Question 1

Figure 6-19  
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)  One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. 
B)  One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. 
C)  One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers. 
D)  Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers. 
A)  One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. 
B)  One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. 
C)  One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers. 
D)  Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

The tax burden falls more heavily on the side of the market that is more inelastic.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-12  
-Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Accepted Answer

A)  the market price will increase to P3. 
B)  a surplus will occur at the new market price of P2. 
C)  the market price will stay at P1. 
D)  a shortage will occur at the new market price of P2. 
A)  the market price will increase to P3. 
B)  a surplus will occur at the new market price of P2. 
C)  the market price will stay at P1. 
D)  a shortage will occur at the new market price of P2.

Question 6

Workers, rather than firms, bear most of the burden of the payroll tax.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

Accepted Answer

With a $6 tax per un

Question 8

A shortage results when a

Accepted Answer

A)  nonbinding price ceiling is imposed on a market. 
B)  nonbinding price ceiling is removed from a market. 
C)  binding price ceiling is imposed on a market. 
D)  binding price ceiling is removed from a market. 
A)  nonbinding price ceiling is imposed on a market. 
B)  nonbinding price ceiling is removed from a market. 
C)  binding price ceiling is imposed on a market. 
D)  binding price ceiling is removed from a market.

Question 9

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

Accepted Answer

A)  Cellular phones become less popular. 
B)  Traditional land line phones become more expensive. 
C)  The components used to produce cellular phones become less expensive. 
D)  Firms expect the price of cellular phones to fall in the future. 
A)  Cellular phones become less popular. 
B)  Traditional land line phones become more expensive. 
C)  The components used to produce cellular phones become less expensive. 
D)  Firms expect the price of cellular phones to fall in the future.

Question 10

A binding price floor causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not an example of a public policy?

Accepted Answer

A)  rent-control laws 
B)  minimum-wage laws 
C)  taxes 
D)  equilibrium laws 
A)  rent-control laws 
B)  minimum-wage laws 
C)  taxes 
D)  equilibrium laws

Question 12

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

Accepted Answer

A) True 
 B)False

Question 13

You have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia. George, who is one of your advisors, says that the best way to avoid a shortage of oranges is to take no action at all. Charles, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop. Otto, a third advisor, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Which of your three advisors is most likely to have studied economics?

Accepted Answer

A)  George 
B)  Charles 
C)  Otto 
D)  Apparently, all three advisors have studied economics, but their views on positive economics are different. 
A)  George 
B)  Charles 
C)  Otto 
D)  Apparently, all three advisors have studied economics, but their views on positive economics are different.

Question 14

The imposition of a binding price floor on a market

Accepted Answer

A)  causes quantity demanded to be greater than quantity supplied. 
B)  causes quantity demanded to be less than quantity supplied. 
C)  causes quantity demanded to be equal to quantity supplied. 
D)  causes a decrease in demand. 
A)  causes quantity demanded to be greater than quantity supplied. 
B)  causes quantity demanded to be less than quantity supplied. 
C)  causes quantity demanded to be equal to quantity supplied. 
D)  causes a decrease in demand.

Question 15

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 16

When a tax is placed on the sellers 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)  supply of 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)  supply of the product decreases. 
D)  All of the above are correct.

Question 17

An example of a price floor is

Accepted Answer

A)  the regulation of gasoline prices in the U.S. in the 1970s. 
B)  rent control. 
C)  the minimum wage. 
D)  any restriction on price that leads to a shortage. 
A)  the regulation of gasoline prices in the U.S. in the 1970s. 
B)  rent control. 
C)  the minimum wage. 
D)  any restriction on price that leads to a shortage.

Question 18

Minimum-wage laws benefit society by creating a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 19

The price paid by buyers in a market will increase if the government

Accepted Answer

A)  decreases a binding price floor in that market. 
B)  increases a binding price ceiling in that market. 
C)  decreases a tax on the good sold in that market. 
D)  imposes a binding price ceiling in that market. 
A)  decreases a binding price floor in that market. 
B)  increases a binding price ceiling in that market. 
C)  decreases a tax on the good sold in that market. 
D)  imposes a binding price ceiling in that market.

Question 20

Scenario 6-2
Suppose demand for a product is given by the equation   and supply for the product is given by the equation  
-The following table shows the demand and supply schedules in a particular market.
   If the government sets a price floor $2 above the equilibrium price, how many units will be sold in this market?

Accepted Answer

The equilibrium price is $3, so the pric

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

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

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

The tax burden falls more heavily on the side of the market that is more inelastic.

Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Workers, rather than firms, bear most of the burden of the payroll tax.

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

A shortage results when a

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

A binding price floor causes a shortage in the market.

Which of the following is not an example of a public policy?

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

The imposition of a binding price floor on a market

A tax imposed on the sellers of a good will

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

An example of a price floor is

Minimum-wage laws benefit society by creating a surplus of labor.

The price paid by buyers in a market will increase if 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

Filters

Exam 6: Supply, Demand, and Government Policies

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

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

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

The tax burden falls more heavily on the side of the market that is more inelastic.

Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Workers, rather than firms, bear most of the burden of the payroll tax.

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

A shortage results when a

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

A binding price floor causes a shortage in the market.

Which of the following is not an example of a public policy?

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

The imposition of a binding price floor on a market

A tax imposed on the sellers of a good will

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

An example of a price floor is

Minimum-wage laws benefit society by creating a surplus of labor.

The price paid by buyers in a market will increase if 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

Filters