Question 1

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell, then

Accepted Answer

A) the supply curve for mopeds shifts downward by $200. 
B) sellers of mopeds receive $200 less per mopeds than they were receiving before the tax. 
C) buyers of mopeds are unaffected by the tax. 
D) None of the above is correct. 
A) the supply curve for mopeds shifts downward by $200. 
B) sellers of mopeds receive $200 less per mopeds than they were receiving before the tax. 
C) buyers of mopeds are unaffected by the tax. 
D) None of the above is correct.

Question 2

Figure 6-20  
-Refer to Figure 6-20. What is the amount of the tax per unit?

Accepted Answer

A) $8 
B) $6 
C) $4 
D) $2 
A) $8 
B) $6 
C) $4 
D) $2

Question 3

Figure 6-13  
-Refer to Figure 6-13. In this market, a minimum wage of $2.75 creates a labor

Accepted Answer

A) shortage of 2,250 workers. 
B) shortage of 4,500 workers. 
C) surplus of 2,250 workers. 
D) neither a labor shortage nor surplus. 
A) shortage of 2,250 workers. 
B) shortage of 4,500 workers. 
C) surplus of 2,250 workers. 
D) neither a labor shortage nor surplus.

Question 4

Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars?

Accepted Answer

A) frequent rental programs such as "Rent nine times and the tenth rental is free!" 
B) enhanced maintenance programs to promote the high quality of the cars 
C) free gasoline given to people as an incentive to a rent a car 
D) slow replacement of old rental cars with newer ones 
A) frequent rental programs such as "Rent nine times and the tenth rental is free!" 
B) enhanced maintenance programs to promote the high quality of the cars 
C) free gasoline given to people as an incentive to a rent a car 
D) slow replacement of old rental cars with newer ones

Question 5

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

Accepted Answer

A) Buyers bear the entire burden of the tax. 
B) Sellers bear the entire burden of the tax. 
C) Buyers and sellers share the burden of the tax. 
D) We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination. 
A) Buyers bear the entire burden of the tax. 
B) Sellers bear the entire burden of the tax. 
C) Buyers and sellers share the burden of the tax. 
D) We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination.

Question 6

A tax on golf clubs will cause buyers of golf clubs to pay a higher price, sellers of golf clubs to receive a lower price, and fewer golf clubs to be sold.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-27  
-Refer to Figure 6-27. If the government places a $2 tax in the market, the seller receives $6.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following would not interfere with market equilibria?

Accepted Answer

A) a minimum wage 
B) a rent control 
C) a non-binding price floor 
D) a binding price ceiling 
A) a minimum wage 
B) a rent control 
C) a non-binding price floor 
D) a binding price ceiling

Question 9

A legal minimum on the price at which a good can be sold is called a price

Accepted Answer

A) subsidy. 
B) floor. 
C) support. 
D) ceiling. 
A) subsidy. 
B) floor. 
C) support. 
D) ceiling.

Question 10

The incidence of a tax falls more heavily on

Accepted Answer

A) consumers than producers if demand is more inelastic than supply. 
B) producers than consumers if supply is more inelastic than demand. 
C) consumers than producers if supply is more elastic than demand. 
D) All of the above are correct. 
A) consumers than producers if demand is more inelastic than supply. 
B) producers than consumers if supply is more inelastic than demand. 
C) consumers than producers if supply is more elastic than demand. 
D) All of the above are correct.

Question 11

Figure 6-18  
-Refer to Figure 6-18. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the buyers of the good, rather than the sellers, are required to pay the tax to the government. After the buyers pay the tax, relative to the case depicted in the figure, the burden on buyers will be

Accepted Answer

A) larger, and the burden on sellers will be smaller. 
B) smaller, and the burden on sellers will be larger. 
C) the same, and the burden on sellers will be the same. 
D) The relative burdens in the two cases cannot be determined without further information. 
A) larger, and the burden on sellers will be smaller. 
B) smaller, and the burden on sellers will be larger. 
C) the same, and the burden on sellers will be the same. 
D) The relative burdens in the two cases cannot be determined without further information.

Question 12

Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift

Accepted Answer

A) demand, raising both the equilibrium price and quantity in the market for artificially-sweetened beverages. 
B) demand, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially-sweetened beverages. 
C) supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially-sweetened beverages. 
D) supply, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially-sweetened beverages. 
A) demand, raising both the equilibrium price and quantity in the market for artificially-sweetened beverages. 
B) demand, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially-sweetened beverages. 
C) supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially-sweetened beverages. 
D) supply, lowering the equilibrium price and raising the equilibrium quantity in the market for artificially-sweetened beverages.

Question 13

A minimum wage that is set above a market's equilibrium wage will result in an excess

Accepted Answer

A) demand for labor, that is, unemployment. 
B) demand for labor, that is, a shortage of workers. 
C) supply of labor, that is, unemployment. 
D) supply of labor, that is, a shortage of workers. 
A) demand for labor, that is, unemployment. 
B) demand for labor, that is, a shortage of workers. 
C) supply of labor, that is, unemployment. 
D) supply of labor, that is, a shortage of workers.

Question 14

A binding price floor causes quantity supplied to be less than quantity demanded.

Accepted Answer

A) True 
 B)False

Question 15

If the demand curve is very inelastic and the supply curve is very elastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 16

Figure 6-20  
-Refer to Figure 6-20. Which of the following statements is correct?

Accepted Answer

A) The amount of the tax per unit is $6. 
B) The tax leaves the size of the market unchanged. 
C) The tax is levied on buyers of the good, rather than on sellers. 
D) All of the above are correct. 
A) The amount of the tax per unit is $6. 
B) The tax leaves the size of the market unchanged. 
C) The tax is levied on buyers of the good, rather than on sellers. 
D) All of the above are correct.

Question 17

Table 6-1
 $$\begin{array} { | c | c | c | } 
\hline \text { Price } & \begin{array} { c } 
\text { Quantity } \
\text { Denanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { Sugplied }
\end{array} \
\hline \$ [ 12 & 12 & 0 \
\hline \$ 1 & 10 & 2 \
\hline \$ 2 & 8 & 4 \
\hline \$ 3 & 6 & 6 \
\hline \$ 4 & 4 & 8 \
\hline \$ 5 & 2 & 10 \
\hline \$ 6 & 0 & 12 \
\hline
\end{array}$$
-Refer to Table 6-1. Which of the following price ceilings would be binding in this market?

Accepted Answer

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

Question 18

The minimum wage is an example of a

Accepted Answer

A) price ceiling. 
B) price floor. 
C) wage subsidy. 
D) tax. 
A) price ceiling. 
B) price floor. 
C) wage subsidy. 
D) tax.

Question 19

Figure 6-1
  
-Refer to Figure 6-1. The price ceiling shown in panel (a)

Accepted Answer

A) is not binding. 
B) creates a surplus. 
C) creates a shortage. 
D) Both a) and b) are correct. 
A) is not binding. 
B) creates a surplus. 
C) creates a shortage. 
D) Both a) and b) are correct.

Question 20

You have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia. Harpo, who is one of your advisors, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Chico, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop. Zeppo, a third advisor, says that the best way to avoid a shortage of oranges is to take no action at all. Which of your three advisors is most likely to have studied economics?

Accepted Answer

A) Harpo 
B) Chico 
C) Zeppo 
D) Apparently, all three advisors have studied economics, but their views on positive economics are different. 
A) Harpo 
B) Chico 
C) Zeppo 
D) Apparently, all three advisors have studied economics, but their views on positive economics are different.

Exam 6: Supply, Demand, and Government Policies

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell, then

Figure 6-20 -Refer to Figure 6-20. What is the amount of the tax per unit?

Figure 6-13 -Refer to Figure 6-13. In this market, a minimum wage of $2.75 creates a labor

Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars?

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

A tax on golf clubs will cause buyers of golf clubs to pay a higher price, sellers of golf clubs to receive a lower price, and fewer golf clubs to be sold.

Figure 6-27 -Refer to Figure 6-27. If the government places a $2 tax in the market, the seller receives $6.

Which of the following would not interfere with market equilibria?

A legal minimum on the price at which a good can be sold is called a price

The incidence of a tax falls more heavily on

Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift

A minimum wage that is set above a market's equilibrium wage will result in an excess

A binding price floor causes quantity supplied to be less than quantity demanded.

If the demand curve is very inelastic and the supply curve is very elastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Figure 6-20 -Refer to Figure 6-20. Which of the following statements is correct?

Table 6-1 Price Quantity Denanded Quantity Sugplied \ [12 12 0 \ 1 10 2 \ 2 8 4 \ 3 6 6 \ 4 4 8 \ 5 2 10 \ 6 0 12 -Refer to Table 6-1. Which of the following price ceilings would be binding in this market?

The minimum wage is an example of a

Figure 6-1 -Refer to Figure 6-1. The price ceiling shown in panel (a)

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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