Question 1

Opponents of the minimum wage point out that the minimum wage

Accepted Answer

A)  encourages teenagers to drop out of school. 
B)  prevents some workers from getting needed on-the-job training. 
C)  contributes to the problem of unemployment. 
D)  All of the above are correct. 
A)  encourages teenagers to drop out of school. 
B)  prevents some workers from getting needed on-the-job training. 
C)  contributes to the problem of unemployment. 
D)  All of the above are correct.

Question 2

Suppose that a tax is placed on books.If the buyers pay the majority of the tax,then we know that the

Accepted Answer

A)  demand is more inelastic than the supply. 
B)  supply is more inelastic than the demand. 
C)  government has required that buyers remit the tax payments. 
D)  government has required that sellers remit the tax payments. 
A)  demand is more inelastic than the supply. 
B)  supply is more inelastic than the demand. 
C)  government has required that buyers remit the tax payments. 
D)  government has required that sellers remit the tax payments.

Question 3

Figure 6-3  
-Refer to Figure 6-3.If the government imposes a price ceiling of $8 on this market,then there will be a

Accepted Answer

A)  shortage of 0. 
B)  shortage of 10. 
C)  shortage of 20. 
D)  shortage of 40. 
A)  shortage of 0. 
B)  shortage of 10. 
C)  shortage of 20. 
D)  shortage of 40.

Question 4

Figure 6-1
Panel (a)Panel (b)    
-Refer to Figure 6-1.In which panel(s)of the figure would there be a shortage of the good at the price ceiling?

Accepted Answer

A)  panel (a)but not panel (b) 
B)  panel (b)but not panel (a) 
C)  both panel (a)and panel (b) 
D)  neither panel (a)nor panel (b) 
A)  panel (a)but not panel (b) 
B)  panel (b)but not panel (a) 
C)  both panel (a)and panel (b) 
D)  neither panel (a)nor panel (b)

Question 5

In which of these cases will the tax burden fall most heavily on sellers of the good?

Accepted Answer

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

Question 6

Price controls are usually enacted

Accepted Answer

A)  as a means of raising revenue for public purposes. 
B)  when policymakers believe that the market price of a good or service is unfair to buyers or sellers. 
C)  when policymakers detect inefficiencies in a market. 
D)  All of the above are correct. 
A)  as a means of raising revenue for public purposes. 
B)  when policymakers believe that the market price of a good or service is unfair to buyers or sellers. 
C)  when policymakers detect inefficiencies in a market. 
D)  All of the above are correct.

Question 7

Figure 6-12  
-Refer to Figure 6-12.How much tax revenue does this tax produce for the government?

Accepted Answer

A)  $24 
B)  $30 
C)  $32 
D)  $56 
A)  $24 
B)  $30 
C)  $32 
D)  $56

Question 8

A tax imposed on the sellers of a good will

Accepted Answer

A)  raise both the price buyers pay and the effective price sellers receive. 
B)  raise the price buyers pay and lower the effective price sellers receive. 
C)  lower the price buyers pay and raise the effective price sellers receive. 
D)  lower both the price buyers pay and the effective price sellers receive. 
A)  raise both the price buyers pay and the effective price sellers receive. 
B)  raise the price buyers pay and lower the effective price sellers receive. 
C)  lower the price buyers pay and raise the effective price sellers receive. 
D)  lower both the price buyers pay and the effective price sellers receive.

Question 9

Using the graph shown,in which the vertical distance between points A and B represents the tax in the market,answer the following questions.
a.What was the equilibrium price and quantity 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.
Equilibrium price was $8 and equilibr

Question 10

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

Accepted Answer

A)  size of the market decreases. 
B)  effective price received by sellers decreases and the price paid by buyers increases. 
C)  demand for the product decreases. 
D)  All of the above are correct. 
A)  size of the market decreases. 
B)  effective price received by sellers decreases and the price paid by buyers increases. 
C)  demand for the product decreases. 
D)  All of the above are correct.

Question 11

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

Accepted Answer

A)  A price floor set at $4 will be binding and will result in a shortage of 3 units. 
B)  A price floor set at $4 will be binding and will result in a shortage of 6 units. 
C)  A price floor set at $7 will be binding and will result in a surplus of 6 units. 
D)  A price floor set at $7 will be binding and will result in a surplus of 12 units. 
A)  A price floor set at $4 will be binding and will result in a shortage of 3 units. 
B)  A price floor set at $4 will be binding and will result in a shortage of 6 units. 
C)  A price floor set at $7 will be binding and will result in a surplus of 6 units. 
D)  A price floor set at $7 will be binding and will result in a surplus of 12 units.

Question 12

A tax on buyers decreases demand.

Accepted Answer

A) True 
 B)False

Question 13

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Accepted Answer

A)  Policymakers have studied the effects of the price ceiling carefully,and they recognize that the price ceiling is advantageous for society as a whole. 
B)  Buyers of milk,recognizing that the price ceiling is good for them,have pressured policymakers into imposing the price ceiling. 
C)  Sellers of milk,recognizing that the price ceiling is good for them,have pressured policymakers into imposing the price ceiling. 
D)  Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling. 
A)  Policymakers have studied the effects of the price ceiling carefully,and they recognize that the price ceiling is advantageous for society as a whole. 
B)  Buyers of milk,recognizing that the price ceiling is good for them,have pressured policymakers into imposing the price ceiling. 
C)  Sellers of milk,recognizing that the price ceiling is good for them,have pressured policymakers into imposing the price ceiling. 
D)  Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling.

Question 15

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

Accepted Answer

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

Question 16

When a free market for a good reaches equilibrium,anyone who is willing and able to pay the market price can buy the good.

Accepted Answer

A) True 
 B)False

Question 17

Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers 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 18

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market?

Accepted Answer

A)  A smaller quantity of the good is bought and sold after the price ceiling becomes effective. 
B)  A smaller quantity of the good is demanded after the price ceiling becomes effective. 
C)  A larger quantity of the good is supplied after the price ceiling becomes effective. 
D)  All of the above are correct. 
A)  A smaller quantity of the good is bought and sold after the price ceiling becomes effective. 
B)  A smaller quantity of the good is demanded after the price ceiling becomes effective. 
C)  A larger quantity of the good is supplied after the price ceiling becomes effective. 
D)  All of the above are correct.

Question 19

A $0.10 tax levied on the buyers of socks will cause the

Accepted Answer

A)  supply curve for socks to shift down by $0.10. 
B)  supply curve for socks to shift up by $0.10. 
C)  demand curve for socks to shift down by $0.10. 
D)  demand curve for socks to shift up by $0.10. 
A)  supply curve for socks to shift down by $0.10. 
B)  supply curve for socks to shift up by $0.10. 
C)  demand curve for socks to shift down by $0.10. 
D)  demand curve for socks to shift up by $0.10.

Question 20

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Opponents of the minimum wage point out that the minimum wage

Suppose that a tax is placed on books.If the buyers pay the majority of the tax,then we know that the

Figure 6-3 -Refer to Figure 6-3.If the government imposes a price ceiling of $8 on this market,then there will be a

Figure 6-1 Panel (a)Panel (b) -Refer to Figure 6-1.In which panel(s)of the figure would there be a shortage of the good at the price ceiling?

In which of these cases will the tax burden fall most heavily on sellers of the good?

Price controls are usually enacted

Figure 6-12 -Refer to Figure 6-12.How much tax revenue does this tax produce for the government?

A tax imposed on the sellers of a good will

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

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

A tax on buyers decreases demand.

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

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

When a free market for a good reaches equilibrium,anyone who is willing and able to pay the market price can buy the good.

Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers 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

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market?

A $0.10 tax levied on the buyers of socks will cause the

A tax on sellers and an increase in input prices affect the supply curve in the same way.

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