling. 
D) The actual price will equal the price ceiling.

Question 11

A tax on golf clubs will cause the equilibrium market price of golf clubs to increase,and the equilibrium quantity sold to decrease.

Accepted Answer

A) True 
 B)False

Question 12

Figure 6-6

-Refer to Figure 6-6.In panel (b),what will happen at the actual price

Accepted Answer

A) There will be a shortage of wheat. 
B) There will be equilibrium in the market. 
C) There will be a surplus of wheat. 
D) There will be an excess demand for wheat. 
A) There will be a shortage of wheat. 
B) There will be equilibrium in the market. 
C) There will be a surplus of wheat. 
D) There will be an excess demand for wheat.

Question 13

When a payroll tax is enacted,what happens to the wage received by workers and the wage paid by firms

Accepted Answer

A) The wage received by workers falls and the wage paid by firms rises. 
B) The wage received by workers and the wage paid by firms both fall. 
C) The wage received by workers rises and the wage paid by firms falls. 
D) The wage received by workers and the wage paid by firms both rise. 
A) The wage received by workers falls and the wage paid by firms rises. 
B) The wage received by workers and the wage paid by firms both fall. 
C) The wage received by workers rises and the wage paid by firms falls. 
D) The wage received by workers and the wage paid by firms both rise.

Question 14

Suppose that the demand for digital picture frames is price elastic and the supply of digital picture frames is price inelastic.By what amount will a tax of $1.00 per frame levied on buyers of picture frames increase the equilibrium price paid by buyers of picture frames

Accepted Answer

A) by less than $0.50 
B) by more than $0.50 but less than $1.00 
C) by $1.00 
D) by more than $1.00 
A) by less than $0.50 
B) by more than $0.50 but less than $1.00 
C) by $1.00 
D) by more than $1.00

Question 15

If a price ceiling is a binding constraint on the market,what do we know

Accepted Answer

A) The equilibrium price must be above the price ceiling. 
B) Sellers will benefit from this market. 
C) The forces of supply and demand must be in equilibrium. 
D) There may be a surplus in the market. 
A) The equilibrium price must be above the price ceiling. 
B) Sellers will benefit from this market. 
C) The forces of supply and demand must be in equilibrium. 
D) There may be a surplus in the market.

Question 16

How can water shortages be most efficiently eliminated even in times of drought

Accepted Answer

A) if the market is allowed to adjust freely 
B) if water can be moved from where it is plentiful to where it is needed most 
C) if government watering bans are imposed to reduce water usage 
D) if the price is low enough for everyone to have all the water they want 
A) if the market is allowed to adjust freely 
B) if water can be moved from where it is plentiful to where it is needed most 
C) if government watering bans are imposed to reduce water usage 
D) if the price is low enough for everyone to have all the water they want

Question 17

Figure 6-10
  
-Refer to Figure 6-10.What is the price buyers will pay after the tax is imposed

Accepted Answer

A) $1.00 
B) $3.50 
C) $5.00 
D) $6.00 
A) $1.00 
B) $3.50 
C) $5.00 
D) $6.00

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

What is the role of price controls in the market economy

Accepted Answer

A) Price controls are used to make markets more efficient. 
B) Price controls are a tool used by business firms to fix prices. 
C) Price controls are nearly always effective in eliminating shortages. 
D) Price controls are used by governments to reallocate resources more equitably. 
A) Price controls are used to make markets more efficient. 
B) Price controls are a tool used by business firms to fix prices. 
C) Price controls are nearly always effective in eliminating shortages. 
D) Price controls are used by governments to reallocate resources more equitably.

Question 20

Using the equations shown below,answer the following questions with a carefully labelled graph (without calculations)
QD = a - bP
QS = c + dP
a.Draw demand and supply curves, and show the market equilibrium point.
b.Assuming a tax of T is imposed on the seller side, what is the new demand and supply curve?
c.What is the new equilibrium point?
d.Label the portion of tax that buyer pays and the portion that seller pays?
e.What is the effective price the sellers receive?

Accepted Answer

a.The equilibrium point is P₀,Q₀.
b.With

Exam 6: Supply, demand, and Government Policies

Figure 6-10 -Refer to Figure 6-10.What is the share of the tax burden per unit that buyers would pay

What will result from a binding price ceiling in the computer market

What will a tax placed on the seller of a product do to the equilibrium price and quantity

Market demand is given as QD = 210 - 5P.Market supply is given as QS = 2P.Which legally imposed price would constitute a binding price floor

If buyers are required to pay a $0.20 tax per bag on jelly beans,how will the demand for jelly beans shift

What does a tax placed on the seller of a good do to the price paid and received

What does the tax incidence depend on

Why was the minimum wage instituted

What will a price ceiling that is not binding do

What will result when a price ceiling is a binding constraint

A tax on golf clubs will cause the equilibrium market price of golf clubs to increase,and the equilibrium quantity sold to decrease.

Figure 6-6 -Refer to Figure 6-6.In panel (b),what will happen at the actual price

When a payroll tax is enacted,what happens to the wage received by workers and the wage paid by firms

Suppose that the demand for digital picture frames is price elastic and the supply of digital picture frames is price inelastic.By what amount will a tax of $1.00 per frame levied on buyers of picture frames increase the equilibrium price paid by buyers of picture frames

If a price ceiling is a binding constraint on the market,what do we know

How can water shortages be most efficiently eliminated even in times of drought

Figure 6-10 -Refer to Figure 6-10.What is the price buyers will pay after the tax is imposed

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

What is the role of price controls in the market economy

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

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

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters

Market demand is given as Q_D= 210 - 5P.Market supply is given as Q_S= 2P.Which legally imposed price would constitute a binding price floor