Question 1

When a tax is placed on the sellers of energy drinks, the

Accepted Answer

A)  sellers bear the entire burden of the tax. 
B)  buyers bear the entire burden of the tax. 
C)  burden of the tax will be always be equally divided between the buyers and the sellers. 
D)  burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal. 
A)  sellers bear the entire burden of the tax. 
B)  buyers bear the entire burden of the tax. 
C)  burden of the tax will be always be equally divided between the buyers and the sellers. 
D)  burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

Question 2

To say that a price floor is binding is to say that the price floor

Accepted Answer

A)  results in a shortage. 
B)  is set below the equilibrium price. 
C)  causes quantity supplied to exceed quantity demanded. 
D)  All of the above are correct. 
A)  results in a shortage. 
B)  is set below the equilibrium price. 
C)  causes quantity supplied to exceed quantity demanded. 
D)  All of the above are correct.

Question 3

Table 6-5
  
-Refer to Table 6-5. Which of the following price floors would be binding in this market?

Accepted Answer

A)  $3 
B)  $6 
C)  $9 
D)  None of the above price floors would be binding. 
A)  $3 
B)  $6 
C)  $9 
D)  None of the above price floors would be binding.

Question 4

When a tax is imposed on a good, the result is always a shortage of the good.

Accepted Answer

A) True 
 B)False

Question 5

A price floor will be binding only if it is set

Accepted Answer

A)  equal to the equilibrium price. 
B)  above the equilibrium price. 
C)  below the equilibrium price. 
D)  either above or below the equilibrium price. 
A)  equal to the equilibrium price. 
B)  above the equilibrium price. 
C)  below the equilibrium price. 
D)  either above or below the equilibrium price.

Question 6

If a binding price floor is imposed on the video game market, then

Accepted Answer

A)  the quantity of video games demanded will decrease. 
B)  the quantity of video games supplied will increase. 
C)  a surplus of video games will develop. 
D)  All of the above are correct. 
A)  the quantity of video games demanded will decrease. 
B)  the quantity of video games supplied will increase. 
C)  a surplus of video games will develop. 
D)  All of the above are correct.

Question 7

Renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments.

Accepted Answer

A) True 
 B)False

Question 8

In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. The goal of the tax was to

Accepted Answer

A)  raise revenue from the wealthy. 
B)  prevent wealthy people from buying luxuries. 
C)  force producers of luxury goods to reduce employment. 
D)  limit exports of luxury goods to other countries. 
A)  raise revenue from the wealthy. 
B)  prevent wealthy people from buying luxuries. 
C)  force producers of luxury goods to reduce employment. 
D)  limit exports of luxury goods to other countries.

Question 9

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Accepted Answer

A)  less than one-third. 
B)  between one-third and one-half. 
C)  between one-half and two-thirds. 
D)  greater than two-thirds. 
A)  less than one-third. 
B)  between one-third and one-half. 
C)  between one-half and two-thirds. 
D)  greater than two-thirds.

Question 10

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

Accepted Answer

A)  decrease by less than $500. 
B)  decrease by exactly $500. 
C)  decrease by more than $500. 
D)  increase by an indeterminate amount. 
A)  decrease by less than $500. 
B)  decrease by exactly $500. 
C)  decrease by more than $500. 
D)  increase by an indeterminate amount.

Question 11

Figure 6-21  
-Refer to Figure 6-21. How is the burden of the tax shared between buyers and sellers? Buyers bear

Accepted Answer

A)  three-fourths of the burden, and sellers bear one-fourth of the burden. 
B)  two-thirds of the burden, and sellers bear one-third of the burden. 
C)  one-half of the burden, and sellers bear one-half of the burden. 
D)  one-fourth of the burden, and sellers bear three-fourths of the burden. 
A)  three-fourths of the burden, and sellers bear one-fourth of the burden. 
B)  two-thirds of the burden, and sellers bear one-third of the burden. 
C)  one-half of the burden, and sellers bear one-half of the burden. 
D)  one-fourth of the burden, and sellers bear three-fourths of the burden.

Question 12

Table 6-6
  
-Refer to Table 6-6. If the government set a price floor at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 13

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 14

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

Accepted Answer

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

Question 15

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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 18

Table 6-6
  
-Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

Accepted Answer

A price floor must be set abov

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

Accepted Answer

A)  the payment by government of a fraction of a poor family's rent. 
B)  higher taxes on rental income earned by landlords. 
C)  a policy that prevents landlords from evicting tenants. 
D)  a policy that allows government to confiscate residential property for the purpose of commercial development. 
A)  the payment by government of a fraction of a poor family's rent. 
B)  higher taxes on rental income earned by landlords. 
C)  a policy that prevents landlords from evicting tenants. 
D)  a policy that allows government to confiscate residential property for the purpose of commercial development.

Exam 6: Supply, Demand, and Government Policies

When a tax is placed on the sellers of energy drinks, the

To say that a price floor is binding is to say that the price floor

Table 6-5 -Refer to Table 6-5. Which of the following price floors would be binding in this market?

When a tax is imposed on a good, the result is always a shortage of the good.

A price floor will be binding only if it is set

If a binding price floor is imposed on the video game market, then

Renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments.

In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. The goal of the tax was to

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

Figure 6-21 -Refer to Figure 6-21. How is the burden of the tax shared between buyers and sellers? Buyers bear

Table 6-6 -Refer to Table 6-6. If the government set a price floor at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

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

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

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

Table 6-6 -Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

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

An alternative to rent-control laws that would not reduce the quantity of housing supplied is

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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