Question 1

Which of the following is not correct?

Accepted Answer

A)  The economy contains many labor markets for different types of workers. 
B)  The impact of the minimum wage depends on the skill and experience of the worker. 
C)  The minimum wage is binding for workers with high skills and much experience. 
D)  The minimum wage is not binding when the equilibrium wage is above the minimum wage. 
A)  The economy contains many labor markets for different types of workers. 
B)  The impact of the minimum wage depends on the skill and experience of the worker. 
C)  The minimum wage is binding for workers with high skills and much experience. 
D)  The minimum wage is not binding when the equilibrium wage is above the minimum wage. C

Question 2

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Accepted Answer

A)  OPEC raised the price of crude oil in world markets. 
B)  U.S. gasoline producers raised the price of gasoline. 
C)  the U.S. government maintained a price ceiling on gasoline. 
D)  Americans typically commuted long distances. 
A)  OPEC raised the price of crude oil in world markets. 
B)  U.S. gasoline producers raised the price of gasoline. 
C)  the U.S. government maintained a price ceiling on gasoline. 
D)  Americans typically commuted long distances. C

Question 3

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. D

Question 4

The term tax incidence refers to

Accepted Answer

A)  whether buyers or sellers of a good are required to send tax payments to the government. 
B)  whether the demand curve or the supply curve shifts when the tax is imposed. 
C)  the distribution of the tax burden between buyers and sellers. 
D)  widespread view that taxes and death) are the only certainties in life. 
A)  whether buyers or sellers of a good are required to send tax payments to the government. 
B)  whether the demand curve or the supply curve shifts when the tax is imposed. 
C)  the distribution of the tax burden between buyers and sellers. 
D)  widespread view that taxes and death) are the only certainties in life.

Question 5

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Accepted Answer

A)  demand for labor is more elastic than the supply of labor. 
B)  supply of labor is more elastic than the demand for labor. 
C)  demand for labor and supply of labor are equally elastic. 
D)  It is not possible for the tax burden to fall equally on firms and workers. 
A)  demand for labor is more elastic than the supply of labor. 
B)  supply of labor is more elastic than the demand for labor. 
C)  demand for labor and supply of labor are equally elastic. 
D)  It is not possible for the tax burden to fall equally on firms and workers.

Question 6

Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the

Accepted Answer

A)  demand is more inelastic than the supply. 
B)  supply is more inelastic than the demand. 
C)  government has required that buyers remit the tax payments. 
D)  government has required that sellers remit the tax payments. 
A)  demand is more inelastic than the supply. 
B)  supply is more inelastic than the demand. 
C)  government has required that buyers remit the tax payments. 
D)  government has required that sellers remit the tax payments.

Question 7

Figure 6-11  
-Refer to Figure 6-11. Which of the following statements is not correct?

Accepted Answer

A)  A government-imposed price of $8 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B. 
B)  A government-imposed price of $10 would be a binding price ceiling if market demand is either Demand A or Demand B. 
C)  A government-imposed price of $4 would be a binding price ceiling if market demand is either Demand A or Demand B. 
D)  A government-imposed price of $10 would be a binding price floor if market demand is Demand A and a non-binding price ceiling if market demand is Demand B. 
A)  A government-imposed price of $8 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B. 
B)  A government-imposed price of $10 would be a binding price ceiling if market demand is either Demand A or Demand B. 
C)  A government-imposed price of $4 would be a binding price ceiling if market demand is either Demand A or Demand B. 
D)  A government-imposed price of $10 would be a binding price floor if market demand is Demand A and a non-binding price ceiling if market demand is Demand B.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 10

In "Venezuela Versus the Market," the price control placed on coffee

Accepted Answer

A)  created a shortage of coffee. 
B)  resulted in higher profits for coffee growers. 
C)  increased coffee exports to other countries. 
D)  increased the amount of land and coffee used in production. 
A)  created a shortage of coffee. 
B)  resulted in higher profits for coffee growers. 
C)  increased coffee exports to other countries. 
D)  increased the amount of land and coffee used in production.

Question 11

The Earned Income Tax Credit is an example of a

Accepted Answer

A)  minimum-wage law. 
B)  price ceiling. 
C)  wage subsidy. 
D)  rent subsidy. 
A)  minimum-wage law. 
B)  price ceiling. 
C)  wage subsidy. 
D)  rent subsidy.

Question 12

Which of the following is correct?

Accepted Answer

A)  Workers determine the supply of labor, and firms determine the demand for labor. 
B)  Workers determine the demand for labor, and firms determine the supply of labor. 
C)  The labor market is a single market for all different types of workers. 
D)  The price of the product produced by labor adjusts to balance the supply of labor and the demand for labor. 
A)  Workers determine the supply of labor, and firms determine the demand for labor. 
B)  Workers determine the demand for labor, and firms determine the supply of labor. 
C)  The labor market is a single market for all different types of workers. 
D)  The price of the product produced by labor adjusts to balance the supply of labor and the demand for labor.

Question 13

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

Accepted Answer

A) True 
 B)False

Question 14

When a tax is imposed on the sellers of a good, the supply 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 15

Figure 6-31  
-Refer to Figure 6-31. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set

Question 16

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Accepted Answer

A) True 
 B)False

Question 17

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would

Accepted Answer

A)  shift the demand curve downward by 25 cents. 
B)  lower the equilibrium price by 25 cents. 
C)  reduce the equilibrium quantity. 
D)  discourage market activity. 
A)  shift the demand curve downward by 25 cents. 
B)  lower the equilibrium price by 25 cents. 
C)  reduce the equilibrium quantity. 
D)  discourage market activity.

Question 18

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 ceiling at $12, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $12 wou

Question 19

Figure 6-6  
-Refer to Figure 6-6. If the government imposes a price floor of $6 on this market, then there will be

Accepted Answer

A)  no surplus. 
B)  a surplus of 20 units. 
C)  a surplus of 30 units. 
D)  a surplus of 40 units. 
A)  no surplus. 
B)  a surplus of 20 units. 
C)  a surplus of 30 units. 
D)  a surplus of 40 units.

Question 20

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

Accepted Answer

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

Exam 6: Supply, Demand, and Government Policies

Which of the following is not correct?

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

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?

The term tax incidence refers to

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the

Figure 6-11 -Refer to Figure 6-11. Which of the following statements is not correct?

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

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.

In "Venezuela Versus the Market," the price control placed on coffee

The Earned Income Tax Credit is an example of a

Which of the following is correct?

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

When a tax is imposed on the sellers of a good, the supply curve shifts

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would

Figure 6-6 -Refer to Figure 6-6. If the government imposes a price floor of $6 on this market, then there will be

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

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 Costs of Production

Firms in Competitive Markets

Monopoly

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

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