Question 1

Figure 6-25
  
-Refer to Figure 6-25. In which market will the tax burden be most equally divided between buyers and sellers?

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 2

Figure 6-19  
-Refer to Figure 6-19. Which of the following is correct?

Accepted Answer

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

Question 3

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

Accepted Answer

A) He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people. 
B) He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city. 
C) He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted. 
D) He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city. 
A) He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people. 
B) He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city. 
C) He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted. 
D) He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.

Question 4

A tax on buyers increases the size of a market.

Accepted Answer

A) True 
 B)False

Question 5

The minimum wage was instituted to ensure workers

Accepted Answer

A) a middle-class standard of living. 
B) employment. 
C) a minimally adequate standard of living. 
D) unemployment compensation. 
A) a middle-class standard of living. 
B) employment. 
C) a minimally adequate standard of living. 
D) unemployment compensation.

Question 6

A price ceiling set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 7

Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

Accepted Answer

A) True 
 B)False

Question 8

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

Accepted Answer

A) True 
 B)False

Question 9

Price controls can generate inequities.

Accepted Answer

A) True 
 B)False

Question 10

The price paid by buyers in a market will increase if the government (i)
Increases a binding price floor in that market.(ii)
Increases a binding price ceiling in that market.(iii)
Decreases a tax on the good sold in that market.

Accepted Answer

A) (ii) only 
B) (iii) only 
C) (i) and (ii) only 
D) (i), (ii), and (iii) 
A) (ii) only 
B) (iii) only 
C) (i) and (ii) only 
D) (i), (ii), and (iii)

Question 11

Figure 6-23  
-Refer to Figure 6-23. The per-unit burden of the tax is

Accepted Answer

A) $4 for buyers and $6 for sellers. 
B) $5 for buyers and $5 for sellers. 
C) $6 for buyers and $4 for sellers. 
D) $10 for buyers and $0 for sellers. 
A) $4 for buyers and $6 for sellers. 
B) $5 for buyers and $5 for sellers. 
C) $6 for buyers and $4 for sellers. 
D) $10 for buyers and $0 for sellers.

Question 12

One common example of a price ceiling is rent control.

Accepted Answer

A) True 
 B)False

Question 13

When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market

Accepted Answer

A) and the price paid by buyers both decrease. 
B) decreases, but the price paid by buyers increases. 
C) increases, but the price paid by buyers decreases. 
D) and the price paid by buyers both increase. 
A) and the price paid by buyers both decrease. 
B) decreases, but the price paid by buyers increases. 
C) increases, but the price paid by buyers decreases. 
D) and the price paid by buyers both increase.

Question 14

Which of the following causes a shortage of a good?

Accepted Answer

A) a binding price floor 
B) a binding price ceiling 
C) a tax on the good 
D) None of the above is correct. 
A) a binding price floor 
B) a binding price ceiling 
C) a tax on the good 
D) None of the above is correct.

Question 15

When a free market for a good reaches equilibrium, anyone who is willing and able to pay the market price can buy the good.

Accepted Answer

A) True 
 B)False

Question 16

Figure 6-10  
-Refer to Figure 6-10. A price ceiling set at

Accepted Answer

A) $6 will be binding and will result in a shortage of 8 units. 
B) $6 will be binding and will result in a shortage of 4 units. 
C) $16 will be binding and will result in a shortage of 12 units. 
D) $16 will be binding and will result in a shortage of 6 units. 
A) $6 will be binding and will result in a shortage of 8 units. 
B) $6 will be binding and will result in a shortage of 4 units. 
C) $16 will be binding and will result in a shortage of 12 units. 
D) $16 will be binding and will result in a shortage of 6 units.

Question 17

A tax on sellers will shift the

Accepted Answer

A) demand curve upward by the amount of the tax. 
B) demand curve downward by the amount of the tax. 
C) supply curve upward by the amount of the tax. 
D) supply curve downward by the amount of the tax. 
A) demand curve upward by the amount of the tax. 
B) demand curve downward by the amount of the tax. 
C) supply curve upward by the amount of the tax. 
D) supply curve downward by the amount of the tax.

Question 18

A price ceiling is binding when it is set

Accepted Answer

A) above the equilibrium price, causing a shortage. 
B) above the equilibrium price, causing a surplus. 
C) below the equilibrium price, causing a shortage. 
D) below the equilibrium price, causing a surplus. 
A) above the equilibrium price, causing a shortage. 
B) above the equilibrium price, causing a surplus. 
C) below the equilibrium price, causing a shortage. 
D) below the equilibrium price, causing a surplus.

Question 19

A price ceiling will be binding only if it is set

Accepted Answer

A) equal to the equilibrium price. 
B) above the equilibrium price. 
C) below the equilibrium price. 
D) either above or below the equilibrium price. 
A) equal to the equilibrium price. 
B) above the equilibrium price. 
C) below the equilibrium price. 
D) either above or below the equilibrium price.

Question 20

When a tax is levied on sellers of tea,

Accepted Answer

A) the well-being of both sellers and buyers of tea is unaffected. 
B) sellers of tea are made worse off, and the well-being of buyers is unaffected. 
C) sellers of tea are made worse off, and buyers of tea are made better off. 
D) both sellers and buyers of tea are made worse off. 
A) the well-being of both sellers and buyers of tea is unaffected. 
B) sellers of tea are made worse off, and the well-being of buyers is unaffected. 
C) sellers of tea are made worse off, and buyers of tea are made better off. 
D) both sellers and buyers of tea are made worse off.

Exam 6: Supply, Demand, and Government Policies

Figure 6-25 -Refer to Figure 6-25. In which market will the tax burden be most equally divided between buyers and sellers?

Figure 6-19 -Refer to Figure 6-19. Which of the following is correct?

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

A tax on buyers increases the size of a market.

The minimum wage was instituted to ensure workers

A price ceiling set above the equilibrium price causes a surplus in the market.

Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

Price controls can generate inequities.

The price paid by buyers in a market will increase if the government (i) Increases a binding price floor in that market.(ii) Increases a binding price ceiling in that market.(iii) Decreases a tax on the good sold in that market.

Figure 6-23 -Refer to Figure 6-23. The per-unit burden of the tax is

One common example of a price ceiling is rent control.

When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market

Which of the following causes a shortage of a good?

When a free market for a good reaches equilibrium, anyone who is willing and able to pay the market price can buy the good.

Figure 6-10 -Refer to Figure 6-10. A price ceiling set at

A tax on sellers will shift the

A price ceiling is binding when it is set

A price ceiling will be binding only if it is set

When a tax is levied on sellers of tea,

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

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 Macroeconomic Models

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

Six Debates Over Macroeconomic Policy

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