Question 1

When a tax is placed on the buyers of cell phones, the size of the cell phone market

Accepted Answer

A) and the effective price received by sellers both decrease. 
B) decreases, but the effective price received by sellers increases. 
C) increases, but the effective price received by sellers decreases. 
D) and the effective price received by sellers both increase. 
A) and the effective price received by sellers both decrease. 
B) decreases, but the effective price received by sellers increases. 
C) increases, but the effective price received by sellers decreases. 
D) and the effective price received by sellers both increase.

Question 2

A binding price floor may not help all sellers, but it does not hurt any sellers.

Accepted Answer

A) True 
 B)False

Question 3

Figure 6-14
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-14. The price that buyers pay after the tax is imposed is

Accepted Answer

A) $8. 
B) $10. 
C) $16. 
D) $24. 
A) $8. 
B) $10. 
C) $16. 
D) $24.

Question 4

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market. $$\begin{array} { | c | c | c } 
\hline \text { price } & \begin{array} { c } 
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Suppplied }
\end{array} \
\hline \$ 0 & 15 & 0 \
\hline \$ 1 & 13 & 3 \
\hline \$ 2 & 11 & 6 \
\hline \$ 3 & 9 & 9 \
\hline \$ 4 & 7 & 12 \
\hline \$ 5 & 5 & 15 \
\hline \$ 6 & 3 & 18 \
\hline
\end{array}$$
-Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is

Accepted Answer

A) $2. 
B) $3. 
C) $4. 
D) $5. 
A) $2. 
B) $3. 
C) $4. 
D) $5.

Question 5

Figure 6-14
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-14. The per-unit burden of the tax on sellers is

Accepted Answer

A) $6. 
B) $8. 
C) $10. 
D) $14. 
A) $6. 
B) $8. 
C) $10. 
D) $14.

Question 6

Which of the following is correct? A tax burden

Accepted Answer

A) falls more heavily on the side of the market that is more elastic. 
B) falls more heavily on the side of the market that is less elastic. 
C) falls more heavily on the side of the market that is closest to unit elastic. 
D) is distributed independently of the relative elasticities of supply and demand. 
A) falls more heavily on the side of the market that is more elastic. 
B) falls more heavily on the side of the market that is less elastic. 
C) falls more heavily on the side of the market that is closest to unit elastic. 
D) is distributed independently of the relative elasticities of supply and demand.

Question 7

Figure 6-24
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-24. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2,

Accepted Answer

A) buyers bear a higher burden of the tax in the short run than in the long run. 
B) sellers bear a higher burden of the tax in the short run than in the long run. 
C) buyers and sellers bear an equal burden of the tax in both the short run and long run. 
D) buyers and sellers bear an equal burden of the tax in the short run, but buyers bear a higher burden of the tax in the long run. 
A) buyers bear a higher burden of the tax in the short run than in the long run. 
B) sellers bear a higher burden of the tax in the short run than in the long run. 
C) buyers and sellers bear an equal burden of the tax in both the short run and long run. 
D) buyers and sellers bear an equal burden of the tax in the short run, but buyers bear a higher burden of the tax in the long run.

Question 8

If a tax is levied on the sellers of a product, then the demand curve will

Accepted Answer

A) shift down. 
B) shift up. 
C) become flatter. 
D) not shift. 
A) shift down. 
B) shift up. 
C) become flatter. 
D) not shift.

Question 9

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

Accepted Answer

A) increase, and the price received by sellers will increase. 
B) increase, and the price received by sellers will not change. 
C) not change, and the price received by sellers will increase. 
D) not change, and the price received by sellers will not change. 
A) increase, and the price received by sellers will increase. 
B) increase, and the price received by sellers will not change. 
C) not change, and the price received by sellers will increase. 
D) not change, and the price received by sellers will not change.

Question 10

A price ceiling set below the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 11

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

Question 12

If a binding price floor is imposed on the video game market, then

Accepted Answer

A) the quantity of video games demanded will decrease. 
B) the quantity of video games supplied will increase. 
C) a surplus of video games will develop. 
D) All of the above are correct. 
A) the quantity of video games demanded will decrease. 
B) the quantity of video games supplied will increase. 
C) a surplus of video games will develop. 
D) All of the above are correct.

Question 13

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 14

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market. $$\begin{array} { | c | c | c } 
\hline \text { price } & \begin{array} { c } 
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Suppplied }
\end{array} \
\hline \$ 0 & 15 & 0 \
\hline \$ 1 & 13 & 3 \
\hline \$ 2 & 11 & 6 \
\hline \$ 3 & 9 & 9 \
\hline \$ 4 & 7 & 12 \
\hline \$ 5 & 5 & 15 \
\hline \$ 6 & 3 & 18 \
\hline
\end{array}$$
-Refer to Table 6-4. How many units of the good are sold after the imposition of the price floor?

Accepted Answer

A) 3 
B) 9 
C) 15 
D) 18 
A) 3 
B) 9 
C) 15 
D) 18

Question 15

If a nonbinding price floor is imposed on a market, then the

Accepted Answer

A) quantity sold in the market will decrease. 
B) quantity sold in the market will stay the same. 
C) price in the market will increase. 
D) price in the market will decrease. 
A) quantity sold in the market will decrease. 
B) quantity sold in the market will stay the same. 
C) price in the market will increase. 
D) price in the market will decrease.

Question 16

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 17

The demand for salt is inelastic, and the supply of salt is elastic. The demand for caviar is elastic, and the supply of caviar is inelastic. Suppose that a tax of $1 per pound is levied on the sellers of salt, and a tax of $1 per pound is levied on the buyers of caviar. We would expect that most of the burden of these taxes will fall on

Accepted Answer

A) sellers of salt and the buyers of caviar. 
B) sellers of salt and the sellers of caviar. 
C) buyers of salt and the sellers of caviar. 
D) buyers of salt and the buyers of caviar. 
A) sellers of salt and the buyers of caviar. 
B) sellers of salt and the sellers of caviar. 
C) buyers of salt and the sellers of caviar. 
D) buyers of salt and the buyers of caviar.

Question 18

The tax burden will fall most heavily on sellers of the good when the demand curve

Accepted Answer

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

Question 19

Figure 6-15  
-Refer to Figure 6-15. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

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

Question 20

FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

Accepted Answer

A) True 
 B)False

When a tax is placed on the buyers of cell phones, the size of the cell phone market

A binding price floor may not help all sellers, but it does not hurt any sellers.

Figure 6-14 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-14. The price that buyers pay after the tax is imposed is

Figure 6-14 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-14. The per-unit burden of the tax on sellers is

Which of the following is correct? A tax burden

If a tax is levied on the sellers of a product, then the demand curve will

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

A price ceiling set below the equilibrium price is binding.

A nonbinding 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.

If a binding price floor is imposed on the video game market, then

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

If a nonbinding price floor is imposed on a market, then the

Policymakers use taxes

The tax burden will fall most heavily on sellers of the good when the demand curve

Figure 6-15 -Refer to Figure 6-15. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

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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Exam 6: Supply, Demand, and Government Policies

When a tax is placed on the buyers of cell phones, the size of the cell phone market

A binding price floor may not help all sellers, but it does not hurt any sellers.

Figure 6-14 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-14. The price that buyers pay after the tax is imposed is

Figure 6-14 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-14. The per-unit burden of the tax on sellers is

Which of the following is correct? A tax burden

If a tax is levied on the sellers of a product, then the demand curve will

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

A price ceiling set below the equilibrium price is binding.

A nonbinding 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.

If a binding price floor is imposed on the video game market, then

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

If a nonbinding price floor is imposed on a market, then the

Policymakers use taxes

The tax burden will fall most heavily on sellers of the good when the demand curve

Figure 6-15 -Refer to Figure 6-15. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

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

Filters