Question 1

Figure 6-21  
-Refer to Figure 6-21. How is the burden of the tax shared between buyers and sellers? Buyers bear

Accepted Answer

A)  three-fourths of the burden, and sellers bear one-fourth of the burden. 
B)  two-thirds of the burden, and sellers bear one-third of the burden. 
C)  one-half of the burden, and sellers bear one-half of the burden. 
D)  one-fourth of the burden, and sellers bear three-fourths of the burden. 
A)  three-fourths of the burden, and sellers bear one-fourth of the burden. 
B)  two-thirds of the burden, and sellers bear one-third of the burden. 
C)  one-half of the burden, and sellers bear one-half of the burden. 
D)  one-fourth of the burden, and sellers bear three-fourths of the burden.

Question 2

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

If a tax is imposed on a market with inelastic supply and elastic demand, then

Accepted Answer

A)  buyers will bear most of the burden of the tax. 
B)  sellers will bear most of the burden of the tax. 
C)  the burden of the tax will be shared equally between buyers and sellers. 
D)  it is impossible to determine how the burden of the tax will be shared. 
A)  buyers will bear most of the burden of the tax. 
B)  sellers will bear most of the burden of the tax. 
C)  the burden of the tax will be shared equally between buyers and sellers. 
D)  it is impossible to determine how the burden of the tax will be shared.

Question 5

Figure 6-9  
-Refer to Figure 6-9. At which price would a price ceiling be binding?

Accepted Answer

A)  $8 
B)  $5 
C)  $6 
D)  $7 
A)  $8 
B)  $5 
C)  $6 
D)  $7

Question 6

If the government levies a $0.25 tax per MP3 music file downloaded on buyers of MP3 music files, then the price received by sellers of MP3 music files would

Accepted Answer

A)  decrease by more than $0.25. 
B)  decrease by exactly $0.25. 
C)  decrease by less than $0.25. 
D)  increase by an indeterminate amount. 
A)  decrease by more than $0.25. 
B)  decrease by exactly $0.25. 
C)  decrease by less than $0.25. 
D)  increase by an indeterminate amount.

Question 7

Which of the following statements is correct?

Accepted Answer

A)  A tax levied on buyers will never be partially paid by sellers. 
B)  Who actually pays a tax depends on the price elasticities of supply and demand. 
C)  Government can decide who actually pays a tax. 
D)  A tax levied on sellers always will be passed on completely to buyers. 
A)  A tax levied on buyers will never be partially paid by sellers. 
B)  Who actually pays a tax depends on the price elasticities of supply and demand. 
C)  Government can decide who actually pays a tax. 
D)  A tax levied on sellers always will be passed on completely to buyers.

Question 8

If the government removes a binding price ceiling from a market, then the price received by sellers will

Accepted Answer

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

Question 9

Figure 6-23
  
-Refer to Figure 6-23. The effective price received by sellers after the tax is imposed is

Accepted Answer

A)  $3. 
B)  $4. 
C)  $5. 
D)  $6. 
A)  $3. 
B)  $4. 
C)  $5. 
D)  $6.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-8  
-Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be

Accepted Answer

A)  no shortage of the good. 
B)  a shortage of 10 units of the good. 
C)  a shortage of 20 units of the good. 
D)  a shortage of 30 units of the good. 
A)  no shortage of the good. 
B)  a shortage of 10 units of the good. 
C)  a shortage of 20 units of the good. 
D)  a shortage of 30 units of the good.

Question 12

Figure 6-17
This figure shows the market demand and market supply curves for good Y  
-Refer to Figure 6-17. 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 13

Figure 6-19  
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)  One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. 
B)  One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. 
C)  One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers. 
D)  Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers. 
A)  One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. 
B)  One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. 
C)  One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers. 
D)  Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers.

Question 14

Which of the following statements about the effects of rent control is correct?

Accepted Answer

A)  The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments. 
B)  The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments. 
C)  In the long run, rent control leads to a shortage of apartments and an improvement in the quality of available apartments. 
D)  The effects of rent control are very noticeable to the public in the short run because the primary effects of rent control occur very quickly. 
A)  The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments. 
B)  The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments. 
C)  In the long run, rent control leads to a shortage of apartments and an improvement in the quality of available apartments. 
D)  The effects of rent control are very noticeable to the public in the short run because the primary effects of rent control occur very quickly.

Question 15

Minimum-wage laws benefit society by creating a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 16

Figure 6-24  
-Refer to Figure 6-24. The price paid by buyers after the tax is imposed is

Accepted Answer

A)  $24. 
B)  21. 
C)  $18. 
D)  $16. 
A)  $24. 
B)  21. 
C)  $18. 
D)  $16.

Question 17

As a rationing mechanism, discrimination according to seller bias is

Accepted Answer

A)  efficient and fair. 
B)  efficient, but potentially unfair. 
C)  inefficient, but fair. 
D)  inefficient and potentially unfair. 
A)  efficient and fair. 
B)  efficient, but potentially unfair. 
C)  inefficient, but fair. 
D)  inefficient and potentially unfair.

Question 18

Figure 6-24  
-Refer to Figure 6-24. In the after-tax equilibrium, government collects

Accepted Answer

A)  $1,440 in tax revenue; of this amount, $960 represents a burden on buyers and $480 represents a burden on sellers. 
B)  $1,440 in tax revenue; of this amount, $720 represents a burden on buyers and $720 represents a burden on sellers. 
C)  $1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers. 
D)  $1,680 in tax revenue; of this amount, $840 represents a burden on buyers and $840 represents a burden on sellers. 
A)  $1,440 in tax revenue; of this amount, $960 represents a burden on buyers and $480 represents a burden on sellers. 
B)  $1,440 in tax revenue; of this amount, $720 represents a burden on buyers and $720 represents a burden on sellers. 
C)  $1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers. 
D)  $1,680 in tax revenue; of this amount, $840 represents a burden on buyers and $840 represents a burden on sellers.

Question 19

Figure 6-22  
-Refer to Figure 6-22. Sellers pay how much of the tax per unit?

Accepted Answer

A)  $0.50. 
B)  $1.50. 
C)  $3.00. 
D)  $5.00. 
A)  $0.50. 
B)  $1.50. 
C)  $3.00. 
D)  $5.00.

Question 20

To say that a price ceiling is binding is to say that the price ceiling

Accepted Answer

A)  results in a surplus. 
B)  is set above the equilibrium price. 
C)  causes quantity demanded to exceed quantity supplied. 
D)  All of the above are correct. 
A)  results in a surplus. 
B)  is set above the equilibrium price. 
C)  causes quantity demanded to exceed quantity supplied. 
D)  All of the above are correct.

Exam 6: Supply, Demand, and Government Policies

Figure 6-21 -Refer to Figure 6-21. How is the burden of the tax shared between buyers and sellers? Buyers bear

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

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

If a tax is imposed on a market with inelastic supply and elastic demand, then

Figure 6-9 -Refer to Figure 6-9. At which price would a price ceiling be binding?

If the government levies a $0.25 tax per MP3 music file downloaded on buyers of MP3 music files, then the price received by sellers of MP3 music files would

Which of the following statements is correct?

If the government removes a binding price ceiling from a market, then the price received by sellers will

Figure 6-23 -Refer to Figure 6-23. The effective price received by sellers after the tax is imposed is

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

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be

Figure 6-17 This figure shows the market demand and market supply curves for good Y -Refer to Figure 6-17. A government-imposed price of $12 in this market is an example of a

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Which of the following statements about the effects of rent control is correct?

Minimum-wage laws benefit society by creating a surplus of labor.

Figure 6-24 -Refer to Figure 6-24. The price paid by buyers after the tax is imposed is

As a rationing mechanism, discrimination according to seller bias is

Figure 6-24 -Refer to Figure 6-24. In the after-tax equilibrium, government collects

Figure 6-22 -Refer to Figure 6-22. Sellers pay how much of the tax per unit?

To say that a price ceiling is binding is to say that the price ceiling

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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