Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

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.
  
-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 A

Question 3

Workers with high skills and much experience are not typically affected by the minimum wage.

Accepted Answer

A) True 
 B)False  True

Question 4

A price floor set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 5

Suppose there is currently a tax of $50 per ticket on airline tickets.Sellers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then

Accepted Answer

A)  the demand curve will shift upward by $20,and the effective price received by sellers will increase by $20. 
B)  the demand curve will shift upward by $20,and the effective price received by sellers will increase by less than $20. 
C)  the supply curve will shift downward by $20,and the price paid by buyers will decrease by $20. 
D)  the supply curve will shift downward by $20,and the price paid by buyers will decrease by less than $20. 
A)  the demand curve will shift upward by $20,and the effective price received by sellers will increase by $20. 
B)  the demand curve will shift upward by $20,and the effective price received by sellers will increase by less than $20. 
C)  the supply curve will shift downward by $20,and the price paid by buyers will decrease by $20. 
D)  the supply curve will shift downward by $20,and the price paid by buyers will decrease by less than $20.

Question 6

Taxes levied on sellers and taxes levied on buyers are equivalent.

Accepted Answer

A) True 
 B)False

Question 7

A tax on the sellers of TVs

Accepted Answer

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

Question 8

Figure 6-11  
-Refer to Figure 6-11.The effective price sellers receive after the tax is imposed is

Accepted Answer

A)  $2.50. 
B)  $3.50. 
C)  $5.00. 
D)  $6.00. 
A)  $2.50. 
B)  $3.50. 
C)  $5.00. 
D)  $6.00.

Question 9

If a tax is levied on the buyers of sugar,then

Accepted Answer

A)  buyers will bear the entire burden of the tax. 
B)  sellers will bear the entire burden of the tax. 
C)  buyers and sellers will share the burden of the tax. 
D)  the government will bear the entire burden of the tax. 
A)  buyers will bear the entire burden of the tax. 
B)  sellers will bear the entire burden of the tax. 
C)  buyers and sellers will share the burden of the tax. 
D)  the government will bear the entire burden of the tax.

Question 10

A price ceiling set above the equilibrium price causes quantity demanded to exceed quantity supplied.

Accepted Answer

A) True 
 B)False

Question 11

Suppose the government has imposed a price ceiling on cellular phones.Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

Accepted Answer

A)  Cellular phones become more popular. 
B)  Traditional land line phones become more expensive. 
C)  The components used to produce cellular phones become more expensive. 
D)  A technological advance makes cellular phone production less expensive. 
A)  Cellular phones become more popular. 
B)  Traditional land line phones become more expensive. 
C)  The components used to produce cellular phones become more expensive. 
D)  A technological advance makes cellular phone production less expensive.

Question 12

When a tax is placed on the buyers of a product,

Accepted Answer

A)  buyers pay more and sellers receive more than they did before the tax. 
B)  buyers pay more and sellers receive less than they did before the tax. 
C)  buyers pay less and sellers receive more than they did before the tax. 
D)  buyers pay less and sellers receive less than they did before the tax. 
A)  buyers pay more and sellers receive more than they did before the tax. 
B)  buyers pay more and sellers receive less than they did before the tax. 
C)  buyers pay less and sellers receive more than they did before the tax. 
D)  buyers pay less and sellers receive less than they did before the tax.

Question 13

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

Accepted Answer

A)  the payment by government of a fraction of a poor family's rent. 
B)  higher taxes on rental income earned by landlords. 
C)  a policy that prevents landlords from evicting tenants. 
D)  a policy that allows government to confiscate residential property for the purpose of commercial development. 
A)  the payment by government of a fraction of a poor family's rent. 
B)  higher taxes on rental income earned by landlords. 
C)  a policy that prevents landlords from evicting tenants. 
D)  a policy that allows government to confiscate residential property for the purpose of commercial development.

Question 14

Figure 6-4  
-Refer to Figure 6-4.Which of the following price controls would cause a surplus of 20 units of the good?

Accepted Answer

A)  a price ceiling of $4 
B)  a price ceiling of $5 
C)  a price floor of $7 
D)  a price floor of $8 
A)  a price ceiling of $4 
B)  a price ceiling of $5 
C)  a price floor of $7 
D)  a price floor of $8

Question 15

Table 6-1
  
-Refer to Table 6-1.Suppose the government imposes a price floor of $5 on this market.What will be the size of the surplus in this market?

Accepted Answer

A)  0 units 
B)  2 units 
C)  8 units 
D)  10 units 
A)  0 units 
B)  2 units 
C)  8 units 
D)  10 units

Question 16

The Earned Income Tax Credit is an example of

Accepted Answer

A)  a minimum-wage law. 
B)  a price ceiling. 
C)  a wage subsidy. 
D)  a rent subsidy. 
A)  a minimum-wage law. 
B)  a price ceiling. 
C)  a wage subsidy. 
D)  a rent subsidy.

Question 17

Suppose that the demand for picture frames is inelastic and the supply of picture frames is elastic.A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Accepted Answer

A)  less than $0.50. 
B)  $0.50. 
C)  between $0.50 and $1. 
D)  $1. 
A)  less than $0.50. 
B)  $0.50. 
C)  between $0.50 and $1. 
D)  $1.

Question 18

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not a short-run effect of rent control on the housing market?

Accepted Answer

A)  reduced rents 
B)  a large shortage 
C)  a small increase in quantity demanded 
D)  a small decrease in quantity supplied 
A)  reduced rents 
B)  a large shortage 
C)  a small increase in quantity demanded 
D)  a small decrease in quantity supplied

Question 20

Price is the rationing mechanism in a free,competitive market.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

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

Workers with high skills and much experience are not typically affected by the minimum wage.

A price floor set above the equilibrium price causes a surplus in the market.

Suppose there is currently a tax of $50 per ticket on airline tickets.Sellers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then

Taxes levied on sellers and taxes levied on buyers are equivalent.

A tax on the sellers of TVs

Figure 6-11 -Refer to Figure 6-11.The effective price sellers receive after the tax is imposed is

If a tax is levied on the buyers of sugar,then

A price ceiling set above the equilibrium price causes quantity demanded to exceed quantity supplied.

Suppose the government has imposed a price ceiling on cellular phones.Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

When a tax is placed on the buyers of a product,

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

Figure 6-4 -Refer to Figure 6-4.Which of the following price controls would cause a surplus of 20 units of the good?

Table 6-1 -Refer to Table 6-1.Suppose the government imposes a price floor of $5 on this market.What will be the size of the surplus in this market?

The Earned Income Tax Credit is an example of

Suppose that the demand for picture frames is inelastic and the supply of picture frames is elastic.A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Which of the following is not a short-run effect of rent control on the housing market?

Price is the rationing mechanism in a free,competitive market.

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality 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 Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

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