Question 1

Which of the following causes a surplus of a good?

Accepted Answer

A)  a binding price floor 
B)  a binding price ceiling 
C)  a tax on the good 
D)  More than one of the above is correct. 
A)  a binding price floor 
B)  a binding price ceiling 
C)  a tax on the good 
D)  More than one of the above is correct.

Question 2

Figure 6-15  
-Refer to Figure 6-15. For a price ceiling to be binding in this market, it would have to be set at

Accepted Answer

A)  any price below $3. 
B)  a price between $2 and $3. 
C)  a price between $3 and $4. 
D)  any price above $3. 
A)  any price below $3. 
B)  a price between $2 and $3. 
C)  a price between $3 and $4. 
D)  any price above $3.

Question 3

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market.
  
-Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting shortage is

Accepted Answer

A)  0 units. 
B)  4 units. 
C)  5 units. 
D)  10 units. 
A)  0 units. 
B)  4 units. 
C)  5 units. 
D)  10 units.

Question 4

Figure 6-25  
-Refer to Figure 6-25. As the figure is drawn, who sends the tax payment to the government?

Accepted Answer

A)  The buyers send the tax payment. 
B)  The sellers send the tax payment. 
C)  A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers. 
D)  The question of who sends the tax payment cannot be determined from the figure. 
A)  The buyers send the tax payment. 
B)  The sellers send the tax payment. 
C)  A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers. 
D)  The question of who sends the tax payment cannot be determined from the figure.

Question 5

Figure 6-14  
-Refer to Figure 6-14. If the horizontal line on the graph represents a price floor, then the price floor is

Accepted Answer

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

Question 6

The demand for salt is inelastic, and the supply of salt is elastic. The demand for caviar is elastic, and the supply of caviar is inelastic. Suppose that a tax of $1 per pound is levied on the sellers of salt, and a tax of $1 per pound is levied on the buyers of caviar. We would expect that most of the burden of these taxes will fall on

Accepted Answer

A)  sellers of salt and the buyers of caviar. 
B)  sellers of salt and the sellers of caviar. 
C)  buyers of salt and the sellers of caviar. 
D)  buyers of salt and the buyers of caviar. 
A)  sellers of salt and the buyers of caviar. 
B)  sellers of salt and the sellers of caviar. 
C)  buyers of salt and the sellers of caviar. 
D)  buyers of salt and the buyers of caviar.

Question 7

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Accepted Answer

A)  Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole. 
B)  Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
C)  Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
D)  Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling. 
A)  Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole. 
B)  Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
C)  Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling. 
D)  Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling.

Question 9

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. Workers will bear

Accepted Answer

A)  an equal share of the tax in comparison to firms. 
B)  a greater share of the tax in comparison to firms. 
C)  a smaller share of the tax in comparison to firms. 
D)  All of the above are possible. 
A)  an equal share of the tax in comparison to firms. 
B)  a greater share of the tax in comparison to firms. 
C)  a smaller share of the tax in comparison to firms. 
D)  All of the above are possible.

Question 10

A tax on sellers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-15  
-Refer to Figure 6-15. Suppose a price floor of $4 is imposed on this market. As a result,

Accepted Answer

A)  buyers' total expenditure on the good decreases by $15. 
B)  the supply curve shifts to the left so as to now pass through the point quantity = 30, price = $4). 
C)  the quantity demanded of the good decreases by 30 units. 
D)  the number of units sold in the market will increase by 15 units. 
A)  buyers' total expenditure on the good decreases by $15. 
B)  the supply curve shifts to the left so as to now pass through the point quantity = 30, price = $4). 
C)  the quantity demanded of the good decreases by 30 units. 
D)  the number of units sold in the market will increase by 15 units.

Question 12

Suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

Accepted Answer

A)  less than $1. 
B)  $1. 
C)  between $1 and $2. 
D)  $2. 
A)  less than $1. 
B)  $1. 
C)  between $1 and $2. 
D)  $2.

Question 13

Does a binding price ceiling result in a shortage or a surplus in the market?

Accepted Answer

A binding price ceil

Question 14

To say that a price ceiling is nonbinding 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.

Question 15

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. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set

Question 16

Buyers and sellers rarely share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 17

Table 6-5
  
-Refer to Table 6-5. Which of the following price floors would be binding in this market?

Accepted Answer

A)  $3 
B)  $6 
C)  $9 
D)  None of the above price floors would be binding. 
A)  $3 
B)  $6 
C)  $9 
D)  None of the above price floors would be binding.

Question 18

Figure 6-32  
-Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at $55 would

Question 19

Figure 6-9  
-Refer to Figure 6-9. A price floor set at

Accepted Answer

A)  $4 will be binding and will result in a shortage of 8 units. 
B)  $4 will be binding and will result in a shortage of 16 units. 
C)  $7 will be binding and will result in a surplus of 4 units. 
D)  $7 will be binding and will result in a surplus of 8 units. 
A)  $4 will be binding and will result in a shortage of 8 units. 
B)  $4 will be binding and will result in a shortage of 16 units. 
C)  $7 will be binding and will result in a surplus of 4 units. 
D)  $7 will be binding and will result in a surplus of 8 units.

Question 20

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

Accepted Answer

A)  decrease by less than $500. 
B)  decrease by exactly $500. 
C)  decrease by more than $500. 
D)  increase by an indeterminate amount. 
A)  decrease by less than $500. 
B)  decrease by exactly $500. 
C)  decrease by more than $500. 
D)  increase by an indeterminate amount.

Exam 6: Supply, Demand, and Government Policies

Which of the following causes a surplus of a good?

Figure 6-15 -Refer to Figure 6-15. For a price ceiling to be binding in this market, it would have to be set at

Figure 6-25 -Refer to Figure 6-25. As the figure is drawn, who sends the tax payment to the government?

Figure 6-14 -Refer to Figure 6-14. If the horizontal line on the graph represents a price floor, then the price floor is

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

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. Workers will bear

A tax on sellers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Figure 6-15 -Refer to Figure 6-15. Suppose a price floor of $4 is imposed on this market. As a result,

Suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

Does a binding price ceiling result in a shortage or a surplus in the market?

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

Buyers and sellers rarely share the burden of a tax equally.

Table 6-5 -Refer to Table 6-5. Which of the following price floors would be binding in this market?

Figure 6-32 -Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-9 -Refer to Figure 6-9. A price floor set at

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

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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