Question 1

Figure 6-26  
-Refer to Figure 6-26. The per-unit burden of the tax is

Accepted Answer

A)  $2 for buyers and $6 for sellers. 
B)  $4 for buyers and $4 for sellers. 
C)  $6 for buyers and $2 for sellers. 
D)  $8 for buyers and $0 for sellers. 
A)  $2 for buyers and $6 for sellers. 
B)  $4 for buyers and $4 for sellers. 
C)  $6 for buyers and $2 for sellers. 
D)  $8 for buyers and $0 for sellers.

Question 2

FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

Accepted Answer

A) True 
 B)False

Question 3

If the government removes a tax on a good, then the price paid by buyers will

Accepted Answer

A)  increase, and the price received by sellers will increase. 
B)  increase, and the price received by sellers will decrease. 
C)  decrease, and the price received by sellers will increase. 
D)  decrease, and the price received by sellers will decrease. 
A)  increase, and the price received by sellers will increase. 
B)  increase, and the price received by sellers will decrease. 
C)  decrease, and the price received by sellers will increase. 
D)  decrease, and the price received by sellers will decrease.

Question 4

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 5

When free markets ration goods with prices, it is both efficient and impersonal.

Accepted Answer

A) True 
 B)False

Question 6

When a binding price floor is imposed on a market,

Accepted Answer

A)  price no longer serves as a rationing device. 
B)  the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor. 
C)  only some sellers benefit. 
D)  All of the above are correct. 
A)  price no longer serves as a rationing device. 
B)  the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor. 
C)  only some sellers benefit. 
D)  All of the above are correct.

Question 7

A price ceiling is binding when it is set

Accepted Answer

A)  above the equilibrium price, causing a shortage. 
B)  above the equilibrium price, causing a surplus. 
C)  below the equilibrium price, causing a shortage. 
D)  below the equilibrium price, causing a surplus. 
A)  above the equilibrium price, causing a shortage. 
B)  above the equilibrium price, causing a surplus. 
C)  below the equilibrium price, causing a shortage. 
D)  below the equilibrium price, causing a surplus.

Question 8

Figure 6-6  
-Refer to Figure 6-6. If the government imposes a price floor of $10 on this market, then there will be

Accepted Answer

A)  no surplus. 
B)  a surplus of 20 units. 
C)  a surplus of 30 units. 
D)  a surplus of 10 units. 
A)  no surplus. 
B)  a surplus of 20 units. 
C)  a surplus of 30 units. 
D)  a surplus of 10 units.

Question 9

Figure 6-32  
-Refer to Figure 6-32. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

There woul

Question 10

In an unregulated labor market, the wage adjusts to balance labor supply and labor demand.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-3
Panel a) Panel b)
    
-Refer to Figure 6-3. A binding price floor is shown in

Accepted Answer

A)  both panel a) and panel b). 
B)  panel a) only. 
C)  panel b) only. 
D)  neither panel a) nor panel b). 
A)  both panel a) and panel b). 
B)  panel a) only. 
C)  panel b) only. 
D)  neither panel a) nor panel b).

Question 12

Figure 6-3
Panel a) Panel b)
    
-Refer to Figure 6-3. In panel b), there will be

Accepted Answer

A)  a shortage. 
B)  equilibrium in the market. 
C)  a surplus. 
D)  lines of people waiting to buy the good. 
A)  a shortage. 
B)  equilibrium in the market. 
C)  a surplus. 
D)  lines of people waiting to buy the good.

Question 13

A price ceiling set below the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-33  
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the sellers in this market?

Accepted Answer

The burden

Question 15

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Accepted Answer

A)  Improvements in production technology reduce the costs of producing laptop computers. 
B)  The number of firms selling laptop computers decreases. 
C)  Consumers' income decreases, and laptop computers are a normal good. 
D)  The number of consumers buying laptop computers decreases. 
A)  Improvements in production technology reduce the costs of producing laptop computers. 
B)  The number of firms selling laptop computers decreases. 
C)  Consumers' income decreases, and laptop computers are a normal good. 
D)  The number of consumers buying laptop computers decreases.

Question 16

Figure 6-1
Panel a) Panel b)
    
-Refer to Figure 6-1. In which panels) of the figure would there be a shortage of the good at the price ceiling?

Accepted Answer

A)  panel a) only 
B)  panel b) only 
C)  both panel a) and panel b) 
D)  neither panel a) nor panel b) 
A)  panel a) only 
B)  panel b) only 
C)  both panel a) and panel b) 
D)  neither panel a) nor panel b)

Question 17

The impact of the minimum wage depends on the skill and experience of the worker.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  imposes a binding price floor in that market. 
B)  decreases a binding price ceiling in that market. 
C)  decreases a tax on the good sold in that market. 
D)  increases a binding price floor in that market. 
A)  imposes a binding price floor in that market. 
B)  decreases a binding price ceiling in that market. 
C)  decreases a tax on the good sold in that market. 
D)  increases a binding price floor in that market.

Question 19

Buyers of a good bear the larger share of the tax burden when the i) supply is more elastic than the demand for the product.
Ii) demand in more elastic than the supply for the product.
Iii) tax is placed on the sellers of the product.
Iv) tax is placed on the buyers of the product.

Accepted Answer

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

Question 20

The tax incidence

Accepted Answer

A)  is the manner in which the burden of a tax is shared among participants in a market. 
B)  can be shifted to the buyer by imposing the tax on the buyers of a product in a market. 
C)  can be shifted to the seller by imposing the tax on the sellers of a product in a market. 
D)  All of the above are correct. 
A)  is the manner in which the burden of a tax is shared among participants in a market. 
B)  can be shifted to the buyer by imposing the tax on the buyers of a product in a market. 
C)  can be shifted to the seller by imposing the tax on the sellers of a product in a market. 
D)  All of the above are correct.

Exam 6: Supply, Demand, and Government Policies

Figure 6-26 -Refer to Figure 6-26. The per-unit burden of the tax is

FICA is an example of a payroll tax, which is a tax on the wages that firms pay their workers.

If the government removes a tax on a good, then the price paid by buyers will

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

When free markets ration goods with prices, it is both efficient and impersonal.

When a binding price floor is imposed on a market,

A price ceiling is binding when it is set

Figure 6-6 -Refer to Figure 6-6. If the government imposes a price floor of $10 on this market, then there will be

Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

In an unregulated labor market, the wage adjusts to balance labor supply and labor demand.

Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. A binding price floor is shown in

Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. In panel b), there will be

A price ceiling set below the equilibrium price is binding.

Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the sellers in this market?

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Figure 6-1 Panel a) Panel b) -Refer to Figure 6-1. In which panels) of the figure would there be a shortage of the good at the price ceiling?

The impact of the minimum wage depends on the skill and experience of the worker.

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

Buyers of a good bear the larger share of the tax burden when the i) supply is more elastic than the demand for the product. Ii) demand in more elastic than the supply for the product. Iii) tax is placed on the sellers of the product. Iv) tax is placed on the buyers of the product.

The tax incidence

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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