Question 1

In the final analysis,tax incidence

Accepted Answer

A)  depends on the legislated burden. 
B)  is entirely random. 
C)  depends on the forces of supply and demand. 
D)  falls entirely on buyers or entirely on sellers. 
A)  depends on the legislated burden. 
B)  is entirely random. 
C)  depends on the forces of supply and demand. 
D)  falls entirely on buyers or entirely on sellers.

Question 2

Most labor economists believe that the supply of labor is

Accepted Answer

A)  less elastic than the demand and,therefore,firms bear most of the burden of the payroll tax. 
B)  less elastic than the demand and,therefore,workers bear most of the burden of the payroll tax. 
C)  more elastic than the demand and,therefore,workers bear most of the burden of the payroll tax. 
D)  more elastic than the demand and,therefore,firms bear most of the burden of the payroll tax. 
A)  less elastic than the demand and,therefore,firms bear most of the burden of the payroll tax. 
B)  less elastic than the demand and,therefore,workers bear most of the burden of the payroll tax. 
C)  more elastic than the demand and,therefore,workers bear most of the burden of the payroll tax. 
D)  more elastic than the demand and,therefore,firms bear most of the burden of the payroll tax.

Question 3

Figure 6-10  
-Refer to Figure 6-10.The per-unit burden of the tax is

Accepted Answer

A)  $4 on buyers and $6 on sellers. 
B)  $5 on buyers and $5 on sellers. 
C)  $6 on buyers and $4 on sellers. 
D)  $10 on buyers and $0 on sellers. 
A)  $4 on buyers and $6 on sellers. 
B)  $5 on buyers and $5 on sellers. 
C)  $6 on buyers and $4 on sellers. 
D)  $10 on buyers and $0 on sellers.

Question 4

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 5

Minimum-wage laws dictate the

Accepted Answer

A)  average price employers must pay for labor. 
B)  highest price employers may pay for labor. 
C)  lowest price employers may pay for labor. 
D)  the highest and lowest prices employers may pay for labor. 
A)  average price employers must pay for labor. 
B)  highest price employers may pay for labor. 
C)  lowest price employers may pay for labor. 
D)  the highest and lowest prices employers may pay for labor.

Question 6

Suppose sellers of liquor are required to send $1.00 to the government for every bottle of liquor they sell.Further,suppose this tax causes the price paid by buyers of liquor to rise by $0.60 per bottle.Which of the following statements is correct?

Accepted Answer

A)  The effective price received by sellers is $0.40 per bottle less than it was before the tax. 
B)  Sixty percent of the burden of the tax falls on sellers. 
C)  This tax causes the demand curve for liquor to shift downward by $1.00 at each quantity of liquor. 
D)  All of the above are correct. 
A)  The effective price received by sellers is $0.40 per bottle less than it was before the tax. 
B)  Sixty percent of the burden of the tax falls on sellers. 
C)  This tax causes the demand curve for liquor to shift downward by $1.00 at each quantity of liquor. 
D)  All of the above are correct.

Question 7

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

Accepted Answer

A) True 
 B)False

Question 8

A $2.00 tax levied on the sellers of mailboxes will shift the supply curve

Accepted Answer

A)  upward by exactly $2.00. 
B)  upward by less than $2.00. 
C)  downward by exactly $2.00. 
D)  downward by less than $2.00. 
A)  upward by exactly $2.00. 
B)  upward by less than $2.00. 
C)  downward by exactly $2.00. 
D)  downward by less than $2.00.

Question 9

One common example of a price floor is the minimum wage.

Accepted Answer

A) True 
 B)False

Question 10

Over time,housing shortages caused by rent control

Accepted Answer

A)  increase,because the demand for and supply of housing are less elastic in the long run. 
B)  increase,because the demand for and supply of housing are more elastic in the long run. 
C)  decrease,because the demand for and supply of housing are less elastic in the long run. 
D)  decrease,because the demand for and supply of housing are more elastic in the long run. 
A)  increase,because the demand for and supply of housing are less elastic in the long run. 
B)  increase,because the demand for and supply of housing are more elastic in the long run. 
C)  decrease,because the demand for and supply of housing are less elastic in the long run. 
D)  decrease,because the demand for and supply of housing are more elastic in the long run.

Question 11

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

Accepted Answer

A) True 
 B)False

Question 12

A tax levied on the sellers of blueberries

Accepted Answer

A)  increases sellers' costs,reduces profits,and shifts the supply curve up. 
B)  increases sellers' costs,reduces profits,and shifts the supply curve down. 
C)  decreases sellers' costs,increases profits,and shifts the supply curve up. 
D)  decreases sellers' costs,increases profits,and shifts the supply curve down. 
A)  increases sellers' costs,reduces profits,and shifts the supply curve up. 
B)  increases sellers' costs,reduces profits,and shifts the supply curve down. 
C)  decreases sellers' costs,increases profits,and shifts the supply curve up. 
D)  decreases sellers' costs,increases profits,and shifts the supply curve down.

Question 13

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Accepted Answer

A) True 
 B)False

Question 14

Suppose the demand for macaroni is inelastic and the supply of macaroni is elastic,and the demand for cigarettes is inelastic and the supply of cigarettes is elastic.If a tax were levied on the sellers of both of these commodities,we would expect that the

Accepted Answer

A)  burden of both taxes would fall more heavily on the buyers than on the sellers. 
B)  burden of the macaroni tax would fall more heavily on the sellers than on the buyers,and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C)  burden of the macaroni tax would fall more heavily on the buyers than on the sellers,and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D)  burden of both taxes would fall more heavily on the sellers than on the buyers. 
A)  burden of both taxes would fall more heavily on the buyers than on the sellers. 
B)  burden of the macaroni tax would fall more heavily on the sellers than on the buyers,and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C)  burden of the macaroni tax would fall more heavily on the buyers than on the sellers,and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D)  burden of both taxes would fall more heavily on the sellers than on the buyers.

Question 15

Table 6-2
  
-Refer to Table 6-2.Which of the following statements is correct?

Accepted Answer

A)  A price ceiling set at $15 will be binding and will result in a shortage of 50 units. 
B)  A price ceiling set at $15 will be binding and will result in a shortage of 100 units. 
C)  A price ceiling set at $15 will be binding and will result in a shortage of 125 units. 
D)  A price ceiling set at $15 will not be binding. 
A)  A price ceiling set at $15 will be binding and will result in a shortage of 50 units. 
B)  A price ceiling set at $15 will be binding and will result in a shortage of 100 units. 
C)  A price ceiling set at $15 will be binding and will result in a shortage of 125 units. 
D)  A price ceiling set at $15 will not be binding.

Question 16

In a competitive market free of government regulation,

Accepted Answer

A)  price adjusts until quantity demanded is greater than quantity supplied. 
B)  price adjusts until quantity demanded is less than quantity supplied. 
C)  price adjusts until quantity demanded equals quantity supplied. 
D)  supply adjusts to meet demand at every price. 
A)  price adjusts until quantity demanded is greater than quantity supplied. 
B)  price adjusts until quantity demanded is less than quantity supplied. 
C)  price adjusts until quantity demanded equals quantity supplied. 
D)  supply adjusts to meet demand at every price.

Question 17

Which of the following statements about the effects of rent control is correct?

Accepted Answer

A)  The short-run effect of rent control is a surplus of apartments,and the long-run effect of rent control is a shortage of apartments. 
B)  The short-run effect of rent control is a relatively small shortage of apartments,and the long-run effect of rent control is a larger shortage of apartments. 
C)  In the long run,rent control leads to a shortage of apartments and an improvement in the quality of available apartments. 
D)  The effects of rent control are very noticeable to the public in the short run because the primary effects of rent control occur very quickly. 
A)  The short-run effect of rent control is a surplus of apartments,and the long-run effect of rent control is a shortage of apartments. 
B)  The short-run effect of rent control is a relatively small shortage of apartments,and the long-run effect of rent control is a larger shortage of apartments. 
C)  In the long run,rent control leads to a shortage of apartments and an improvement in the quality of available apartments. 
D)  The effects of rent control are very noticeable to the public in the short run because the primary effects of rent control occur very quickly.

Question 18

Most labor economists believe that the supply of labor is much more elastic than the demand.

Accepted Answer

A) True 
 B)False

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

A tax on buyers increases the size of a market.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

In the final analysis,tax incidence

Most labor economists believe that the supply of labor is

Figure 6-10 -Refer to Figure 6-10.The per-unit burden of the tax is

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.

Minimum-wage laws dictate the

Suppose sellers of liquor are required to send $1.00 to the government for every bottle of liquor they sell.Further,suppose this tax causes the price paid by buyers of liquor to rise by $0.60 per bottle.Which of the following statements is correct?

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

A $2.00 tax levied on the sellers of mailboxes will shift the supply curve

One common example of a price floor is the minimum wage.

Over time,housing shortages caused by rent control

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

A tax levied on the sellers of blueberries

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Suppose the demand for macaroni is inelastic and the supply of macaroni is elastic,and the demand for cigarettes is inelastic and the supply of cigarettes is elastic.If a tax were levied on the sellers of both of these commodities,we would expect that the

Table 6-2 -Refer to Table 6-2.Which of the following statements is correct?

In a competitive market free of government regulation,

Which of the following statements about the effects of rent control is correct?

Most labor economists believe that the supply of labor is much more elastic than the demand.

When a binding price ceiling is imposed on a market,

A tax on buyers increases the size of a 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

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