Question 1

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 2

You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

Accepted Answer

A)  The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee. 
B)  Your employer is required by law to pay $300 to match the $300 deducted from your check. 
C)  This type of tax is an example of a payroll tax. 
D)  All of the above are correct. 
A)  The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee. 
B)  Your employer is required by law to pay $300 to match the $300 deducted from your check. 
C)  This type of tax is an example of a payroll tax. 
D)  All of the above are correct.

Question 3

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Accepted Answer

A) True 
 B)False

Question 4

Figure 6-3
Panel (a) Panel (b)
    
-Refer to Figure 6-3. A nonbinding price floor is shown in

Accepted Answer

A)  both panel (a) and panel (b). 
B)  panel (a) only. 
C)  panel (b) only. 
D)  neither panel (a) nor panel (b). 
A)  both panel (a) and panel (b). 
B)  panel (a) only. 
C)  panel (b) only. 
D)  neither panel (a) nor panel (b).

Question 5

A tax on buyers decreases the quantity of the good sold in the market.

Accepted Answer

A) True 
 B)False

Question 6

If a binding price floor is imposed on the video game market, then

Accepted Answer

A)  the quantity of video games demanded will decrease. 
B)  the quantity of video games supplied will increase. 
C)  a surplus of video games will develop. 
D)  All of the above are correct. 
A)  the quantity of video games demanded will decrease. 
B)  the quantity of video games supplied will increase. 
C)  a surplus of video games will develop. 
D)  All of the above are correct.

Question 7

The minimum wage was instituted to ensure workers

Accepted Answer

A)  a middle-class standard of living. 
B)  employment. 
C)  a minimally adequate standard of living. 
D)  unemployment compensation. 
A)  a middle-class standard of living. 
B)  employment. 
C)  a minimally adequate standard of living. 
D)  unemployment compensation.

Question 8

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

Accepted Answer

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

Question 9

Figure 6-19  
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)  less than 50 units 
B)  50 units 
C)  between 50 units and 100 units 
D)  greater than 100 units 
A)  less than 50 units 
B)  50 units 
C)  between 50 units and 100 units 
D)  greater than 100 units

Question 10

If the government removes a tax on a good, then the price paid by buyers will

Accepted Answer

A)  increase, and the price received by sellers will increase. 
B)  increase, and the price received by sellers will decrease. 
C)  decrease, and the price received by sellers will increase. 
D)  decrease, and the price received by sellers will decrease. 
A)  increase, and the price received by sellers will increase. 
B)  increase, and the price received by sellers will decrease. 
C)  decrease, and the price received by sellers will increase. 
D)  decrease, and the price received by sellers will decrease.

Question 11

Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars?

Accepted Answer

A)  frequent rental programs such as "Rent nine times and the tenth rental is free!" 
B)  enhanced maintenance programs to promote the high quality of the cars 
C)  free gasoline given to people as an incentive to a rent a car 
D)  slow replacement of old rental cars with newer ones 
A)  frequent rental programs such as "Rent nine times and the tenth rental is free!" 
B)  enhanced maintenance programs to promote the high quality of the cars 
C)  free gasoline given to people as an incentive to a rent a car 
D)  slow replacement of old rental cars with newer ones

Question 12

Table 6-3
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 $2 above the equilibrium price in this market.
  
-Refer to Table 6-3. Following the imposition of a price floor $2 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)  2 units. 
C)  5 units. 
D)  7 units. 
A)  0 units. 
B)  2 units. 
C)  5 units. 
D)  7 units.

Question 13

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 14

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

Accepted Answer

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

Question 15

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the buyers in this market?

Accepted Answer

With a $6 tax per unit, the pr

Question 16

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 17

Buyers and sellers rarely share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 18

The quantity sold 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)  More than one of the above is correct. 
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)  More than one of the above is correct.

Question 19

Table 6-6
  
-Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set

Question 20

Under rent control, tenants can expect

Accepted Answer

A)  lower rent and higher quality housing. 
B)  lower rent and lower quality housing. 
C)  higher rent and a shortage of rental housing. 
D)  higher rent and a surplus of rental housing. 
A)  lower rent and higher quality housing. 
B)  lower rent and lower quality housing. 
C)  higher rent and a shortage of rental housing. 
D)  higher rent and a surplus of rental housing.

Exam 6: Supply, Demand, and Government Policies

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Figure 6-3 Panel (a) Panel (b) -Refer to Figure 6-3. A nonbinding price floor is shown in

A tax on buyers decreases the quantity of the good sold in the market.

If a binding price floor is imposed on the video game market, then

The minimum wage was instituted to ensure workers

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

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

If the government removes a tax on a good, then the price paid by buyers will

Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars?

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.

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

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the buyers in this market?

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

Buyers and sellers rarely share the burden of a tax equally.

The quantity sold in a market will increase if the government

Table 6-6 -Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Under rent control, tenants can expect

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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