Question 1

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-35  
-Refer to Figure 6-35. A price ceiling set at $30 would create a shortage of 20 units.

Accepted Answer

A) True 
 B)False

Question 3

If the government removes a tax on a good, then the quantity of the good sold will

Accepted Answer

A)  increase. 
B)  decrease. 
C)  not change. 
D)  All of the above are possible. 
A)  increase. 
B)  decrease. 
C)  not change. 
D)  All of the above are possible.

Question 4

Figure 6-33  
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. What price will buyers pay for the good after the tax is imposed?

Accepted Answer

Buyers wil

Question 5

Figure 6-26  
-Refer to Figure 6-26. The price paid by buyers after the tax is imposed is

Accepted Answer

A)  $8. 
B)  $16. 
C)  $14. 
D)  $12. 
A)  $8. 
B)  $16. 
C)  $14. 
D)  $12.

Question 6

Table 6-6
  
-Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set

Question 7

FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

Accepted Answer

A) True 
 B)False

Question 8

Economists generally believe that rent control is

Accepted Answer

A)  an efficient and fair way to help the poor. 
B)  inefficient but the best available means of solving a serious social problem. 
C)  a highly inefficient way to help the poor raise their standard of living. 
D)  an efficient way to allocate housing, but not a good way to help the poor. 
A)  an efficient and fair way to help the poor. 
B)  inefficient but the best available means of solving a serious social problem. 
C)  a highly inefficient way to help the poor raise their standard of living. 
D)  an efficient way to allocate housing, but not a good way to help the poor.

Question 9

The incidence of a tax falls more heavily on

Accepted Answer

A)  consumers than producers if demand is more inelastic than supply. 
B)  producers than consumers if supply is more inelastic than demand. 
C)  consumers than producers if supply is more elastic than demand. 
D)  All of the above are correct. 
A)  consumers than producers if demand is more inelastic than supply. 
B)  producers than consumers if supply is more inelastic than demand. 
C)  consumers than producers if supply is more elastic than demand. 
D)  All of the above are correct.

Question 10

Figure 6-35  
-Refer to Figure 6-35. A price floor set at $60 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 11

Using the graph shown, answer the following questions.
a. What was the equilibrium price in this market before the tax?
b. What is the amount of the tax?
c. How much of the tax will the buyers pay?
d. How much of the tax will the sellers pay?
e. How much will the buyer pay for the product after the tax is imposed?
f. How much will the seller receive after the tax is imposed?
g. As a result of the tax, what has happened to the level of market activity?

Accepted Answer

a. $6
b. $4
c. $1
d. $3
e. $7

Question 12

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-7  
-Refer to Figure 6-7. For a price ceiling to be binding in this market, it would have to be set at

Accepted Answer

A)  any price below $7. 
B)  any price above $3. 
C)  any price below $9. 
D)  any price above $7. 
A)  any price below $7. 
B)  any price above $3. 
C)  any price below $9. 
D)  any price above $7.

Question 14

Figure 6-11  
-Refer to Figure 6-11. If the government imposes a price floor at $10, it would be

Accepted Answer

A)  binding if market demand is Demand A or Demand B. 
B)  non-binding if market demand is Demand A or Demand B. 
C)  binding if market demand is Demand A and non-binding if market demand is Demand B. 
D)  non-binding if market demand is Demand A and binding if market demand is Demand B. 
A)  binding if market demand is Demand A or Demand B. 
B)  non-binding if market demand is Demand A or Demand B. 
C)  binding if market demand is Demand A and non-binding if market demand is Demand B. 
D)  non-binding if market demand is Demand A and binding if market demand is Demand B.

Question 15

The minimum wage was instituted to ensure workers

Accepted Answer

A)  a middle-class standard of living. 
B)  employment. 
C)  a minimally adequate standard of living. 
D)  unemployment compensation. 
A)  a middle-class standard of living. 
B)  employment. 
C)  a minimally adequate standard of living. 
D)  unemployment compensation.

Question 16

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 $3 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)  less than 8 units 
B)  8 units 
C)  between 8 units and 10 units 
D)  greater than 10 units 
A)  less than 8 units 
B)  8 units 
C)  between 8 units and 10 units 
D)  greater than 10 units

Question 17

The federal government uses the revenue from the FICA Federal Insurance Contribution Act) tax to pay for

Accepted Answer

A)  unemployment compensation. 
B)  the salaries of members of Congress. 
C)  Social Security and Medicare. 
D)  housing subsidies for low-income people. 
A)  unemployment compensation. 
B)  the salaries of members of Congress. 
C)  Social Security and Medicare. 
D)  housing subsidies for low-income people.

Question 18

Figure 6-22  
-Refer to Figure 6-22. As the figure is drawn, who sends the tax payment to the government?

Accepted Answer

A)  The buyers send the tax payment. 
B)  The sellers send the tax payment. 
C)  A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers. 
D)  The question of who sends the tax payment cannot be determined from the graph. 
A)  The buyers send the tax payment. 
B)  The sellers send the tax payment. 
C)  A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers. 
D)  The question of who sends the tax payment cannot be determined from the graph.

Question 19

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

Accepted Answer

With a $6 tax per un

Question 20

If a price floor is not binding, then

Accepted Answer

A)  there will be a surplus in the market. 
B)  there will be a shortage in the market. 
C)  there will be no effect on the market price or quantity sold. 
D)  the market will be less efficient than it would be without the price floor. 
A)  there will be a surplus in the market. 
B)  there will be a shortage in the market. 
C)  there will be no effect on the market price or quantity sold. 
D)  the market will be less efficient than it would be without the price floor.

Exam 6: Supply, Demand, and Government Policies

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Figure 6-35 -Refer to Figure 6-35. A price ceiling set at $30 would create a shortage of 20 units.

If the government removes a tax on a good, then the quantity of the good sold will

Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. What price will buyers pay for the good after the tax is imposed?

Figure 6-26 -Refer to Figure 6-26. The price paid by buyers after the tax is imposed is

Table 6-6 -Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

Economists generally believe that rent control is

The incidence of a tax falls more heavily on

Figure 6-35 -Refer to Figure 6-35. A price floor set at $60 would create a surplus of 20 units.

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.

Figure 6-7 -Refer to Figure 6-7. For a price ceiling to be binding in this market, it would have to be set at

Figure 6-11 -Refer to Figure 6-11. If the government imposes a price floor at $10, it would be

The minimum wage was instituted to ensure workers

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 $3 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

The federal government uses the revenue from the FICA Federal Insurance Contribution Act) tax to pay for

Figure 6-22 -Refer to Figure 6-22. As the figure is drawn, who sends the tax payment to the government?

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

If a price floor is not binding, then

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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