Question 1

Figure 6-30
Panel (a) Panel (b)
     Panel (c)  
-Refer to Figure 6-30. In which market will the majority of the tax burden fall on sellers?

Accepted Answer

A)  the market shown in panel (a). 
B)  the market shown in panel (b). 
C)  the market shown in panel (c). 
D)  All of the above are correct. 
A)  the market shown in panel (a). 
B)  the market shown in panel (b). 
C)  the market shown in panel (c). 
D)  All of the above are correct.

Question 2

You receive a paycheck from your employer, and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

Accepted Answer

A)  This type of tax is an example of a payback tax. 
B)  Your employer is required by law to pay $400 to match the $400 deducted from your check. 
C)  The $400 that you paid is the true burden of the tax that falls on you, the employee. 
D)  All of the above are correct. 
A)  This type of tax is an example of a payback tax. 
B)  Your employer is required by law to pay $400 to match the $400 deducted from your check. 
C)  The $400 that you paid is the true burden of the tax that falls on you, the employee. 
D)  All of the above are correct.

Question 3

In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. The goal of the tax was to

Accepted Answer

A)  raise revenue from the wealthy. 
B)  prevent wealthy people from buying luxuries. 
C)  force producers of luxury goods to reduce employment. 
D)  limit exports of luxury goods to other countries. 
A)  raise revenue from the wealthy. 
B)  prevent wealthy people from buying luxuries. 
C)  force producers of luxury goods to reduce employment. 
D)  limit exports of luxury goods to other countries.

Question 4

Figure 6-35  
-Refer to Figure 6-35. A price floor set at $60 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-24  
-Refer to Figure 6-24. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

Accepted Answer

A)  $16 
B)  $18 
C)  $24 
D)  $26 
A)  $16 
B)  $18 
C)  $24 
D)  $26

Question 6

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

Question 7

A binding minimum wage creates a shortage of labor.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-21  
-Refer to Figure 6-21. The price that buyers pay after the tax is imposed is

Accepted Answer

A)  $8.00. 
B)  $9.00. 
C)  $10.50. 
D)  $12.00. 
A)  $8.00. 
B)  $9.00. 
C)  $10.50. 
D)  $12.00.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

Accepted Answer

A)  not change, and the price received by sellers will not change. 
B)  not change, and the price received by sellers will decrease. 
C)  decrease, and the price received by sellers will not change. 
D)  decrease, and the price received by sellers will decrease. 
A)  not change, and the price received by sellers will not change. 
B)  not change, and the price received by sellers will decrease. 
C)  decrease, and the price received by sellers will not change. 
D)  decrease, and the price received by sellers will decrease.

Question 11

A binding minimum wage creates unemployment.

Accepted Answer

A) True 
 B)False

Question 12

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a (i) binding price ceiling.
(ii) non-binding price ceiling.
(iii) binding price floor.
(iv) non-binding price floor.

Accepted Answer

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

Question 14

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. Following the imposition of a price floor $3 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting shortage is

Accepted Answer

A)  0 units. 
B)  4 units. 
C)  5 units. 
D)  10 units. 
A)  0 units. 
B)  4 units. 
C)  5 units. 
D)  10 units.

Question 15

The United States is the only country in the world with minimum-wage laws.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

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

Question 17

Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

Accepted Answer

A) True 
 B)False

Question 18

The price received by sellers in a market will increase if the government decreases a

Accepted Answer

A)  binding price floor in that market. 
B)  binding price ceiling in that market. 
C)  tax on the good sold in that market. 
D)  None of the above is correct. 
A)  binding price floor in that market. 
B)  binding price ceiling in that market. 
C)  tax on the good sold in that market. 
D)  None of the above is correct.

Question 19

The true burden of a payroll tax has nothing to do with the percentage of the tax that employers are required to pay.

Accepted Answer

A) True 
 B)False

Question 20

Figure 6-24  
-Refer to Figure 6-24. Suppose sellers, rather than buyers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on buyers, the tax on sellers would result in

Accepted Answer

A)  buyers bearing the same share of the tax burden. 
B)  sellers bearing the same share of the tax burden. 
C)  the same amount of tax revenue for the government. 
D)  All of the above are correct. 
A)  buyers bearing the same share of the tax burden. 
B)  sellers bearing the same share of the tax burden. 
C)  the same amount of tax revenue for the government. 
D)  All of the above are correct.

Figure 6-30 Panel (a) Panel (b) Panel (c) -Refer to Figure 6-30. In which market will the majority of the tax burden fall on sellers?

You receive a paycheck from your employer, and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. The goal of the tax was to

Figure 6-35 -Refer to Figure 6-35. A price floor set at $60 would create a surplus of 20 units.

Figure 6-24 -Refer to Figure 6-24. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

A binding minimum wage creates a shortage of labor.

Figure 6-21 -Refer to Figure 6-21. The price that buyers pay after the tax is imposed is

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

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

A binding minimum wage creates unemployment.

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a (i) binding price ceiling. (ii) non-binding price ceiling. (iii) binding price floor. (iv) non-binding price floor.

The United States is the only country in the world with minimum-wage laws.

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

Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

The price received by sellers in a market will increase if the government decreases a

The true burden of a payroll tax has nothing to do with the percentage of the tax that employers are required to pay.

Figure 6-24 -Refer to Figure 6-24. Suppose sellers, rather than buyers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on buyers, the tax on sellers would result in

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

Filters

Exam 6: Supply, Demand, and Government Policies

Figure 6-30 Panel (a) Panel (b) Panel (c) -Refer to Figure 6-30. In which market will the majority of the tax burden fall on sellers?

You receive a paycheck from your employer, and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. The goal of the tax was to

Figure 6-35 -Refer to Figure 6-35. A price floor set at $60 would create a surplus of 20 units.

Figure 6-24 -Refer to Figure 6-24. Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

A binding minimum wage creates a shortage of labor.

Figure 6-21 -Refer to Figure 6-21. The price that buyers pay after the tax is imposed is

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

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

A binding minimum wage creates unemployment.

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a (i) binding price ceiling. (ii) non-binding price ceiling. (iii) binding price floor. (iv) non-binding price floor.

The United States is the only country in the world with minimum-wage laws.

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

Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

The price received by sellers in a market will increase if the government decreases a

The true burden of a payroll tax has nothing to do with the percentage of the tax that employers are required to pay.

Figure 6-24 -Refer to Figure 6-24. Suppose sellers, rather than buyers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on buyers, the tax on sellers would result in

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

Filters