Question 1

In "Venezuela Versus the Market," the long lines and shortages are caused by

Accepted Answer

A)  declining world energy prices. 
B)  unfettered capitalism. 
C)  price floors that are intended to make food more affordable for the poor. 
D)  price ceilings that are intended to make food more affordable for the poor. 
A)  declining world energy prices. 
B)  unfettered capitalism. 
C)  price floors that are intended to make food more affordable for the poor. 
D)  price ceilings that are intended to make food more affordable for the poor.

Question 2

The tax incidence

Accepted Answer

A)  is the manner in which the burden of a tax is shared among participants in a market. 
B)  can be shifted to the buyer by imposing the tax on the buyers of a product in a market. 
C)  can be shifted to the seller by imposing the tax on the sellers of a product in a market. 
D)  All of the above are correct. 
A)  is the manner in which the burden of a tax is shared among participants in a market. 
B)  can be shifted to the buyer by imposing the tax on the buyers of a product in a market. 
C)  can be shifted to the seller by imposing the tax on the sellers of a product in a market. 
D)  All of the above are correct.

Question 3

A payroll tax is a

Accepted Answer

A)  fixed number of dollars that every firm must pay to the government for each worker that the firm hires. 
B)  tax that each firm must pay to the government before the firm can hire workers and operate its business. 
C)  tax on the wages that firms pay their workers. 
D)  tax on all wages above the minimum wage. 
A)  fixed number of dollars that every firm must pay to the government for each worker that the firm hires. 
B)  tax that each firm must pay to the government before the firm can hire workers and operate its business. 
C)  tax on the wages that firms pay their workers. 
D)  tax on all wages above the minimum wage.

Question 4

Suppose that a tax is placed on books. If the sellers 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 5

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

Accepted Answer

A)  lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. 
B)  the tax raises too little revenue for the government, so it should be eliminated. 
C)  firms bear most of the burden of the tax. 
D)  workers bear most of the burden of the tax. 
A)  lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. 
B)  the tax raises too little revenue for the government, so it should be eliminated. 
C)  firms bear most of the burden of the tax. 
D)  workers bear most of the burden of the tax.

Question 6

Tax incidence

Accepted Answer

A)  depends on the legislated burden. 
B)  is entirely random. 
C)  depends on the elasticities of supply and demand. 
D)  falls entirely on buyers or entirely on sellers. 
A)  depends on the legislated burden. 
B)  is entirely random. 
C)  depends on the elasticities of supply and demand. 
D)  falls entirely on buyers or entirely on sellers.

Question 7

Buyers and sellers rarely share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 8

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A)  no sellers actually benefit. 
B)  some sellers benefit, but no sellers are harmed. 
C)  some sellers benefit, and some sellers are harmed. 
D)  all sellers benefit. 
A)  no sellers actually benefit. 
B)  some sellers benefit, but no sellers are harmed. 
C)  some sellers benefit, and some sellers are harmed. 
D)  all sellers benefit.

Question 9

Figure 6-25  
-Refer to Figure 6-25. The amount of the tax per unit is

Accepted Answer

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

Question 10

Table 6-1
  
-Refer to Table 6-1. Which of the following price ceilings would be binding in this market?

Accepted Answer

A)  $80 
B)  $70 
C)  $60 
D)  $50 
A)  $80 
B)  $70 
C)  $60 
D)  $50

Question 11

If a tax is levied on the sellers of a product, then the supply curve will

Accepted Answer

A)  shift up. 
B)  shift down. 
C)  become flatter. 
D)  not shift. 
A)  shift up. 
B)  shift down. 
C)  become flatter. 
D)  not shift.

Question 12

Figure 6-31  
-Refer to Figure 6-31. If the government set a price floor at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 13

Figure 6-31  
-Refer to Figure 6-31. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 14

Figure 6-6  
-Refer to Figure 6-6. If the government imposes a price ceiling of $8 on this market, then there will be

Accepted Answer

A)  no shortage. 
B)  a shortage of 10 units. 
C)  a shortage of 20 units. 
D)  a shortage of 40 units. 
A)  no shortage. 
B)  a shortage of 10 units. 
C)  a shortage of 20 units. 
D)  a shortage of 40 units.

Question 15

Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor.

Accepted Answer

A) True 
 B)False

Question 16

The price received by sellers in a market will increase if the government decreases a

Accepted Answer

A)  binding price floor in that market. 
B)  binding price ceiling in that market. 
C)  tax on the good sold in that market. 
D)  None of the above is correct. 
A)  binding price floor in that market. 
B)  binding price ceiling in that market. 
C)  tax on the good sold in that market. 
D)  None of the above is correct.

Question 17

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Accepted Answer

A)  a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B)  the government's policy of maintaining a price ceiling on gasoline. 
C)  an indifference among U.S. consumers toward conservation. 
D)  the lack of substitutes for crude oil. 
A)  a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B)  the government's policy of maintaining a price ceiling on gasoline. 
C)  an indifference among U.S. consumers toward conservation. 
D)  the lack of substitutes for crude oil.

Question 18

Minimum wage laws

Accepted Answer

A)  may encourage some teenagers to drop out and take jobs. 
B)  create labor shortages. 
C)  have the greatest impact in the market for skilled labor. 
D)  All of the above are correct. 
A)  may encourage some teenagers to drop out and take jobs. 
B)  create labor shortages. 
C)  have the greatest impact in the market for skilled labor. 
D)  All of the above are correct.

Question 19

A price floor set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 20

When free markets ration goods with prices, it is both efficient and impersonal.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

In "Venezuela Versus the Market," the long lines and shortages are caused by

The tax incidence

A payroll tax is a

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

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

Tax incidence

Buyers and sellers rarely share the burden of a tax equally.

When a binding price floor is imposed on a market to benefit sellers,

Figure 6-25 -Refer to Figure 6-25. The amount of the tax per unit is

Table 6-1 -Refer to Table 6-1. Which of the following price ceilings would be binding in this market?

If a tax is levied on the sellers of a product, then the supply curve will

Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-6 -Refer to Figure 6-6. If the government imposes a price ceiling of $8 on this market, then there will be

Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor.

The price received by sellers in a market will increase if the government decreases a

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Minimum wage laws

A price floor set above the equilibrium price causes a surplus in the market.

When free markets ration goods with prices, it is both efficient and impersonal.

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

Filters