Question 1

If the government levies a $5 tax per MP3 player on buyers of MP3 players, then the price paid by buyers of MP3 players would likely

Accepted Answer

A)  increase by more than $5. 
B)  increase by exactly $5. 
C)  increase by less than $5. 
D)  decrease. 
A)  increase by more than $5. 
B)  increase by exactly $5. 
C)  increase by less than $5. 
D)  decrease. C

Question 2

If a tax is levied on the buyers of a product, then there will be an)

Accepted Answer

A)  downward shift of the supply curve. 
B)  upward shift of the supply curve. 
C)  movement up and to the right along the supply curve. 
D)  movement down and to the left along the supply curve. 
A)  downward shift of the supply curve. 
B)  upward shift of the supply curve. 
C)  movement up and to the right along the supply curve. 
D)  movement down and to the left along the supply curve. D

Question 3

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Accepted Answer

A) True 
 B)False  False

Question 4

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price ceiling of $6 in this market results in

Accepted Answer

A)  a shortage of 8 units. 
B)  a shortage of 4 units. 
C)  14 units sold. 
D)  10 units sold. 
A)  a shortage of 8 units. 
B)  a shortage of 4 units. 
C)  14 units sold. 
D)  10 units sold.

Question 5

The effects of rent control in the long run include lower rents and lower-quality housing.

Accepted Answer

A) True 
 B)False

Question 6

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Accepted Answer

A) True 
 B)False

Question 7

Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

Accepted Answer

A)  Cellular phones become less popular. 
B)  Traditional land line phones become more expensive. 
C)  The components used to produce cellular phones become less expensive. 
D)  Firms expect the price of cellular phones to fall in the future. 
A)  Cellular phones become less popular. 
B)  Traditional land line phones become more expensive. 
C)  The components used to produce cellular phones become less expensive. 
D)  Firms expect the price of cellular phones to fall in the future.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-18
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-18. The effective price that sellers receive after the tax is imposed is

Accepted Answer

A)  $6. 
B)  $10. 
C)  $16. 
D)  $24. 
A)  $6. 
B)  $10. 
C)  $16. 
D)  $24.

Question 10

Advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Accepted Answer

A) True 
 B)False

Question 11

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

Accepted Answer

A) True 
 B)False

Question 12

Figure 6-28  
-Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)  $4 
B)  between $4 and $7 
C)  between $7 and $10 
D)  $10 
A)  $4 
B)  between $4 and $7 
C)  between $7 and $10 
D)  $10

Question 13

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

Accepted Answer

A)  This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. 
B)  The price paid by buyers is $0.30 per drink more than it was before the tax. 
C)  Forty percent of the burden of the tax falls on sellers. 
D)  All of the above are correct. 
A)  This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. 
B)  The price paid by buyers is $0.30 per drink more than it was before the tax. 
C)  Forty percent of the burden of the tax falls on sellers. 
D)  All of the above are correct.

Question 14

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 15

Figure 6-5  
-Refer to Figure 6-5. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Accepted Answer

A)  binding and creates a surplus of 60 units of the good. 
B)  binding and creates a surplus of 20 units of the good. 
C)  not binding but creates a surplus 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 surplus of 60 units of the good. 
B)  binding and creates a surplus of 20 units of the good. 
C)  not binding but creates a surplus of 40 units of the good. 
D)  not binding, and there will be no surplus or shortage of the good.

Question 16

Rent-control laws dictate

Accepted Answer

A)  the exact rent that landlords must charge tenants. 
B)  a maximum rent that landlords may charge tenants. 
C)  a minimum rent that landlords may charge tenants. 
D)  both a minimum rent and a maximum rent that landlords may charge tenants. 
A)  the exact rent that landlords must charge tenants. 
B)  a maximum rent that landlords may charge tenants. 
C)  a minimum rent that landlords may charge tenants. 
D)  both a minimum rent and a maximum rent that landlords may charge tenants.

Question 17

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would

Accepted Answer

A)  shift the supply curve upward by less than 50 cents. 
B)  raise the equilibrium price by 50 cents. 
C)  create a 50-cent tax burden each for buyers and sellers. 
D)  discourage market activity. 
A)  shift the supply curve upward by less than 50 cents. 
B)  raise the equilibrium price by 50 cents. 
C)  create a 50-cent tax burden each for buyers and sellers. 
D)  discourage market activity.

Question 18

Suppose the equilibrium price of a physical examination "physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,

Accepted Answer

A)  the quantity of physicals demanded increases. 
B)  there is shortage of physicals. 
C)  the quantity of physicals supplied decreases. 
D)  All of the above are correct. 
A)  the quantity of physicals demanded increases. 
B)  there is shortage of physicals. 
C)  the quantity of physicals supplied decreases. 
D)  All of the above are correct.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Will a binding price floor result in a shortage or a surplus in the market?

Accepted Answer

A binding price floo

Exam 6: Supply, Demand, and Government Policies

If the government levies a $5 tax per MP3 player on buyers of MP3 players, then the price paid by buyers of MP3 players would likely

If a tax is levied on the buyers of a product, then there will be an)

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Figure 6-4 -Refer to Figure 6-4. A government-imposed price ceiling of $6 in this market results in

The effects of rent control in the long run include lower rents and lower-quality housing.

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

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

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The effective price that sellers receive after the tax is imposed is

Advocates of the minimum wage admit that it has some adverse effects, but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

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

Figure 6-5 -Refer to Figure 6-5. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

Rent-control laws dictate

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would

Suppose the equilibrium price of a physical examination "physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,

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

Will a binding price floor result in a shortage or a surplus in the market?

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

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

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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