Question 1

Figure 6-16  
-Refer to Figure 6-16. Suppose a tax of $5 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A) $5 
B) between $5 and $10 
C) between $10 and $14 
D) $14 
A) $5 
B) between $5 and $10 
C) between $10 and $14 
D) $14

Question 2

Using the graph shown, in which the vertical distance between points A and B represents the tax in the market, answer the following questions.
a. What was the equilibrium price and quantity in this market before the tax?
b. What is the amount of the tax?
c. How much of the tax will the buyers pay?
d. How much of the tax will the sellers pay?
e. How much will the buyer pay for the product after the tax is imposed?
f. How much will the seller receive after the tax is imposed?
g. As a result of the tax, what has happened to the level of market activity?
   
a.What was the equilibrium price and quantity in this market before the tax?
b.What is the amount of the tax?
c.How much of the tax will the buyers pay?
d.How much of the tax will the sellers pay?
e.How much will the buyer pay for the product after the tax is imposed?

Accepted Answer

a.$8; 8,000 units
b.$5
c.$3
d.

Question 3

When policymakers set prices by legal decree, they

Accepted Answer

A) are usually following the advice of mainstream economists. 
B) improve the organization of economic activity. 
C) obscure the signals that normally guide the allocation of society's resources. 
D) are demonstrating a willingness to sacrifice fairness for the sake of a gain in efficiency. 
A) are usually following the advice of mainstream economists. 
B) improve the organization of economic activity. 
C) obscure the signals that normally guide the allocation of society's resources. 
D) are demonstrating a willingness to sacrifice fairness for the sake of a gain in efficiency.

Question 4

A tax levied on the sellers of blueberries

Accepted Answer

A) increases sellers' costs, reduces profits, and shifts the supply curve up. 
B) increases sellers' costs, reduces profits, and shifts the supply curve down. 
C) decreases sellers' costs, increases profits, and shifts the supply curve up. 
D) decreases sellers' costs, increases profits, and shifts the supply curve down. 
A) increases sellers' costs, reduces profits, and shifts the supply curve up. 
B) increases sellers' costs, reduces profits, and shifts the supply curve down. 
C) decreases sellers' costs, increases profits, and shifts the supply curve up. 
D) decreases sellers' costs, increases profits, and shifts the supply curve down.

Question 5

The price paid by buyers in a market will increase if the government

Accepted Answer

A) decreases a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) decreases a tax on the good sold in that market. 
D) imposes a binding price ceiling in that market. 
A) decreases a binding price floor in that market. 
B) increases a binding price ceiling in that market. 
C) decreases a tax on the good sold in that market. 
D) imposes a binding price ceiling in that market.

Question 6

A price floor set above the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-26  
-Refer to Figure 6-26. A price floor set at $60 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 8

A price floor is a legal minimum on the price at which a good or service can be sold.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not correct?

Accepted Answer

A) Economists have two roles: scientist and policy adviser. 
B) As scientists, economists develop and test theories to explain the world around them. 
C) Economic policies rarely have effects that their architects did not intend or anticipate. 
D) As policy advisers, economists use their theories to help change the world for the better. 
A) Economists have two roles: scientist and policy adviser. 
B) As scientists, economists develop and test theories to explain the world around them. 
C) Economic policies rarely have effects that their architects did not intend or anticipate. 
D) As policy advisers, economists use their theories to help change the world for the better.

Question 10

Figure 6-6  
-Refer to Figure 6-6. If the government imposes a price floor of $14 on this market, then there will be

Accepted Answer

A) no surplus. 
B) a surplus of 20 units. 
C) a surplus of 30 units. 
D) a surplus of 40 units. 
A) no surplus. 
B) a surplus of 20 units. 
C) a surplus of 30 units. 
D) a surplus of 40 units.

Question 11

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 12

The term tax incidence refers to

Accepted Answer

A) whether buyers or sellers of a good are required to send tax payments to the government. 
B) whether the demand curve or the supply curve shifts when the tax is imposed. 
C) the distribution of the tax burden between buyers and sellers. 
D) widespread view that taxes (and death) are the only certainties in life. 
A) whether buyers or sellers of a good are required to send tax payments to the government. 
B) whether the demand curve or the supply curve shifts when the tax is imposed. 
C) the distribution of the tax burden between buyers and sellers. 
D) widespread view that taxes (and death) are the only certainties in life.

Question 13

Figure 6-27  
-Refer to Figure 6-27. If the government places a $2 tax in the market, the buyer bears $2 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 14

Minimum-wage laws dictate

Accepted Answer

A) the exact wage that firms must pay workers. 
B) a maximum wage that firms may pay workers. 
C) a minimum wage that firms may pay workers. 
D) both a minimum wage and a maximum wage that firms may pay workers. 
A) the exact wage that firms must pay workers. 
B) a maximum wage that firms may pay workers. 
C) a minimum wage that firms may pay workers. 
D) both a minimum wage and a maximum wage that firms may pay workers.

Question 15

Figure 6-9  
-Refer to Figure 6-9. At which price would a price ceiling be binding?

Accepted Answer

A) $4 
B) $5 
C) $6 
D) $7 
A) $4 
B) $5 
C) $6 
D) $7

Question 16

The minimum wage does not apply to

Accepted Answer

A) jobs for teenagers. 
B) jobs for members of minority groups. 
C) unpaid internships. 
D) jobs that include on-the-job training. 
A) jobs for teenagers. 
B) jobs for members of minority groups. 
C) unpaid internships. 
D) jobs that include on-the-job training.

Question 17

An example of a price floor is

Accepted Answer

A) the regulation of gasoline prices in the U.S. in the 1970s. 
B) rent control. 
C) the minimum wage. 
D) any restriction on price that leads to a shortage. 
A) the regulation of gasoline prices in the U.S. in the 1970s. 
B) rent control. 
C) the minimum wage. 
D) any restriction on price that leads to a shortage.

Question 18

Figure 6-17  
-Refer to Figure 6-17. In the after-tax equilibrium, how much revenue does the government collect from the tax on this good?

Accepted Answer

A) $210 
B) $345 
C) $420 
D) $480 
A) $210 
B) $345 
C) $420 
D) $480

Question 19

A binding price ceiling (i)
Causes a surplus.(ii)
Causes a shortage.(iii)
Is set at a price above the equilibrium price.(iv)
Is set at a price below the equilibrium price.

Accepted Answer

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

Question 20

A tax imposed on the buyers of a good will lower the

Accepted Answer

A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity. 
A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity.

Exam 6: Supply, Demand, and Government Policies

Figure 6-16 -Refer to Figure 6-16. Suppose a tax of $5 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

When policymakers set prices by legal decree, they

A tax levied on the sellers of blueberries

The price paid by buyers in a market will increase if the government

A price floor set above the equilibrium price is binding.

Figure 6-26 -Refer to Figure 6-26. A price floor set at $60 would create a surplus of 20 units.

A price floor is a legal minimum on the price at which a good or service can be sold.

Which of the following is not correct?

Figure 6-6 -Refer to Figure 6-6. If the government imposes a price floor of $14 on this market, then there will be

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

The term tax incidence refers to

Figure 6-27 -Refer to Figure 6-27. If the government places a $2 tax in the market, the buyer bears $2 of the tax burden.

Minimum-wage laws dictate

Figure 6-9 -Refer to Figure 6-9. At which price would a price ceiling be binding?

The minimum wage does not apply to

An example of a price floor is

Figure 6-17 -Refer to Figure 6-17. In the after-tax equilibrium, how much revenue does the government collect from the tax on this good?

A binding price ceiling (i) Causes a surplus.(ii) Causes a shortage.(iii) Is set at a price above the equilibrium price.(iv) Is set at a price below the equilibrium price.

A tax imposed on the buyers of a good will lower the

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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