Question 1

Figure 6-26  
-Refer to Figure 6-26. The amount of the tax per unit is

Accepted Answer

A)  $4. 
B)  $8. 
C)  $14. 
D)  $10. 
A)  $4. 
B)  $8. 
C)  $14. 
D)  $10.

Question 2

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

Accepted Answer

A)  This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. 
B)  The price paid by buyers is $0.30 per drink more than it was before the tax. 
C)  Forty percent of the burden of the tax falls on sellers. 
D)  All of the above are correct. 
A)  This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. 
B)  The price paid by buyers is $0.30 per drink more than it was before the tax. 
C)  Forty percent of the burden of the tax falls on sellers. 
D)  All of the above are correct.

Question 3

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Accepted Answer

A) True 
 B)False

Question 4

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 price ceilings would be binding in this market?

Accepted Answer

A)  $4 
B)  $5 
C)  $6 
D)  $7 
A)  $4 
B)  $5 
C)  $6 
D)  $7

Question 5

Figure 6-23
  
-Refer to Figure 6-23. The effective price received by sellers after the tax is imposed is

Accepted Answer

A)  $3. 
B)  $4. 
C)  $5. 
D)  $6. 
A)  $3. 
B)  $4. 
C)  $5. 
D)  $6.

Question 6

Most economists are in favor of price controls as a way of allocating resources in the economy.

Accepted Answer

A) True 
 B)False

Question 7

When a binding price floor is imposed on a market,

Accepted Answer

A)  price no longer serves as a rationing device. 
B)  the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor. 
C)  only some sellers benefit. 
D)  All of the above are correct. 
A)  price no longer serves as a rationing device. 
B)  the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor. 
C)  only some sellers benefit. 
D)  All of the above are correct.

Question 8

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

Accepted Answer

A)  increase by less than $5. 
B)  increase by exactly $5. 
C)  increase by more than $5. 
D)  decrease by an indeterminate amount. 
A)  increase by less than $5. 
B)  increase by exactly $5. 
C)  increase by more than $5. 
D)  decrease by an indeterminate amount.

Question 9

Figure 6-28  
-Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)  less than 20 units 
B)  20 units 
C)  between 20 units and 35 units 
D)  greater than 35 units 
A)  less than 20 units 
B)  20 units 
C)  between 20 units and 35 units 
D)  greater than 35 units

Question 10

The minimum wage is more often binding for teenagers than for other members of the labor force.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following causes a surplus of a good?

Accepted Answer

A)  a binding price floor 
B)  a binding price ceiling 
C)  a tax on the good 
D)  More than one of the above is correct. 
A)  a binding price floor 
B)  a binding price ceiling 
C)  a tax on the good 
D)  More than one of the above is correct.

Question 12

Scenario 6-1
Suppose that demand in the market for good X is given by the equation   and that supply in the market for good X is given by the equation  
-Refer to Scenario 6-1. If the government set a price floor at $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 13

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, 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 not change. 
C)  not change, and the price received by sellers will increase. 
D)  not change, and the price received by sellers will not change. 
A)  increase, and the price received by sellers will increase. 
B)  increase, and the price received by sellers will not change. 
C)  not change, and the price received by sellers will increase. 
D)  not change, and the price received by sellers will not change.

Question 14

If a binding price ceiling is imposed on the baby formula market, then

Accepted Answer

A)  the quantity of baby formula demanded will increase. 
B)  the quantity of baby formula supplied will decrease. 
C)  a shortage of baby formula will develop. 
D)  All of the above are correct. 
A)  the quantity of baby formula demanded will increase. 
B)  the quantity of baby formula supplied will decrease. 
C)  a shortage of baby formula will develop. 
D)  All of the above are correct.

Question 15

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A)  an enhancement of efficiency. 
B)  undesirable rationing mechanisms. 
C)  a surplus. 
D)  a shortage. 
A)  an enhancement of efficiency. 
B)  undesirable rationing mechanisms. 
C)  a surplus. 
D)  a shortage.

Question 16

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 17

As a rationing mechanism, discrimination according to seller bias is

Accepted Answer

A)  efficient and fair. 
B)  efficient, but potentially unfair. 
C)  inefficient, but fair. 
D)  inefficient and potentially unfair. 
A)  efficient and fair. 
B)  efficient, but potentially unfair. 
C)  inefficient, but fair. 
D)  inefficient and potentially unfair.

Question 18

The effects of rent control in the long run include lower rents and lower-quality housing.

Accepted Answer

A) True 
 B)False

Question 19

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A)  buyers will bear a greater burden of the tax than the sellers. 
B)  sellers will bear a greater burden of the tax than the buyers. 
C)  buyers and sellers are likely to share the burden of the tax equally. 
D)  buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information. 
A)  buyers will bear a greater burden of the tax than the sellers. 
B)  sellers will bear a greater burden of the tax than the buyers. 
C)  buyers and sellers are likely to share the burden of the tax equally. 
D)  buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

Question 20

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Accepted Answer

A)  the actual tax incidence is unaffected by the legislated tax incidence. 
B)  the employer now is required by law to pay more than 50 percent of the tax. 
C)  the employee now is required by law to pay more than 50 percent of the tax. 
D)  employers are no longer required by law to pay any portion of the tax. 
A)  the actual tax incidence is unaffected by the legislated tax incidence. 
B)  the employer now is required by law to pay more than 50 percent of the tax. 
C)  the employee now is required by law to pay more than 50 percent of the tax. 
D)  employers are no longer required by law to pay any portion of the tax.

Exam 6: Supply, Demand, and Government Policies

Figure 6-26 -Refer to Figure 6-26. The amount of the tax per unit is

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

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 price ceilings would be binding in this market?

Figure 6-23 -Refer to Figure 6-23. The effective price received by sellers after the tax is imposed is

Most economists are in favor of price controls as a way of allocating resources in the economy.

When a binding price floor is imposed on a market,

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

The minimum wage is more often binding for teenagers than for other members of the labor force.

Which of the following causes a surplus of a good?

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. If the government set a price floor at $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

If a binding price ceiling is imposed on the baby formula market, then

An outcome that can result from either a price ceiling or a price floor is

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

As a rationing mechanism, discrimination according to seller bias is

The effects of rent control in the long run include lower rents and lower-quality housing.

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

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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