Question 1

The price paid by buyers in a market will decrease if the government

Accepted Answer

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

Question 2

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

Accepted Answer

A)  downward shift of the demand curve. 
B)  upward shift of the demand curve. 
C)  decrease in quantity demanded. 
D)  increase in quantity demanded. 
A)  downward shift of the demand curve. 
B)  upward shift of the demand curve. 
C)  decrease in quantity demanded. 
D)  increase in quantity demanded.

Question 3

Scenario 6-1
Suppose that demand in the market for good X is given by the equation   and that supply in the market for good X is given by the equation  
-Refer to Scenario 6-1. What are the equilibrium price and quantity in the market for good X?

Accepted Answer

The equilibrium pric

Question 4

If a binding price floor is imposed on the market for eBooks, then

Accepted Answer

A)  the demand for eBooks will decrease. 
B)  the supply of eBooks will increase. 
C)  a surplus of eBooks will develop. 
D)  All of the above are correct. 
A)  the demand for eBooks will decrease. 
B)  the supply of eBooks will increase. 
C)  a surplus of eBooks will develop. 
D)  All of the above are correct.

Question 5

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $2 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 6

Figure 6-27
This figure shows the market demand and market supply curves for good Z.  
-Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)  Buyers and sellers will share the burden of the tax equally. 
B)  Buyers will bear more of the burden of the tax than sellers will. 
C)  Sellers will bear more of the burden of the tax than buyers will. 
D)  Any of the above is possible. 
A)  Buyers and sellers will share the burden of the tax equally. 
B)  Buyers will bear more of the burden of the tax than sellers will. 
C)  Sellers will bear more of the burden of the tax than buyers will. 
D)  Any of the above is possible.

Question 7

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

Accepted Answer

A)  Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans. 
B)  The number of farmers selling soybeans decreases. 
C)  Consumers' income increases, and soybeans are a normal good. 
D)  The number of consumers buying soybeans increases. 
A)  Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans. 
B)  The number of farmers selling soybeans decreases. 
C)  Consumers' income increases, and soybeans are a normal good. 
D)  The number of consumers buying soybeans increases.

Question 8

Long lines

Accepted Answer

A)  and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B)  and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C)  are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D)  are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time. 
A)  and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B)  and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C)  are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D)  are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.

Question 9

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a i) binding price ceiling.
Ii) non-binding price ceiling.
Iii) binding price floor.
Iv) non-binding price floor.

Accepted Answer

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

Question 10

When policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 12

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Accepted Answer

A)  upward by exactly $2.00. 
B)  upward by less than $2.00. 
C)  downward by exactly $2.00. 
D)  downward by less than $2.00. 
A)  upward by exactly $2.00. 
B)  upward by less than $2.00. 
C)  downward by exactly $2.00. 
D)  downward by less than $2.00.

Question 13

Which of the following is correct?

Accepted Answer

A)  Rent control and the minimum wage are both examples of price ceilings. 
B)  Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor. 
C)  Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling. 
D)  Rent control and the minimum wage are both examples of price floors. 
A)  Rent control and the minimum wage are both examples of price ceilings. 
B)  Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor. 
C)  Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling. 
D)  Rent control and the minimum wage are both examples of price floors.

Question 14

When policymakers set prices by legal decree, they

Accepted Answer

A)  are usually following the advice of mainstream economists. 
B)  improve the organization of economic activity. 
C)  obscure the signals that normally guide the allocation of society's resources. 
D)  are demonstrating a willingness to sacrifice fairness for the sake of a gain in efficiency. 
A)  are usually following the advice of mainstream economists. 
B)  improve the organization of economic activity. 
C)  obscure the signals that normally guide the allocation of society's resources. 
D)  are demonstrating a willingness to sacrifice fairness for the sake of a gain in efficiency.

Question 15

When a tax is imposed on the buyers of a good, the demand curve shifts

Accepted Answer

A)  upward by the amount of the tax. 
B)  downward by the amount of the tax. 
C)  upward by less than the amount of the tax. 
D)  downward by less than the amount of the tax. 
A)  upward by the amount of the tax. 
B)  downward by the amount of the tax. 
C)  upward by less than the amount of the tax. 
D)  downward by less than the amount of the tax.

Question 16

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Accepted Answer

A)  less than one-third. 
B)  between one-third and one-half. 
C)  between one-half and two-thirds. 
D)  greater than two-thirds. 
A)  less than one-third. 
B)  between one-third and one-half. 
C)  between one-half and two-thirds. 
D)  greater than two-thirds.

Question 17

The primary effect of rent control in the short run is to reduce rents.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

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

Question 19

The term tax incidence refers to

Accepted Answer

A)  whether buyers or sellers of a good are required to send tax payments to the government. 
B)  whether the demand curve or the supply curve shifts when the tax is imposed. 
C)  the distribution of the tax burden between buyers and sellers. 
D)  widespread view that taxes and death) are the only certainties in life. 
A)  whether buyers or sellers of a good are required to send tax payments to the government. 
B)  whether the demand curve or the supply curve shifts when the tax is imposed. 
C)  the distribution of the tax burden between buyers and sellers. 
D)  widespread view that taxes and death) are the only certainties in life.

Question 20

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

The price paid by buyers in a market will decrease if the government

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

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. What are the equilibrium price and quantity in the market for good X?

If a binding price floor is imposed on the market for eBooks, then

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $2 of the tax burden.

Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. Which of the following is correct?

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

Long lines

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a i) binding price ceiling. Ii) non-binding price ceiling. Iii) binding price floor. Iv) non-binding price floor.

When policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources.

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Which of the following is correct?

When policymakers set prices by legal decree, they

When a tax is imposed on the buyers of a good, the demand curve shifts

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

The primary effect of rent control in the short run is to reduce rents.

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

The term tax incidence refers to

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

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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