Question 1

A tax on sellers shifts the supply curve but not the demand curve.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-24  
-Refer to Figure 6-24. In the after-tax equilibrium, government collects

Accepted Answer

A)  $1,440 in tax revenue; of this amount, $960 represents a burden on buyers and $480 represents a burden on sellers. 
B)  $1,440 in tax revenue; of this amount, $720 represents a burden on buyers and $720 represents a burden on sellers. 
C)  $1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers. 
D)  $1,680 in tax revenue; of this amount, $840 represents a burden on buyers and $840 represents a burden on sellers. 
A)  $1,440 in tax revenue; of this amount, $960 represents a burden on buyers and $480 represents a burden on sellers. 
B)  $1,440 in tax revenue; of this amount, $720 represents a burden on buyers and $720 represents a burden on sellers. 
C)  $1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers. 
D)  $1,680 in tax revenue; of this amount, $840 represents a burden on buyers and $840 represents a burden on sellers.

Question 3

A tax of $1 on buyers always decreases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 4

Figure 6-29
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-29. The buyers will bear a higher share of the tax burden than sellers if the demand is

Accepted Answer

A)  D1, and the supply is S1. 
B)  D2, and the supply is S1. 
C)  D1, and the supply is S2. 
D)  D2, and the supply is S2. 
A)  D1, and the supply is S1. 
B)  D2, and the supply is S1. 
C)  D1, and the supply is S2. 
D)  D2, and the supply is S2.

Question 5

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market.
  
-Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting shortage is

Accepted Answer

A)  0 units. 
B)  4 units. 
C)  5 units. 
D)  10 units. 
A)  0 units. 
B)  4 units. 
C)  5 units. 
D)  10 units.

Question 6

Figure 6-14  
-Refer to Figure 6-14. If the horizontal line on the graph represents a price floor, then the price floor is

Accepted Answer

A)  binding and creates a shortage of 20 units of the good. 
B)  binding and creates a shortage of 40 units of the good. 
C)  not binding but creates a shortage of 40 units of the good. 
D)  not binding, and there will be no surplus or shortage of the good. 
A)  binding and creates a shortage of 20 units of the good. 
B)  binding and creates a shortage of 40 units of the good. 
C)  not binding but creates a shortage of 40 units of the good. 
D)  not binding, and there will be no surplus or shortage of the good.

Question 7

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

Accepted Answer

A)  This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor. 
B)  The effective price received by sellers is $5.00 per bottle less than it was before the tax. 
C)  Forty percent of the burden of the tax falls on buyers. 
D)  All of the above are correct. 
A)  This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor. 
B)  The effective price received by sellers is $5.00 per bottle less than it was before the tax. 
C)  Forty percent of the burden of the tax falls on buyers. 
D)  All of the above are correct.

Question 8

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 9

If the minimum wage exceeds the equilibrium wage, then

Accepted Answer

A)  the quantity demanded of labor will exceed the quantity supplied. 
B)  the quantity supplied of labor will exceed the quantity demanded. 
C)  the minimum wage will not be binding. 
D)  there will be no unemployment. 
A)  the quantity demanded of labor will exceed the quantity supplied. 
B)  the quantity supplied of labor will exceed the quantity demanded. 
C)  the minimum wage will not be binding. 
D)  there will be no unemployment.

Question 10

The minimum wage has its greatest impact on the market for

Accepted Answer

A)  female labor. 
B)  older labor. 
C)  black labor. 
D)  teenage labor. 
A)  female labor. 
B)  older labor. 
C)  black labor. 
D)  teenage labor.

Question 11

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

Accepted Answer

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

Question 12

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

Accepted Answer

A)  more and sellers receive more than they did before the tax. 
B)  more and sellers receive less than they did before the tax. 
C)  less and sellers receive more than they did before the tax. 
D)  less and sellers receive less than they did before the tax. 
A)  more and sellers receive more than they did before the tax. 
B)  more and sellers receive less than they did before the tax. 
C)  less and sellers receive more than they did before the tax. 
D)  less and sellers receive less than they did before the tax.

Question 13

Figure 6-30
Panel a) Panel b)
     Panel c)  
-Refer to Figure 6-30. In which market will the majority of the tax burden fall on buyers?

Accepted Answer

A)  the market shown in panel a). 
B)  the market shown in panel b). 
C)  the market shown in panel c). 
D)  All of the above are correct. 
A)  the market shown in panel a). 
B)  the market shown in panel b). 
C)  the market shown in panel c). 
D)  All of the above are correct.

Question 14

Figure 6-15  
-Refer to Figure 6-15. For a price floor to be binding in this market, it would have to be set at

Accepted Answer

A)  any price below $3. 
B)  a price between $2 and $3. 
C)  a price between $3 and $4. 
D)  any price above $3. 
A)  any price below $3. 
B)  a price between $2 and $3. 
C)  a price between $3 and $4. 
D)  any price above $3.

Question 15

A tax on sellers reduces the size of a market.

Accepted Answer

A) True 
 B)False

Question 16

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. If the government imposes a price floor of $7 on this market, then there will be

Accepted Answer

A)  no surplus. 
B)  a surplus of 10 units. 
C)  a surplus of 15 units. 
D)  a surplus of 20 units. 
A)  no surplus. 
B)  a surplus of 10 units. 
C)  a surplus of 15 units. 
D)  a surplus of 20 units.

Question 17

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Accepted Answer

A)  Improvements in production technology reduce the costs of producing laptop computers. 
B)  The number of firms selling laptop computers decreases. 
C)  Consumers' income decreases, and laptop computers are a normal good. 
D)  The number of consumers buying laptop computers decreases. 
A)  Improvements in production technology reduce the costs of producing laptop computers. 
B)  The number of firms selling laptop computers decreases. 
C)  Consumers' income decreases, and laptop computers are a normal good. 
D)  The number of consumers buying laptop computers decreases.

Question 18

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 19

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Accepted Answer

A)  upward by exactly $1.50. 
B)  upward by less than $1.50. 
C)  downward by exactly $1.50. 
D)  downward by less than $1.50. 
A)  upward by exactly $1.50. 
B)  upward by less than $1.50. 
C)  downward by exactly $1.50. 
D)  downward by less than $1.50.

Question 20

Figure 6-21  
-Refer to Figure 6-21. In the after-tax equilibrium, how much revenue does the government collect from the tax on this good?

Accepted Answer

A)  $210 
B)  $345 
C)  $420 
D)  $480 
A)  $210 
B)  $345 
C)  $420 
D)  $480

Exam 6: Supply, Demand, and Government Policies

A tax on sellers shifts the supply curve but not the demand curve.

Figure 6-24 -Refer to Figure 6-24. In the after-tax equilibrium, government collects

A tax of $1 on buyers always decreases the equilibrium price by $1.

Figure 6-29 Suppose the government imposes a $2 on this market. -Refer to Figure 6-29. The buyers will bear a higher share of the tax burden than sellers if the demand is

Figure 6-14 -Refer to Figure 6-14. If the horizontal line on the graph represents a price floor, then the price floor is

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

If the minimum wage exceeds the equilibrium wage, then

The minimum wage has its greatest impact on the market for

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

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

Figure 6-30 Panel a) Panel b) Panel c) -Refer to Figure 6-30. In which market will the majority of the tax burden fall on buyers?

Figure 6-15 -Refer to Figure 6-15. For a price floor to be binding in this market, it would have to be set at

A tax on sellers reduces the size of a market.

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price floor of $7 on this market, then there will be

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

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?

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Figure 6-21 -Refer to Figure 6-21. In the after-tax equilibrium, how much revenue does the government collect from the tax on this good?

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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