Question 1

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

Accepted Answer

A) lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. 
B) the tax raises too little revenue for the government, so it should be eliminated. 
C) firms bear most of the burden of the tax. 
D) workers bear most of the burden of the tax. 
A) lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. 
B) the tax raises too little revenue for the government, so it should be eliminated. 
C) firms bear most of the burden of the tax. 
D) workers bear most of the burden of the tax.

Question 2

A tax on sellers shifts the supply curve but not the demand curve.

Accepted Answer

A) True 
 B)False

Question 3

A tax on the buyers of personal computer external hard drives encourages

Accepted Answer

A) sellers to supply a smaller quantity at every price. 
B) buyers to demand a smaller quantity at every price. 
C) buyers to demand a larger quantity at every price. 
D) Both a) and b) are correct. 
A) sellers to supply a smaller quantity at every price. 
B) buyers to demand a smaller quantity at every price. 
C) buyers to demand a larger quantity at every price. 
D) Both a) and b) are correct.

Question 4

A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

Accepted Answer

A) True 
 B)False

Question 5

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the

Accepted Answer

A) demand curve for toothpaste shifts to the left. 
B) supply curve for toothpaste shifts to the right. 
C) quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases. 
D) quantity supplied of toothpaste stays the same. 
A) demand curve for toothpaste shifts to the left. 
B) supply curve for toothpaste shifts to the right. 
C) quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases. 
D) quantity supplied of toothpaste stays the same.

Question 6

Table 6-2
 $$\begin{array} { | c | c | c | } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Sugplied }
\end{array} \
\hline \$ 10 & 250 & 0\
\hline \$ 5 & 200 & 75 \
\hline \$ 10 & 150 & 150 \
\hline \$ 15 & 100 & 225 \
\hline \$ 20 & 50 & 300 \
\hline \$ 25 & 0 & 375 \
\hline
\end{array}$$
-Refer to Table 6-2. A price floor set at $20 will

Accepted Answer

A) be binding and will result in a surplus of 50 units. 
B) be binding and will result in a surplus of 100 units. 
C) be binding and will result in a surplus of 250 units. 
D) not be binding. 
A) be binding and will result in a surplus of 50 units. 
B) be binding and will result in a surplus of 100 units. 
C) be binding and will result in a surplus of 250 units. 
D) not be binding.

Question 7

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would

Accepted Answer

A) shift the supply curve upward by less than 50 cents. 
B) raise the equilibrium price by 50 cents. 
C) create a 50-cent tax burden each for buyers and sellers. 
D) discourage market activity. 
A) shift the supply curve upward by less than 50 cents. 
B) raise the equilibrium price by 50 cents. 
C) create a 50-cent tax burden each for buyers and sellers. 
D) discourage market activity.

Question 8

Figure 6-6  
-Refer to Figure 6-6. If the government imposes a price floor of $6 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 9

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

Accepted Answer

A) True 
 B)False

Question 10

The impact of the minimum wage depends on the skill and experience of the worker.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-7  
-Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

Accepted Answer

A) the quantity of the good supplied decreases by 20 units. 
B) the demand curve shifts to the left so as to now pass through the point (quantity = 40, price = $5). 
C) buyers' total expenditure on the good decreases by $100. 
D) the price of the good continues to serve as the rationing mechanism. 
A) the quantity of the good supplied decreases by 20 units. 
B) the demand curve shifts to the left so as to now pass through the point (quantity = 40, price = $5). 
C) buyers' total expenditure on the good decreases by $100. 
D) the price of the good continues to serve as the rationing mechanism.

Question 12

If a tax is levied on the buyers of a product, then there will be a(n)

Accepted Answer

A) downward shift of the supply curve. 
B) upward shift of the supply curve. 
C) movement up and to the right along the supply curve. 
D) movement down and to the left along the supply curve. 
A) downward shift of the supply curve. 
B) upward shift of the supply curve. 
C) movement up and to the right along the supply curve. 
D) movement down and to the left along the supply curve.

Question 13

Figure 6-15  
-Refer to Figure 6-15. Suppose a tax of $2 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A) $3 
B) between $3 and $5 
C) between $5 and $7 
D) $7 
A) $3 
B) between $3 and $5 
C) between $5 and $7 
D) $7

Question 14

When a binding price floor is imposed on a market,

Accepted Answer

A) price no longer serves as a rationing device. 
B) the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor. 
C) all sellers benefit. 
D) All of the above are correct. 
A) price no longer serves as a rationing device. 
B) the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor. 
C) all sellers benefit. 
D) All of the above are correct.

Question 15

You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

Accepted Answer

A) The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee. 
B) Your employer is required by law to pay $300 to match the $300 deducted from your check. 
C) This type of tax is an example of a payroll tax. 
D) All of the above are correct. 
A) The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee. 
B) Your employer is required by law to pay $300 to match the $300 deducted from your check. 
C) This type of tax is an example of a payroll tax. 
D) All of the above are correct.

Question 16

A binding minimum wage

Accepted Answer

A) alters both the quantity demanded and quantity supplied of labor. 
B) affects only the quantity of labor demanded; it does not affect the quantity of labor supplied. 
C) has no effect on the quantity of labor demanded or the quantity of labor supplied. 
D) causes only temporary unemployment because the market will adjust and eliminate any temporary surplus of workers. 
A) alters both the quantity demanded and quantity supplied of labor. 
B) affects only the quantity of labor demanded; it does not affect the quantity of labor supplied. 
C) has no effect on the quantity of labor demanded or the quantity of labor supplied. 
D) causes only temporary unemployment because the market will adjust and eliminate any temporary surplus of workers.

Question 17

Workers, rather than firms, bear most of the burden of the payroll tax.

Accepted Answer

A) True 
 B)False

Question 18

Figure 6-18  
-Refer to Figure 6-18. Sellers pay how much of the tax per unit?

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 19

When a binding price ceiling is imposed on a market,

Accepted Answer

A) price no longer serves as a rationing device. 
B) the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling. 
C) all buyers benefit. 
D) All of the above are correct. 
A) price no longer serves as a rationing device. 
B) the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling. 
C) all buyers benefit. 
D) All of the above are correct.

Question 20

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

A tax on sellers shifts the supply curve but not the demand curve.

A tax on the buyers of personal computer external hard drives encourages

A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the

Table 6-2 Price Quantity Denanded Quantity Sugplied \ 10 250 0 \ 5 200 75 \ 10 150 150 \ 15 100 225 \ 20 50 300 \ 25 0 375 -Refer to Table 6-2. A price floor set at $20 will

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would

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

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

The impact of the minimum wage depends on the skill and experience of the worker.

Figure 6-7 -Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

If a tax is levied on the buyers of a product, then there will be a(n)

Figure 6-15 -Refer to Figure 6-15. Suppose a tax of $2 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

When a binding price floor is imposed on a market,

You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

A binding minimum wage

Workers, rather than firms, bear most of the burden of the payroll tax.

Figure 6-18 -Refer to Figure 6-18. Sellers pay how much of the tax per unit?

When a binding price ceiling is imposed on a market,

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

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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