Question 1

A tax on golf clubs will cause the equilibrium market price of golf clubs to increase and the equilibrium quantity sold to decrease.

Accepted Answer

A) True 
 B)False

Question 2

Workers with high levels of skill and experience are not affected by the minimum wage because:

Accepted Answer

A)  they belong to unions 
B)  they are not legally guaranteed the minimum wage 
C)  they generally earn wages less than the minimum wage 
D)  their equilibrium wages are well above the minimum wage 
A)  they belong to unions 
B)  they are not legally guaranteed the minimum wage 
C)  they generally earn wages less than the minimum wage 
D)  their equilibrium wages are well above the minimum wage

Question 3

Payroll taxes are paid by employers therefore:

Accepted Answer

A)  the burden of these taxes is borne entirely by the employer 
B)  wages are not lower as a result of the tax 
C)  do not discourage firms from hiring labour 
D)  the burden of the tax is shared between workers and employers 
A)  the burden of these taxes is borne entirely by the employer 
B)  wages are not lower as a result of the tax 
C)  do not discourage firms from hiring labour 
D)  the burden of the tax is shared between workers and employers

Question 4

A tax on sellers will cause the equilibrium market price to rise but the equilibrium quality sold will fall.

Accepted Answer

A) True 
 B)False

Question 5

The minimum wage creates the most benefits for teenage workers as their wages are typically much lower than adult workers.

Accepted Answer

A) True 
 B)False

Question 6

Graph 6-6
  
-According to Graph 6-6, in panel a, at the actual price there will be:

Accepted Answer

A)  a shortage of wheat 
B)  equilibrium in the market 
C)  a surplus of wheat 
D)  an excess demand for wheat 
A)  a shortage of wheat 
B)  equilibrium in the market 
C)  a surplus of wheat 
D)  an excess demand for wheat

Question 7

A binding price floor on wheat will:

Accepted Answer

A)  force otherwise profitable farmers out of business 
B)  result in a shortage of wheat 
C)  result in a surplus of wheat 
D)  act as an efficient and impersonal rationing mechanism 
A)  force otherwise profitable farmers out of business 
B)  result in a shortage of wheat 
C)  result in a surplus of wheat 
D)  act as an efficient and impersonal rationing mechanism

Question 8

Some countries in the developing world use price controls on rice to make it easier for poor people to afford. Demonstrate the effect of a binding and non-binding price ceiling on the rice market using supply-demand diagrams.

Accepted Answer

The diagrams should

Question 9

Graph 6-8
  
-According to Graph 6-8, the equilibrium price in the market before the tax is imposed is:

Accepted Answer

A)  $1.00 
B)  $3.50 
C)  $5.00 
D)  $6.00 
A)  $1.00 
B)  $3.50 
C)  $5.00 
D)  $6.00

Question 10

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

Accepted Answer

A) True 
 B)False

Question 11

A binding price floor causes a surplus.

Accepted Answer

A) True 
 B)False

Question 12

A tax on the sellers of popcorn will:

Accepted Answer

A)  reduce the equilibrium price of popcorn and increase the equilibrium quantity 
B)  reduce the equilibrium price of popcorn and reduce the equilibrium quantity 
C)  increase the equilibrium price of popcorn and increase the equilibrium quantity 
D)  increase the equilibrium price of popcorn and reduce the equilibrium quantity 
A)  reduce the equilibrium price of popcorn and increase the equilibrium quantity 
B)  reduce the equilibrium price of popcorn and reduce the equilibrium quantity 
C)  increase the equilibrium price of popcorn and increase the equilibrium quantity 
D)  increase the equilibrium price of popcorn and reduce the equilibrium quantity

Question 13

Does a tax encourage increased market activity? How does a tax affect the amount paid by buyers and the amount received by sellers as a result of a tax on a good?

Accepted Answer

A tax reduces market activity. When a go

Question 14

If a tax is imposed on a market with elastic demand and inelastic supply, buyers will bear most of the burden of the tax.

Accepted Answer

A) True 
 B)False

Question 15

Rich consumers always end up paying most of the tax on luxury goods.

Accepted Answer

A) True 
 B)False

Question 16

Graph 6-12
  
-Using Graph 6-12, answer the following questions.
a. What was the equilibrium price 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?

Accepted Answer

a. $10.00
b. $5.00
c. $2.50
d. $2.50
e.

Question 17

Most labour economists believe that the supply of labour is less elastic than demand. This means:

Accepted Answer

A)  most of the payroll tax burden is borne by workers 
B)  most of the payroll tax burden is borne by employers 
C)  the payroll tax burden is shared equally between employers and workers 
D)  the payroll tax burden falls onto employers as lawmakers intended 
A)  most of the payroll tax burden is borne by workers 
B)  most of the payroll tax burden is borne by employers 
C)  the payroll tax burden is shared equally between employers and workers 
D)  the payroll tax burden falls onto employers as lawmakers intended

Question 18

Water shortages caused by droughts can be lessened by:

Accepted Answer

A)  allowing price to equate the demand for water with the supply of water 
B)  restricting water usage of consumers 
C)  arresting anyone who wastes water 
D)  imposing tight price controls on water 
A)  allowing price to equate the demand for water with the supply of water 
B)  restricting water usage of consumers 
C)  arresting anyone who wastes water 
D)  imposing tight price controls on water

Question 19

The justification for the minimum wage is to:

Accepted Answer

A)  increase the jobs available for workers 
B)  reduce the jobs available for unskilled workers 
C)  ensure all workers get an adequate standard of living 
D)  provide benefits to middle-class part-time workers 
A)  increase the jobs available for workers 
B)  reduce the jobs available for unskilled workers 
C)  ensure all workers get an adequate standard of living 
D)  provide benefits to middle-class part-time workers

Question 20

A tax of $0.20 per cup on the sellers of coffee will cause the:

Accepted Answer

A)  supply curve of coffee to shift down by $0.20 per cup 
B)  supply curve of coffee to shift up by $0.20 per cup 
C)  supply curve of coffee to shift left by $0.20 per cup 
D)  supply curve of right to shift right by $0.20 per cup 
A)  supply curve of coffee to shift down by $0.20 per cup 
B)  supply curve of coffee to shift up by $0.20 per cup 
C)  supply curve of coffee to shift left by $0.20 per cup 
D)  supply curve of right to shift right by $0.20 per cup

Exam 6: Supply, Demand and Government Policies

A tax on golf clubs will cause the equilibrium market price of golf clubs to increase and the equilibrium quantity sold to decrease.

Workers with high levels of skill and experience are not affected by the minimum wage because:

Payroll taxes are paid by employers therefore:

A tax on sellers will cause the equilibrium market price to rise but the equilibrium quality sold will fall.

The minimum wage creates the most benefits for teenage workers as their wages are typically much lower than adult workers.

Graph 6-6 -According to Graph 6-6, in panel a, at the actual price there will be:

A binding price floor on wheat will:

Some countries in the developing world use price controls on rice to make it easier for poor people to afford. Demonstrate the effect of a binding and non-binding price ceiling on the rice market using supply-demand diagrams.

Graph 6-8 -According to Graph 6-8, the equilibrium price in the market before the tax is imposed is:

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

A binding price floor causes a surplus.

A tax on the sellers of popcorn will:

Does a tax encourage increased market activity? How does a tax affect the amount paid by buyers and the amount received by sellers as a result of a tax on a good?

If a tax is imposed on a market with elastic demand and inelastic supply, buyers will bear most of the burden of the tax.

Rich consumers always end up paying most of the tax on luxury goods.

Most labour economists believe that the supply of labour is less elastic than demand. This means:

Water shortages caused by droughts can be lessened by:

The justification for the minimum wage is to:

A tax of $0.20 per cup on the sellers of coffee will cause the:

Ten Lessons From 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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

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

Five Debates Over Macroeconomic Policy

Filters