Question 1

If a tax is imposed on the buyers of a product, then the tax burden will fall entirely on the buyers.

Accepted Answer

A) True 
 B)False

Question 2

If a price ceiling is a binding constraint on a market, then

Accepted Answer

A)  the equilibrium price must be below the price ceiling. 
B)  the quantity supplied must exceed the quantity demanded. 
C)  sellers cannot sell all they want to sell at the price ceiling. 
D)  buyers cannot buy all they want to buy at the price ceiling. 
A)  the equilibrium price must be below the price ceiling. 
B)  the quantity supplied must exceed the quantity demanded. 
C)  sellers cannot sell all they want to sell at the price ceiling. 
D)  buyers cannot buy all they want to buy at the price ceiling.

Question 3

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Accepted Answer

A)  less than one-third. 
B)  between one-third and one-half. 
C)  between one-half and two-thirds. 
D)  greater than two-thirds. 
A)  less than one-third. 
B)  between one-third and one-half. 
C)  between one-half and two-thirds. 
D)  greater than two-thirds.

Question 4

Figure 6-22  
-Refer to Figure 6-22. The equilibrium price in the market before the tax is imposed is

Accepted Answer

A)  $3.50. 
B)  $5.00. 
C)  $2.00. 
D)  $1.50. 
A)  $3.50. 
B)  $5.00. 
C)  $2.00. 
D)  $1.50.

Question 5

Figure 6-9  
-Refer to Figure 6-9. A price floor set at

Accepted Answer

A)  $4 will be binding and will result in a shortage of 8 units. 
B)  $4 will be binding and will result in a shortage of 16 units. 
C)  $7 will be binding and will result in a surplus of 4 units. 
D)  $7 will be binding and will result in a surplus of 8 units. 
A)  $4 will be binding and will result in a shortage of 8 units. 
B)  $4 will be binding and will result in a shortage of 16 units. 
C)  $7 will be binding and will result in a surplus of 4 units. 
D)  $7 will be binding and will result in a surplus of 8 units.

Question 6

A tax of $1 on buyers always decreases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 7

Table 6-2
  
-Refer to Table 6-2. A price floor set at $5 will

Accepted Answer

A)  be binding and will result in a surplus of 50 units. 
B)  be binding and will result in a surplus of 250 units. 
C)  be binding and will result in a surplus of 300 units. 
D)  not be binding. 
A)  be binding and will result in a surplus of 50 units. 
B)  be binding and will result in a surplus of 250 units. 
C)  be binding and will result in a surplus of 300 units. 
D)  not be binding.

Question 8

A price floor is

Accepted Answer

A)  a legal minimum on the price at which a good can be sold. 
B)  often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor. 
C)  a source of inefficiency in a market. 
D)  All of the above are correct. 
A)  a legal minimum on the price at which a good can be sold. 
B)  often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor. 
C)  a source of inefficiency in a market. 
D)  All of the above are correct.

Question 9

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $6.

Accepted Answer

A) True 
 B)False

Question 10

FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

Accepted Answer

A) True 
 B)False

Question 11

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

Accepted Answer

A)  demand curve for physicals shifts to the right. 
B)  supply curve for physicals shifts to the left. 
C)  quantity demanded of physicals increases, and the quantity supplied of physicals decreases. 
D)  number of physicals performed stays the same. 
A)  demand curve for physicals shifts to the right. 
B)  supply curve for physicals shifts to the left. 
C)  quantity demanded of physicals increases, and the quantity supplied of physicals decreases. 
D)  number of physicals performed stays the same.

Question 12

Table 6-5
  
-Refer to Table 6-5. Which of the following price floors would be binding in this market?

Accepted Answer

A)  $3 
B)  $6 
C)  $9 
D)  None of the above price floors would be binding. 
A)  $3 
B)  $6 
C)  $9 
D)  None of the above price floors would be binding.

Question 13

If a price floor is a binding constraint on a market, then

Accepted Answer

A)  the equilibrium price must be above the price floor. 
B)  the quantity demanded must exceed the quantity supplied. 
C)  sellers cannot sell all they want to sell at the price floor. 
D)  buyers cannot buy all they want to buy at the price floor. 
A)  the equilibrium price must be above the price floor. 
B)  the quantity demanded must exceed the quantity supplied. 
C)  sellers cannot sell all they want to sell at the price floor. 
D)  buyers cannot buy all they want to buy at the price floor.

Question 14

Buyers of a good bear the larger share of the tax burden when the (i) supply is more elastic than the demand for the product.
(ii) demand in more elastic than the supply for the product.
(iii) tax is placed on the sellers of the product.
(iv) tax is placed on the buyers of the product.

Accepted Answer

A)  (i) only 
B)  (ii) only 
C)  (i) and (iii) only 
D)  (i) and (iv) only 
A)  (i) only 
B)  (ii) only 
C)  (i) and (iii) only 
D)  (i) and (iv) only

Question 15

Figure 6-20  
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)  less than 25 units 
B)  25 units 
C)  between 25 units and 50 units 
D)  greater than 50 units 
A)  less than 25 units 
B)  25 units 
C)  between 25 units and 50 units 
D)  greater than 50 units

Question 16

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Accepted Answer

A)  a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B)  the government's policy of maintaining a price ceiling on gasoline. 
C)  an indifference among U.S. consumers toward conservation. 
D)  the lack of substitutes for crude oil. 
A)  a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B)  the government's policy of maintaining a price ceiling on gasoline. 
C)  an indifference among U.S. consumers toward conservation. 
D)  the lack of substitutes for crude oil.

Question 17

Figure 6-23
  
-Refer to Figure 6-23. How much tax revenue does this tax produce for the government?

Accepted Answer

A)  $18. 
B)  $30. 
C)  $6. 
D)  $36. 
A)  $18. 
B)  $30. 
C)  $6. 
D)  $36.

Question 18

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Accepted Answer

A)  upward by exactly $1.50. 
B)  upward by less than $1.50. 
C)  downward by exactly $1.50. 
D)  downward by less than $1.50. 
A)  upward by exactly $1.50. 
B)  upward by less than $1.50. 
C)  downward by exactly $1.50. 
D)  downward by less than $1.50.

Question 19

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. Which of the following statements is correct?

Accepted Answer

A)  A price ceiling set at $6 would be binding, but a price ceiling set at $4 would not be binding. 
B)  A price floor set at $4 would be binding, but a price ceiling set at $4 would not be binding. 
C)  A price ceiling set at $3.50 would result in a surplus. 
D)  A price floor set at $6.50 would result in a surplus. 
A)  A price ceiling set at $6 would be binding, but a price ceiling set at $4 would not be binding. 
B)  A price floor set at $4 would be binding, but a price ceiling set at $4 would not be binding. 
C)  A price ceiling set at $3.50 would result in a surplus. 
D)  A price floor set at $6.50 would result in a surplus.

Question 20

Figure 6-22  
-Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

Accepted Answer

A)  $60. 
B)  $80. 
C)  $15. 
D)  $45. 
A)  $60. 
B)  $80. 
C)  $15. 
D)  $45.

Exam 6: Supply, Demand, and Government Policies

If a tax is imposed on the buyers of a product, then the tax burden will fall entirely on the buyers.

If a price ceiling is a binding constraint on a market, then

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Figure 6-22 -Refer to Figure 6-22. The equilibrium price in the market before the tax is imposed is

Figure 6-9 -Refer to Figure 6-9. A price floor set at

A tax of $1 on buyers always decreases the equilibrium price by $1.

Table 6-2 -Refer to Table 6-2. A price floor set at $5 will

A price floor is

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $6.

FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

Table 6-5 -Refer to Table 6-5. Which of the following price floors would be binding in this market?

If a price floor is a binding constraint on a market, then

Buyers of a good bear the larger share of the tax burden when the (i) supply is more elastic than the demand for the product. (ii) demand in more elastic than the supply for the product. (iii) tax is placed on the sellers of the product. (iv) tax is placed on the buyers of the product.

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Figure 6-23 -Refer to Figure 6-23. How much tax revenue does this tax produce for the government?

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following statements is correct?

Figure 6-22 -Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

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

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