Question 1

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

Accepted Answer

A) increases 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) All of the above are correct. 
A) increases 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) All of the above are correct.

Question 2

Figure 6-28  
-Refer to Figure 6-28.Suppose a tax of $6 per unit is imposed on this market.How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A) $4 
B) between $4 and $7 
C) between $7 and $10 
D) $10 
A) $4 
B) between $4 and $7 
C) between $7 and $10 
D) $10

Question 3

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 4

The demand for salt is inelastic,and the supply of salt is elastic.The demand for caviar is elastic,and the supply of caviar is inelastic.Suppose that a tax of $1 per pound is levied on the sellers of salt,and a tax of $1 per pound is levied on the buyers of caviar.We would expect that most of the burden of these taxes will fall on

Accepted Answer

A) sellers of salt and the buyers of caviar. 
B) sellers of salt and the sellers of caviar. 
C) buyers of salt and the sellers of caviar. 
D) buyers of salt and the buyers of caviar. 
A) sellers of salt and the buyers of caviar. 
B) sellers of salt and the sellers of caviar. 
C) buyers of salt and the sellers of caviar. 
D) buyers of salt and the buyers of caviar.

Question 5

Figure 6-22  
-Refer to Figure 6-22.How much tax revenue does this tax generate for the government?

Accepted Answer

A) $80. 
B) $60. 
C) $15. 
D) $45. 
A) $80. 
B) $60. 
C) $15. 
D) $45.

Question 6

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

Accepted Answer

A) upward shift of the demand curve. 
B) downward shift of the demand curve. 
C) movement up and to the left along the demand curve. 
D) movement down and to the right along the demand curve. 
A) upward shift of the demand curve. 
B) downward shift of the demand curve. 
C) movement up and to the left along the demand curve. 
D) movement down and to the right along the demand curve.

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

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 9

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms.Labor economists believe that

Accepted Answer

A) lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. 
B) the tax raises too little revenue for the government,so it should be eliminated. 
C) firms bear most of the burden of the tax. 
D) workers bear most of the burden of the tax. 
A) lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. 
B) the tax raises too little revenue for the government,so it should be eliminated. 
C) firms bear most of the burden of the tax. 
D) workers bear most of the burden of the tax.

Question 10

Figure 6-28  
-Refer to Figure 6-28.Suppose a tax of $4 per unit is imposed on this market.Which of the following is correct?

Accepted Answer

A) Buyers and sellers will share the burden of the tax equally. 
B) Buyers will bear more of the burden of the tax than sellers. 
C) Sellers will bear more of the burden of the tax than buyers. 
D) Any of the above is possible in this market. 
A) Buyers and sellers will share the burden of the tax equally. 
B) Buyers will bear more of the burden of the tax than sellers. 
C) Sellers will bear more of the burden of the tax than buyers. 
D) Any of the above is possible in this market.

Question 11

A tax on the buyers of cereal will increase the price of cereal paid by buyers,

Accepted Answer

A) decrease the effective price of cereal received by sellers,and decrease the equilibrium quantity of cereal. 
B) decrease the effective price of cereal received by sellers,and increase the equilibrium quantity of cereal. 
C) increase the effective price of cereal received by sellers,and decrease the equilibrium quantity of cereal. 
D) increase the effective price of cereal received by sellers,and increase the equilibrium quantity of cereal. 
A) decrease the effective price of cereal received by sellers,and decrease the equilibrium quantity of cereal. 
B) decrease the effective price of cereal received by sellers,and increase the equilibrium quantity of cereal. 
C) increase the effective price of cereal received by sellers,and decrease the equilibrium quantity of cereal. 
D) increase the effective price of cereal received by sellers,and increase the equilibrium quantity of cereal.

Question 12

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

Accepted Answer

A) and the price paid by buyers both increase. 
B) increases,but the price paid by buyers decreases. 
C) decreases,but the price paid by buyers increases. 
D) and the price paid by buyers both decrease. 
A) and the price paid by buyers both increase. 
B) increases,but the price paid by buyers decreases. 
C) decreases,but the price paid by buyers increases. 
D) and the price paid by buyers both decrease.

Question 13

A tax burden falls more heavily on the side of the market that

Accepted Answer

A) has a fewer number of participants. 
B) is more inelastic. 
C) is closer to unit elastic. 
D) is less inelastic. 
A) has a fewer number of participants. 
B) is more inelastic. 
C) is closer to unit elastic. 
D) is less inelastic.

Question 14

Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy.Further,suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle.Which of the following statements is correct?

Accepted Answer

A) This tax causes the demand curve for vodka to shift downward by $5.00 at each quantity of vodka. 
B) The price paid by buyers is $2.00 per bottle more than it was before the tax. 
C) Sixty 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 vodka to shift downward by $5.00 at each quantity of vodka. 
B) The price paid by buyers is $2.00 per bottle more than it was before the tax. 
C) Sixty percent of the burden of the tax falls on sellers. 
D) All of the above are correct.

Question 15

The tax burden will fall most heavily on buyers 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 16

Figure 6-22  
-Refer to Figure 6-22.Suppose the same supply and demand curves apply,and a tax of the same amount per unit as shown here is imposed.Now,however,the buyers of the good,rather than the sellers,are required to pay the tax to the government.After the buyers pay the tax,relative to the case depicted in the figure,the burden on buyers will be

Accepted Answer

A) larger,and the burden on sellers will be smaller. 
B) smaller,and the burden on sellers will be larger. 
C) the same,and the burden on sellers will be the same. 
D) The relative burdens in the two cases cannot be determined without further information. 
A) larger,and the burden on sellers will be smaller. 
B) smaller,and the burden on sellers will be larger. 
C) the same,and the burden on sellers will be the same. 
D) The relative burdens in the two cases cannot be determined without further information.

Question 17

Figure 6-20  
-Refer to Figure 6-20.Suppose a tax of $5 per unit is imposed on this market.Which of the following is correct?

Accepted Answer

A) Buyers and sellers will share the burden of the tax equally. 
B) Buyers will bear more of the burden of the tax than sellers will. 
C) Sellers will bear more of the burden of the tax than buyers will. 
D) Any of the above is possible. 
A) Buyers and sellers will share the burden of the tax equally. 
B) Buyers will bear more of the burden of the tax than sellers will. 
C) Sellers will bear more of the burden of the tax than buyers will. 
D) Any of the above is possible.

Question 18

A tax on the sellers of coffee mugs

Accepted Answer

A) increases the size of the coffee mug market. 
B) decreases the size of the coffee mug market. 
C) has no effect on the size of the coffee mug market. 
D) may increase,decrease,or have no effect on the size of the coffee mug market. 
A) increases the size of the coffee mug market. 
B) decreases the size of the coffee mug market. 
C) has no effect on the size of the coffee mug market. 
D) may increase,decrease,or have no effect on the size of the coffee mug market.

Question 19

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 20

Figure 6-22  
-Refer to Figure 6-22.The effective price sellers receive after the tax is imposed is

Accepted Answer

A) $2.00. 
B) $3.50. 
C) $5.00. 
D) $3.00. 
A) $2.00. 
B) $3.50. 
C) $5.00. 
D) $3.00.

Exam 6: Supply Demand and Government Policies: Taxes

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

Figure 6-28 -Refer to Figure 6-28.Suppose a tax of $6 per unit is imposed on this market.How much will sellers receive per unit after the tax is imposed?

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

Figure 6-22 -Refer to Figure 6-22.How much tax revenue does this tax generate for the government?

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

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

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

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms.Labor economists believe that

Figure 6-28 -Refer to Figure 6-28.Suppose a tax of $4 per unit is imposed on this market.Which of the following is correct?

A tax on the buyers of cereal will increase the price of cereal paid by buyers,

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

A tax burden falls more heavily on the side of the market that

Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy.Further,suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle.Which of the following statements is correct?

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

Figure 6-20 -Refer to Figure 6-20.Suppose a tax of $5 per unit is imposed on this market.Which of the following is correct?

A tax on the sellers of coffee mugs

Which of the following causes a surplus of a good?

Figure 6-22 -Refer to Figure 6-22.The effective price sellers receive after the tax is imposed is

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