Question 1

Which of the following causes a shortage of a good?

Accepted Answer

A) a binding price floor 
B) a binding price ceiling 
C) a tax on the good 
D) None of the above is correct. 
A) a binding price floor 
B) a binding price ceiling 
C) a tax on the good 
D) None of the above is correct.

Question 2

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the
(i)Supply is more elastic than the demand.
(ii)Demand in more elastic than the supply.
(iii)Tax is placed on the sellers of the product.
(iv)Tax is placed on the buyers of the product.

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 3

Figure 6-24  
-Refer to Figure 6-24.Which of the following statements is correct?

Accepted Answer

A) The amount of the tax per unit is $6. 
B) The tax leaves the size of the market unchanged. 
C) The tax is levied on buyers of the good,rather than on sellers. 
D) All of the above are correct. 
A) The amount of the tax per unit is $6. 
B) The tax leaves the size of the market unchanged. 
C) The tax is levied on buyers of the good,rather than on sellers. 
D) All of the above are correct.

Question 4

Figure 6-29
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-29.Suppose D1 represents the demand curve for gasoline in both the short run and long run,S1 represents the supply curve for gasoline in the short run,and S2 represents the supply curve for gasoline in the long run.After the imposition of the $2,the price paid by buyers will be

Accepted Answer

A) higher in the long run than in the short run. 
B) higher in the short run than in the long run. 
C) equivalent in the short run and the long run. 
D) unable to be determined without additional information. 
A) higher in the long run than in the short run. 
B) higher in the short run than in the long run. 
C) equivalent in the short run and the long run. 
D) unable to be determined without additional information.

Question 5

Suppose the demand for macaroni is inelastic,the supply of macaroni is elastic,the demand for cigarettes is inelastic,and the supply of cigarettes is elastic.If a tax were levied on the sellers of both of these commodities,we would expect that the burden of

Accepted Answer

A) both taxes would fall more heavily on the buyers than on the sellers. 
B) the macaroni tax would fall more heavily on the sellers than on the buyers,and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C) the macaroni tax would fall more heavily on the buyers than on the sellers,and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D) both taxes would fall more heavily on the sellers than on the buyers. 
A) both taxes would fall more heavily on the buyers than on the sellers. 
B) the macaroni tax would fall more heavily on the sellers than on the buyers,and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C) the macaroni tax would fall more heavily on the buyers than on the sellers,and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D) both taxes would fall more heavily on the sellers than on the buyers.

Question 6

Figure 6-18
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-18.The per-unit burden of the tax on buyers is

Accepted Answer

A) $6. 
B) $8. 
C) $14. 
D) $24. 
A) $6. 
B) $8. 
C) $14. 
D) $24.

Question 7

Figure 6-29
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-29.The buyers and sellers will bear an equal share of the tax burden if the demand is

Accepted Answer

A) D1,and the supply is S1. 
B) D2,and the supply is S1. 
C) D1,and the supply is S2. 
D) D2,and the supply is S2. 
A) D1,and the supply is S1. 
B) D2,and the supply is S1. 
C) D1,and the supply is S2. 
D) D2,and the supply is S2.

Question 8

Figure 6-25  
-Refer to Figure 6-25.The equilibrium price in the market before the tax is imposed is

Accepted Answer

A) $1. 
B) $2. 
C) $5. 
D) $6. 
A) $1. 
B) $2. 
C) $5. 
D) $6.

Question 9

The tax burden will fall most heavily on sellers of the good when the demand curve

Accepted Answer

A) is relatively steep,and the supply curve is relatively flat. 
B) is relatively flat,and the supply curve is relatively steep. 
C) and the supply curve are both relatively flat. 
D) and the supply curve are both relatively steep. 
A) is relatively steep,and the supply curve is relatively flat. 
B) is relatively flat,and the supply curve is relatively steep. 
C) and the supply curve are both relatively flat. 
D) and the supply curve are both relatively steep.

Question 10

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 11

Figure 6-22  
-Refer to Figure 6-22.Sellers pay how much of the tax per unit?

Accepted Answer

A) $0.50. 
B) $1.50. 
C) $3.00. 
D) $5.00. 
A) $0.50. 
B) $1.50. 
C) $3.00. 
D) $5.00.

Question 12

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 13

When a payroll tax is enacted,the wage received by workers

Accepted Answer

A) falls,and the wage paid by firms rises. 
B) falls,and the wage paid by firms falls. 
C) rises,and the wage paid by firms falls. 
D) rises,and the wage paid by firms rises. 
A) falls,and the wage paid by firms rises. 
B) falls,and the wage paid by firms falls. 
C) rises,and the wage paid by firms falls. 
D) rises,and the wage paid by firms rises.

Question 14

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 15

If a tax is levied on the sellers of a product,then there will be a(n)

Accepted Answer

A) downward shift of the demand curve. 
B) upward shift of the demand curve. 
C) decrease in quantity demanded. 
D) increase in quantity demanded. 
A) downward shift of the demand curve. 
B) upward shift of the demand curve. 
C) decrease in quantity demanded. 
D) increase in quantity demanded.

Question 16

If the government wants to reduce the burning of fossil fuels,it should impose a tax on

Accepted Answer

A) buyers of gasoline. 
B) sellers of gasoline. 
C) either buyers or sellers of gasoline. 
D) whichever side of the market is less elastic. 
A) buyers of gasoline. 
B) sellers of gasoline. 
C) either buyers or sellers of gasoline. 
D) whichever side of the market is less elastic.

Question 17

Figure 6-30
 
-Refer to Figure 6-30.In which market will the tax burden be most equally divided between buyers and 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 18

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Accepted Answer

A) upward by exactly $1.50. 
B) upward by less than $1.50. 
C) downward by exactly $1.50. 
D) downward by less than $1.50. 
A) upward by exactly $1.50. 
B) upward by less than $1.50. 
C) downward by exactly $1.50. 
D) downward by less than $1.50.

Question 19

When a tax is placed on the sellers of cell phones,the size of the cell phone market

Accepted Answer

A) and the effective price received by sellers both increase. 
B) increases,but the effective price received by sellers decreases. 
C) decreases,but the effective price received by sellers increases. 
D) and the effective price received by sellers both decrease. 
A) and the effective price received by sellers both increase. 
B) increases,but the effective price received by sellers decreases. 
C) decreases,but the effective price received by sellers increases. 
D) and the effective price received by sellers both decrease.

Exam 6: Supply Demand and Government Policies: Taxes

Which of the following causes a shortage of a good?

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the (i)Supply is more elastic than the demand. (ii)Demand in more elastic than the supply. (iii)Tax is placed on the sellers of the product. (iv)Tax is placed on the buyers of the product.

Figure 6-24 -Refer to Figure 6-24.Which of the following statements is correct?

Suppose the demand for macaroni is inelastic,the supply of macaroni is elastic,the demand for cigarettes is inelastic,and the supply of cigarettes is elastic.If a tax were levied on the sellers of both of these commodities,we would expect that the burden of

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18.The per-unit burden of the tax on buyers is

Figure 6-29 Suppose the government imposes a $2 on this market. -Refer to Figure 6-29.The buyers and sellers will bear an equal share of the tax burden if the demand is

Figure 6-25 -Refer to Figure 6-25.The equilibrium price in the market before the tax is imposed is

The tax burden will fall most heavily on sellers of the good when the demand curve

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?

Figure 6-22 -Refer to Figure 6-22.Sellers pay how much of the tax per unit?

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

When a payroll tax is enacted,the wage received by workers

The quantity sold in a market will increase if the government

If a tax is levied on the sellers of a product,then there will be a(n)

If the government wants to reduce the burning of fossil fuels,it should impose a tax on

Figure 6-30 -Refer to Figure 6-30.In which market will the tax burden be most equally divided between buyers and sellers?

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

When a tax is placed on the sellers of cell phones,the size of the cell phone market

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A

Application International Trade: Part B

Measuring a Nations Income