Question 1

Price controls often hurt those they are trying to help.

Accepted Answer

A) True 
 B)False

Question 2

The tax incidence depends on whether the tax is levied on buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 3

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

Accepted Answer

A)  a surplus of 2 units. 
B)  a surplus of 4 units. 
C)  12 units sold. 
D)  10 units sold. 
A)  a surplus of 2 units. 
B)  a surplus of 4 units. 
C)  12 units sold. 
D)  10 units sold.

Question 4

If a tax is imposed on the buyers of a product, then the tax burden will fall entirely on the buyers.

Accepted Answer

A) True 
 B)False

Question 5

Renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments.

Accepted Answer

A) True 
 B)False

Question 6

Figure 6-29
Suppose the government imposes a $2 on this market.  
-Refer to Figure 6-29. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2,

Accepted Answer

A)  buyers bear a higher burden of the tax in the short run than in the long run. 
B)  sellers bear a higher burden of the tax in the short run than in the long run. 
C)  buyers and sellers bear an equal burden of the tax in both the short run and long run. 
D)  buyers and sellers bear an equal burden of the tax in the short run, but buyers bear a higher burden of the tax in the long run. 
A)  buyers bear a higher burden of the tax in the short run than in the long run. 
B)  sellers bear a higher burden of the tax in the short run than in the long run. 
C)  buyers and sellers bear an equal burden of the tax in both the short run and long run. 
D)  buyers and sellers bear an equal burden of the tax in the short run, but buyers bear a higher burden of the tax in the long run.

Question 7

If the government removes a binding price floor from a market, then the price paid by buyers will

Accepted Answer

A)  increase, and the quantity sold in the market will increase. 
B)  increase, and the quantity sold in the market will decrease. 
C)  decrease, and the quantity sold in the market will increase. 
D)  decrease, and the quantity sold in the market will decrease. 
A)  increase, and the quantity sold in the market will increase. 
B)  increase, and the quantity sold in the market will decrease. 
C)  decrease, and the quantity sold in the market will increase. 
D)  decrease, and the quantity sold in the market will decrease.

Question 8

A binding minimum wage may not help all workers, but it does not hurt any workers.

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the sellers in this market?

Accepted Answer

With a $6 tax per unit, the am

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Accepted Answer

A)  demand for labor is more elastic than the supply of labor. 
B)  supply of labor is more elastic than the demand for labor. 
C)  demand for labor and supply of labor are equally elastic. 
D)  It is not possible for the tax burden to fall equally on firms and workers. 
A)  demand for labor is more elastic than the supply of labor. 
B)  supply of labor is more elastic than the demand for labor. 
C)  demand for labor and supply of labor are equally elastic. 
D)  It is not possible for the tax burden to fall equally on firms and workers.

Question 12

Figure 6-32  
-Refer to Figure 6-32. If the government set a price floor at $70, 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 6-28  
-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 14

Figure 6-35  
-Refer to Figure 6-35. A price ceiling set at $30 would create a shortage of 20 units.

Accepted Answer

A) True 
 B)False

Question 15

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

Accepted Answer

A)  demand curve will shift upward by $20, and the effective price received by sellers will increase by $20. 
B)  demand curve will shift upward by $20, and the effective price received by sellers will increase by less than $20. 
C)  supply curve will shift downward by $20, and the price paid by buyers will decrease by $20. 
D)  supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20. 
A)  demand curve will shift upward by $20, and the effective price received by sellers will increase by $20. 
B)  demand curve will shift upward by $20, and the effective price received by sellers will increase by less than $20. 
C)  supply curve will shift downward by $20, and the price paid by buyers will decrease by $20. 
D)  supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20.

Question 16

A binding price floor i) causes a surplus.
Ii) causes a shortage.
Iii) is set at a price above the equilibrium price.
Iv) is set at a price below the equilibrium price.

Accepted Answer

A)  i) only 
B)  iii) only 
C)  i) and iii) only 
D)  ii) and iv) only 
A)  i) only 
B)  iii) only 
C)  i) and iii) only 
D)  ii) and iv) only

Question 17

When a tax is placed on the buyers of cell phones, the size of the cell phone market

Accepted Answer

A)  and the effective price received by sellers both decrease. 
B)  decreases, but the effective price received by sellers increases. 
C)  increases, but the effective price received by sellers decreases. 
D)  and the effective price received by sellers both increase. 
A)  and the effective price received by sellers both decrease. 
B)  decreases, but the effective price received by sellers increases. 
C)  increases, but the effective price received by sellers decreases. 
D)  and the effective price received by sellers both increase.

Question 18

Figure 6-35  
-Refer to Figure 6-35. A price ceiling set at $70 would create a shortage of 40 units.

Accepted Answer

A) True 
 B)False

Question 19

Figure 6-23
  
-Refer to Figure 6-23. For every unit of the good that is sold, sellers are required to send

Accepted Answer

A)  one dollar to the government, and buyers are required to send two dollars to the government. 
B)  two dollars to the government, and buyers are required to send one dollar to the government. 
C)  three dollars to the government, and buyers are required to send nothing to the government. 
D)  nothing to the government, and buyers are required to send two dollars to the government. 
A)  one dollar to the government, and buyers are required to send two dollars to the government. 
B)  two dollars to the government, and buyers are required to send one dollar to the government. 
C)  three dollars to the government, and buyers are required to send nothing to the government. 
D)  nothing to the government, and buyers are required to send two dollars to the government.

Question 20

When a tax is placed on the sellers of cell phones, the size of the cell phone market

Accepted Answer

A)  and the price paid by buyers both increase. 
B)  increases, but the price paid by buyers decreases. 
C)  decreases, but the price paid by buyers increases. 
D)  and the price paid by buyers both decrease. 
A)  and the price paid by buyers both increase. 
B)  increases, but the price paid by buyers decreases. 
C)  decreases, but the price paid by buyers increases. 
D)  and the price paid by buyers both decrease.

Exam 6: Supply, Demand, and Government Policies

Price controls often hurt those they are trying to help.

The tax incidence depends on whether the tax is levied on buyers or sellers.

Figure 6-4 -Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

If a tax is imposed on the buyers of a product, then the tax burden will fall entirely on the buyers.

Renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments.

If the government removes a binding price floor from a market, then the price paid by buyers will

A binding minimum wage may not help all workers, but it does not hurt any workers.

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the sellers in this market?

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

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Figure 6-32 -Refer to Figure 6-32. If the government set a price floor at $70, would there be a shortage or surplus, and how large would be the shortage/surplus?

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?

Figure 6-35 -Refer to Figure 6-35. A price ceiling set at $30 would create a shortage of 20 units.

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

A binding price floor i) causes a surplus. Ii) causes a shortage. Iii) is set at a price above the equilibrium price. Iv) is set at a price below the equilibrium price.

When a tax is placed on the buyers of cell phones, the size of the cell phone market

Figure 6-35 -Refer to Figure 6-35. A price ceiling set at $70 would create a shortage of 40 units.

Figure 6-23 -Refer to Figure 6-23. For every unit of the good that is sold, sellers are required to send

When a tax is placed on the sellers of cell phones, the size of the cell phone 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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