Question 1

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

Accepted Answer

A) True 
 B)False

Question 2

To say that a price ceiling is binding is to say that the price ceiling

Accepted Answer

A)  results in a surplus. 
B)  is set above the equilibrium price. 
C)  causes quantity demanded to exceed quantity supplied. 
D)  All of the above are correct. 
A)  results in a surplus. 
B)  is set above the equilibrium price. 
C)  causes quantity demanded to exceed quantity supplied. 
D)  All of the above are correct.

Question 3

Table 6-6
  
-Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

Accepted Answer

A price floor must be set abov

Question 4

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

Accepted Answer

A) True 
 B)False

Question 5

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Accepted Answer

A) True 
 B)False

Question 6

Suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

Accepted Answer

A)  less than $1. 
B)  $1. 
C)  between $1 and $2. 
D)  $2. 
A)  less than $1. 
B)  $1. 
C)  between $1 and $2. 
D)  $2.

Question 7

When a tax is imposed on the buyers of a good, the demand curve shifts

Accepted Answer

A)  upward by the amount of the tax. 
B)  downward by the amount of the tax. 
C)  upward by less than the amount of the tax. 
D)  downward by less than the amount of the tax. 
A)  upward by the amount of the tax. 
B)  downward by the amount of the tax. 
C)  upward by less than the amount of the tax. 
D)  downward by less than the amount of the tax.

Question 8

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price ceiling of $6 in this market results in

Accepted Answer

A)  a shortage of 8 units. 
B)  a shortage of 4 units. 
C)  14 units sold. 
D)  10 units sold. 
A)  a shortage of 8 units. 
B)  a shortage of 4 units. 
C)  14 units sold. 
D)  10 units sold.

Question 9

When government imposes a price ceiling or a price floor on a market,

Accepted Answer

A)  price no longer serves as a rationing device. 
B)  efficiency in the market is enhanced. 
C)  shortages and surpluses are eliminated. 
D)  both buyers and sellers become better off. 
A)  price no longer serves as a rationing device. 
B)  efficiency in the market is enhanced. 
C)  shortages and surpluses are eliminated. 
D)  both buyers and sellers become better off.

Question 10

Whether a tax is levied on sellers or buyers, buyers and sellers usually share the burden of taxes.

Accepted Answer

A) True 
 B)False

Question 11

The minimum wage

Accepted Answer

A)  is an example of a price ceiling. 
B)  has its greatest impact on middle-aged and immigrant workers. 
C)  does not apply to unpaid internships. 
D)  does not affect the quantity of labor demanded; it only affects the quantity of labor supplied. 
A)  is an example of a price ceiling. 
B)  has its greatest impact on middle-aged and immigrant workers. 
C)  does not apply to unpaid internships. 
D)  does not affect the quantity of labor demanded; it only affects the quantity of labor supplied.

Question 12

A tax burden falls more heavily on the side of the market that is less elastic.

Accepted Answer

A) True 
 B)False

Question 13

A tax of $1 on buyers shifts the demand curve downward by exactly $1.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-5  
-Refer to Figure 6-5. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Accepted Answer

A)  binding and creates a surplus of 60 units of the good. 
B)  binding and creates a surplus of 20 units of the good. 
C)  not binding but creates a surplus of 40 units of the good. 
D)  not binding, and there will be no surplus or shortage of the good. 
A)  binding and creates a surplus of 60 units of the good. 
B)  binding and creates a surplus of 20 units of the good. 
C)  not binding but creates a surplus of 40 units of the good. 
D)  not binding, and there will be no surplus or shortage of the good.

Question 15

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

Accepted Answer

A) True 
 B)False

Question 16

Prices are inefficient rationing devices.

Accepted Answer

A) True 
 B)False

Question 17

Figure 6-22  
-Refer to Figure 6-22. The amount of the tax per unit is

Accepted Answer

A)  $2.00. 
B)  $1.50. 
C)  $3.00. 
D)  $0.50. 
A)  $2.00. 
B)  $1.50. 
C)  $3.00. 
D)  $0.50.

Question 18

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 19

If a price ceiling is not binding, then

Accepted Answer

A)  there will be a surplus in the market. 
B)  there will be a shortage in the market. 
C)  the market will be less efficient than it would be without the price ceiling. 
D)  there will be no effect on the market price or quantity sold. 
A)  there will be a surplus in the market. 
B)  there will be a shortage in the market. 
C)  the market will be less efficient than it would be without the price ceiling. 
D)  there will be no effect on the market price or quantity sold.

Question 20

Under rent control, bribery is a mechanism to

Accepted Answer

A)  bring the total price of an apartment (including the bribe) closer to the equilibrium price. 
B)  allocate housing to the poorest individuals in the market. 
C)  force the total price of an apartment (including the bribe) to be less than the market price. 
D)  allocate housing to the most deserving tenants. 
A)  bring the total price of an apartment (including the bribe) closer to the equilibrium price. 
B)  allocate housing to the poorest individuals in the market. 
C)  force the total price of an apartment (including the bribe) to be less than the market price. 
D)  allocate housing to the most deserving tenants.

Exam 6: Supply, Demand, and Government Policies

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

To say that a price ceiling is binding is to say that the price ceiling

Table 6-6 -Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

When a tax is imposed on the buyers of a good, the demand curve shifts

Figure 6-4 -Refer to Figure 6-4. A government-imposed price ceiling of $6 in this market results in

When government imposes a price ceiling or a price floor on a market,

Whether a tax is levied on sellers or buyers, buyers and sellers usually share the burden of taxes.

The minimum wage

A tax burden falls more heavily on the side of the market that is less elastic.

A tax of $1 on buyers shifts the demand curve downward by exactly $1.

Figure 6-5 -Refer to Figure 6-5. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

Prices are inefficient rationing devices.

Figure 6-22 -Refer to Figure 6-22. The amount of the tax per unit is

A tax levied on the sellers of blueberries

If a price ceiling is not binding, then

Under rent control, bribery is a mechanism to

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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