Question 1

A tax on buyers shifts the demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 2

If a price ceiling is not binding, then

Accepted Answer

A)  the equilibrium price is above the price ceiling. 
B)  the equilibrium price is below the price ceiling. 
C)  it has no legal enforcement mechanism. 
D)  None of the above is correct because all price ceilings must be binding. 
A)  the equilibrium price is above the price ceiling. 
B)  the equilibrium price is below the price ceiling. 
C)  it has no legal enforcement mechanism. 
D)  None of the above is correct because all price ceilings must be binding.

Question 3

A binding price floor may not help all sellers, but it does not hurt any sellers.

Accepted Answer

A) True 
 B)False

Question 4

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

Accepted Answer

A)  buyers of gasoline. 
B)  sellers of gasoline. 
C)  either buyers or sellers of gasoline. 
D)  whichever side of the market is less elastic. 
A)  buyers of gasoline. 
B)  sellers of gasoline. 
C)  either buyers or sellers of gasoline. 
D)  whichever side of the market is less elastic.

Question 5

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Accepted Answer

A)  both taxes would fall more heavily on the buyers than on the sellers. 
B)  the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C)  the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D)  both taxes would fall more heavily on the sellers than on the buyers. 
A)  both taxes would fall more heavily on the buyers than on the sellers. 
B)  the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers. 
C)  the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers. 
D)  both taxes would fall more heavily on the sellers than on the buyers.

Question 6

Figure 6-22  
-Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

Accepted Answer

A)  $80. 
B)  $60. 
C)  $15. 
D)  $45. 
A)  $80. 
B)  $60. 
C)  $15. 
D)  $45.

Question 7

Figure 6-4  
-Refer to Figure 6-4. 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 8

A price floor set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 9

Most economists are in favor of price controls as a way of allocating resources in the economy.

Accepted Answer

A) True 
 B)False

Question 10

Figure 6-19  
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)  less than 50 units 
B)  50 units 
C)  between 50 units and 100 units 
D)  greater than 100 units 
A)  less than 50 units 
B)  50 units 
C)  between 50 units and 100 units 
D)  greater than 100 units

Question 11

If a tax is levied on the sellers 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)  decrease in quantity supplied. 
D)  increase in quantity supplied. 
A)  downward shift of the supply curve. 
B)  upward shift of the supply curve. 
C)  decrease in quantity supplied. 
D)  increase in quantity supplied.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Accepted Answer

A) True 
 B)False

Question 14

A tax imposed on the buyers of a good will

Accepted Answer

A)  raise both the price buyers pay and the effective price sellers receive. 
B)  raise the price buyers pay and lower the effective price sellers receive. 
C)  lower the price buyers pay and raise the effective price sellers receive. 
D)  lower both the price buyers pay and the effective price sellers receive. 
A)  raise both the price buyers pay and the effective price sellers receive. 
B)  raise the price buyers pay and lower the effective price sellers receive. 
C)  lower the price buyers pay and raise the effective price sellers receive. 
D)  lower both the price buyers pay and the effective price sellers receive.

Question 15

Congress intended that

Accepted Answer

A)  the entire FICA tax be paid by workers. 
B)  the entire FICA tax be paid by firms. 
C)  one-quarter of the FICA tax be paid by workers, and three-quarters be paid by firms. 
D)  half the FICA tax be paid by workers, and half be paid by firms. 
A)  the entire FICA tax be paid by workers. 
B)  the entire FICA tax be paid by firms. 
C)  one-quarter of the FICA tax be paid by workers, and three-quarters be paid by firms. 
D)  half the FICA tax be paid by workers, and half be paid by firms.

Question 16

If a price floor is not binding, then

Accepted Answer

A)  the equilibrium price is above the price floor. 
B)  the equilibrium price is below the price floor. 
C)  there will be a surplus in the market. 
D)  there will be a shortage in the market. 
A)  the equilibrium price is above the price floor. 
B)  the equilibrium price is below the price floor. 
C)  there will be a surplus in the market. 
D)  there will be a shortage in the market.

Question 17

The quantity sold in a market will increase if the government

Accepted Answer

A)  decreases a binding price floor in that market. 
B)  decreases a binding price ceiling in that market. 
C)  increases a tax on the good sold in that market. 
D)  More than one of the above is correct. 
A)  decreases a binding price floor in that market. 
B)  decreases a binding price ceiling in that market. 
C)  increases a tax on the good sold in that market. 
D)  More than one of the above is correct.

Question 18

Which of the following is not a result of rent control?

Accepted Answer

A)  fewer new apartments offered for rent 
B)  less maintenance provided by landlords 
C)  bribery 
D)  higher quality housing 
A)  fewer new apartments offered for rent 
B)  less maintenance provided by landlords 
C)  bribery 
D)  higher quality housing

Question 19

A tax on buyers decreases the quantity of the good sold in the market.

Accepted Answer

A) True 
 B)False

Question 20

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

A tax on buyers shifts the demand curve to the right.

If a price ceiling is not binding, then

A binding price floor may not help all sellers, but it does not hurt any sellers.

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Figure 6-22 -Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $12 in this market is an example of a

A price floor set above the equilibrium price is not binding.

Most economists are in favor of price controls as a way of allocating resources in the economy.

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

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

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

Minimum-wage laws dictate the lowest wage that firms may pay workers.

A tax imposed on the buyers of a good will

Congress intended that

If a price floor is not binding, then

The quantity sold in a market will increase if the government

Which of the following is not a result of rent control?

A tax on buyers decreases the quantity of the good sold in the market.

Rent-control laws dictate a minimum rent that landlords may charge tenants.

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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