Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-20  
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will sellers receive 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 3

A binding price floor will reduce a firm's total revenue

Accepted Answer

A)  always. 
B)  when demand is elastic. 
C)  when demand is inelastic. 
D)  never. 
A)  always. 
B)  when demand is elastic. 
C)  when demand is inelastic. 
D)  never.

Question 4

Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Figure 6-25  
-Refer to Figure 6-25. The price that buyers pay after the tax is imposed is

Accepted Answer

A)  $5. 
B)  $6. 
C)  $7. 
D)  $8. 
A)  $5. 
B)  $6. 
C)  $7. 
D)  $8.

Question 7

The tax burden falls more heavily on the side of the market that is more inelastic.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-9  
-Refer to Figure 6-9. At which price would a price floor be nonbinding?

Accepted Answer

A)  $8 
B)  $7 
C)  $6 
D)  $9 
A)  $8 
B)  $7 
C)  $6 
D)  $9

Question 9

Figure 6-17
This figure shows the market demand and market supply curves for good Y  
-Refer to Figure 6-17. A government-imposed price of $12 in this market is an example of a

Accepted Answer

A)  binding price ceiling that creates a shortage. 
B)  non-binding price ceiling that creates a shortage. 
C)  binding price floor that creates a surplus. 
D)  non-binding price floor that creates a surplus. 
A)  binding price ceiling that creates a shortage. 
B)  non-binding price ceiling that creates a shortage. 
C)  binding price floor that creates a surplus. 
D)  non-binding price floor that creates a surplus.

Question 10

Figure 6-25  
-Refer to Figure 6-25. The burden of the tax on sellers is

Accepted Answer

A)  $1 per unit. 
B)  $1.50 per unit. 
C)  $2 per unit. 
D)  $3 per unit. 
A)  $1 per unit. 
B)  $1.50 per unit. 
C)  $2 per unit. 
D)  $3 per unit.

Question 11

Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

Accepted Answer

A)  less than $10 
B)  $10. 
C)  between $10 and $20. 
D)  $20. 
A)  less than $10 
B)  $10. 
C)  between $10 and $20. 
D)  $20.

Question 12

Does a binding price ceiling result in a shortage or a surplus in the market?

Accepted Answer

A binding price ceil

Question 13

Which of the following causes a shortage of a good?

Accepted Answer

A)  a binding price floor 
B)  a binding price ceiling 
C)  a tax on the good 
D)  None of the above is correct. 
A)  a binding price floor 
B)  a binding price ceiling 
C)  a tax on the good 
D)  None of the above is correct.

Question 14

Which of the following was not a result of the luxury tax imposed by Congress in 1990?

Accepted Answer

A)  The larger part of the tax burden fell on sellers. 
B)  A larger part of the tax burden fell on the middle class than on the rich. 
C)  Even the wealthy demanded fewer luxury goods. 
D)  The tax was never repealed or even modified. 
A)  The larger part of the tax burden fell on sellers. 
B)  A larger part of the tax burden fell on the middle class than on the rich. 
C)  Even the wealthy demanded fewer luxury goods. 
D)  The tax was never repealed or even modified.

Question 15

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

Accepted Answer

A) True 
 B)False

Question 16

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.

Question 17

Price floors are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 18

When a binding price ceiling is imposed on a market for a good, some people who want to buy the good cannot do so.

Accepted Answer

A) True 
 B)False

Question 19

Figure 6-10  
-Refer to Figure 6-10. A price ceiling set at

Accepted Answer

A)  $6 will be binding and will result in a shortage of 10 units. 
B)  $6 will be binding and will result in a shortage of 6 units. 
C)  $16 will be binding and will result in a shortage of 10 units. 
D)  $16 will be binding and will result in a shortage of 4 units. 
A)  $6 will be binding and will result in a shortage of 10 units. 
B)  $6 will be binding and will result in a shortage of 6 units. 
C)  $16 will be binding and will result in a shortage of 10 units. 
D)  $16 will be binding and will result in a shortage of 4 units.

Question 20

Figure 6-9  
-Refer to Figure 6-9. At which price would a price ceiling be nonbinding?

Accepted Answer

A)  $4 
B)  $5 
C)  $3 
D)  $7 
A)  $4 
B)  $5 
C)  $3 
D)  $7

Exam 6: Supply, Demand, and Government Policies

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

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

A binding price floor will reduce a firm's total revenue

Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

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?

Figure 6-25 -Refer to Figure 6-25. The price that buyers pay after the tax is imposed is

The tax burden falls more heavily on the side of the market that is more inelastic.

Figure 6-9 -Refer to Figure 6-9. At which price would a price floor be nonbinding?

Figure 6-17 This figure shows the market demand and market supply curves for good Y -Refer to Figure 6-17. A government-imposed price of $12 in this market is an example of a

Figure 6-25 -Refer to Figure 6-25. The burden of the tax on sellers is

Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

Does a binding price ceiling result in a shortage or a surplus in the market?

Which of the following causes a shortage of a good?

Which of the following was not a result of the luxury tax imposed by Congress in 1990?

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

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

Price floors are typically imposed to benefit buyers.

When a binding price ceiling is imposed on a market for a good, some people who want to buy the good cannot do so.

Figure 6-10 -Refer to Figure 6-10. A price ceiling set at

Figure 6-9 -Refer to Figure 6-9. At which price would a price ceiling be nonbinding?

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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