Question 1

A tax imposed on the buyers of a good will raise the

Accepted Answer

A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity. 
A) price paid by buyers and lower the equilibrium quantity. 
B) price paid by buyers and raise the equilibrium quantity. 
C) effective price received by sellers and lower the equilibrium quantity. 
D) effective price received by sellers and raise the equilibrium quantity.

Question 2

Figure 6-19  
-Refer to Figure 6-19.Suppose a tax of $2 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A) $3 
B) between $3 and $5 
C) between $5 and $7 
D) $7 
A) $3 
B) between $3 and $5 
C) between $5 and $7 
D) $7

Question 3

If a tax is imposed on a market with inelastic demand and elastic supply,then

Accepted Answer

A) buyers will bear most of the burden of the tax. 
B) sellers will bear most of the burden of the tax. 
C) the burden of the tax will be shared equally between buyers and sellers. 
D) it is impossible to determine how the burden of the tax will be shared. 
A) buyers will bear most of the burden of the tax. 
B) sellers will bear most of the burden of the tax. 
C) the burden of the tax will be shared equally between buyers and sellers. 
D) it is impossible to determine how the burden of the tax will be shared.

Question 4

Figure 6-27
This figure shows the market demand and market supply curves for good Z.  
-Refer to Figure 6-27.Suppose a tax of $6 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 5

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

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

Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then the

Accepted Answer

A) demand curve will shift upward by $20,and the effective price received by sellers will increase by $20. 
B) demand curve will shift upward by $20,and the effective price received by sellers will increase by less than $20. 
C) supply curve will shift downward by $20,and the price paid by buyers will decrease by $20. 
D) supply curve will shift downward by $20,and the price paid by buyers will decrease by less than $20. 
A) demand curve will shift upward by $20,and the effective price received by sellers will increase by $20. 
B) demand curve will shift upward by $20,and the effective price received by sellers will increase by less than $20. 
C) supply curve will shift downward by $20,and the price paid by buyers will decrease by $20. 
D) supply curve will shift downward by $20,and the price paid by buyers will decrease by less than $20.

Question 8

If a tax is imposed on a market with inelastic supply and elastic demand,then

Accepted Answer

A) buyers will bear most of the burden of the tax. 
B) sellers will bear most of the burden of the tax. 
C) the burden of the tax will be shared equally between buyers and sellers. 
D) it is impossible to determine how the burden of the tax will be shared. 
A) buyers will bear most of the burden of the tax. 
B) sellers will bear most of the burden of the tax. 
C) the burden of the tax will be shared equally between buyers and sellers. 
D) it is impossible to determine how the burden of the tax will be shared.

Question 9

When a tax is placed on the buyers of tennis racquets,the size of the tennis racquet market

Accepted Answer

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

Question 10

Figure 6-20  
-Refer to Figure 6-20.Suppose a tax of $5 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A) $5 
B) between $5 and $10 
C) between $10 and $14 
D) $14 
A) $5 
B) between $5 and $10 
C) between $10 and $14 
D) $14

Question 11

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars,then the price paid by buyers will

Accepted Answer

A) not change,and the price received by sellers will not change. 
B) not change,and the price received by sellers will decrease. 
C) decrease,and the price received by sellers will not change. 
D) decrease,and the price received by sellers will decrease. 
A) not change,and the price received by sellers will not change. 
B) not change,and the price received by sellers will decrease. 
C) decrease,and the price received by sellers will not change. 
D) decrease,and the price received by sellers will decrease.

Question 12

When a tax is placed on the buyers 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) demand for 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) demand for the product decreases. 
D) All of the above are correct.

Question 13

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 14

Figure 6-24  
-Refer to Figure 6-24.What is the amount of the tax per unit?

Accepted Answer

A) $8 
B) $6 
C) $4 
D) $2 
A) $8 
B) $6 
C) $4 
D) $2

Question 15

Suppose that the demand for picture frames is highly inelastic,and the supply of picture frames is highly elastic.A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Accepted Answer

A) less than $0.50. 
B) $0.50. 
C) between $0.50 and $1. 
D) $1. 
A) less than $0.50. 
B) $0.50. 
C) between $0.50 and $1. 
D) $1.

Question 16

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

Accepted Answer

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

Question 17

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

Accepted Answer

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

Question 18

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.

Question 19

Assume the demand for cigarettes is relatively inelastic,and the supply of cigarettes is relatively elastic.When cigarettes are taxed,we would expect

Accepted Answer

A) most of the burden of the tax to fall on sellers of cigarettes,regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
B) most of the burden of the tax to fall on buyers of cigarettes,regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
C) the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government. 
D) a large percentage of smokers to quit smoking in response to the tax. 
A) most of the burden of the tax to fall on sellers of cigarettes,regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
B) most of the burden of the tax to fall on buyers of cigarettes,regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government. 
C) the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government. 
D) a large percentage of smokers to quit smoking in response to the tax.

Question 20

The price paid by buyers in a market will increase if the government
(i)Increases a binding price floor in that market.
(ii)Increases a binding price ceiling in that market.
(iii)Decreases a tax on the good sold in that market.

Accepted Answer

A) (ii)only 
B) (iii)only 
C) (i)and (ii)only 
D) (i), (ii),and (iii) 
A) (ii)only 
B) (iii)only 
C) (i)and (ii)only 
D) (i), (ii),and (iii)

Exam 6: Supply Demand and Government Policies: Taxes

A tax imposed on the buyers of a good will raise the

Figure 6-19 -Refer to Figure 6-19.Suppose a tax of $2 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

If a tax is imposed on a market with inelastic demand and elastic supply,then

Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27.Suppose a tax of $6 per unit is imposed on this market.Which of the following is correct?

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

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

Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then the

If a tax is imposed on a market with inelastic supply and elastic demand,then

When a tax is placed on the buyers of tennis racquets,the size of the tennis racquet market

Figure 6-20 -Refer to Figure 6-20.Suppose a tax of $5 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars,then the price paid by buyers will

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

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?

Figure 6-24 -Refer to Figure 6-24.What is the amount of the tax per unit?

Suppose that the demand for picture frames is highly inelastic,and the supply of picture frames is highly elastic.A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

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

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

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

Assume the demand for cigarettes is relatively inelastic,and the supply of cigarettes is relatively elastic.When cigarettes are taxed,we would expect

The price paid by buyers in a market will increase if the government (i)Increases a binding price floor in that market. (ii)Increases a binding price ceiling in that market. (iii)Decreases a tax on the good sold in that 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