Question 1

Figure 6-28  
-Refer to Figure 6-28. Suppose a tax of $4 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. 
C)  Sellers will bear more of the burden of the tax than buyers. 
D)  Any of the above is possible in this market. 
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. 
C)  Sellers will bear more of the burden of the tax than buyers. 
D)  Any of the above is possible in this market.

Question 2

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

Accepted Answer

A)  decreases 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)  imposes a binding price ceiling in that market. 
A)  decreases 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)  imposes a binding price ceiling in that market.

Question 3

Figure 6-25  
-Refer to Figure 6-25. The burden of the tax on sellers is

Accepted Answer

A)  $1 per unit. 
B)  $1.50 per unit. 
C)  $2 per unit. 
D)  $3 per unit. 
A)  $1 per unit. 
B)  $1.50 per unit. 
C)  $2 per unit. 
D)  $3 per unit.

Question 4

Figure 6-22  
-Refer to Figure 6-22. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the buyers of the good, rather than the sellers, are required to pay the tax to the government. After the buyers pay the tax, relative to the case depicted in the figure, the burden on buyers will be

Accepted Answer

A)  larger, and the burden on sellers will be smaller. 
B)  smaller, and the burden on sellers will be larger. 
C)  the same, and the burden on sellers will be the same. 
D)  The relative burdens in the two cases cannot be determined without further information. 
A)  larger, and the burden on sellers will be smaller. 
B)  smaller, and the burden on sellers will be larger. 
C)  the same, and the burden on sellers will be the same. 
D)  The relative burdens in the two cases cannot be determined without further information.

Question 5

Figure 6-22  
-Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

Accepted Answer

A)  $80. 
B)  $60. 
C)  $15. 
D)  $45. 
A)  $80. 
B)  $60. 
C)  $15. 
D)  $45.

Question 6

Figure 6-18
The vertical distance between points A and B represents the tax in the market.  
-Refer to Figure 6-18. The per-unit burden of the tax on buyers is

Accepted Answer

A)  $6. 
B)  $8. 
C)  $14. 
D)  $24. 
A)  $6. 
B)  $8. 
C)  $14. 
D)  $24.

Question 7

When a tax is levied on sellers of tea,

Accepted Answer

A)  the well-being of both sellers and buyers of tea is unaffected. 
B)  sellers of tea are made worse off, and the well-being of buyers is unaffected. 
C)  sellers of tea are made worse off, and buyers of tea are made better off. 
D)  both sellers and buyers of tea are made worse off. 
A)  the well-being of both sellers and buyers of tea is unaffected. 
B)  sellers of tea are made worse off, and the well-being of buyers is unaffected. 
C)  sellers of tea are made worse off, and buyers of tea are made better off. 
D)  both sellers and buyers of tea are made worse off.

Question 8

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. If the government imposes a price floor of $3 on this market, then there will be

Accepted Answer

A)  no surplus. 
B)  a surplus of 10 units. 
C)  a surplus of 15 units. 
D)  a surplus of 20 units. 
A)  no surplus. 
B)  a surplus of 10 units. 
C)  a surplus of 15 units. 
D)  a surplus of 20 units.

Question 9

The following table shows the demand and supply schedules in a particular market.   If the government sets a price floor $2 above the equilibrium price, how many units will be sold in this market?

Accepted Answer

The equilibrium price is $3, so the pric

Question 10

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A)  every seller in the market benefits. 
B)  all buyers and sellers benefit. 
C)  every seller who wants to sell the good will be able to do so, but only if he appeals to the personal biases of the buyers. 
D)  some sellers will not be able to sell any amount of the good. 
A)  every seller in the market benefits. 
B)  all buyers and sellers benefit. 
C)  every seller who wants to sell the good will be able to do so, but only if he appeals to the personal biases of the buyers. 
D)  some sellers will not be able to sell any amount of the good.

Question 11

A binding price floor may not help all sellers, but it does not hurt any sellers.

Accepted Answer

A) True 
 B)False

Question 12

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 13

One common example of a price ceiling is rent control.

Accepted Answer

A) True 
 B)False

Question 14

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 15

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

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 16

Economists generally believe that rent control is

Accepted Answer

A)  an efficient and fair way to help the poor. 
B)  inefficient but the best available means of solving a serious social problem. 
C)  a highly inefficient way to help the poor raise their standard of living. 
D)  an efficient way to allocate housing, but not a good way to help the poor. 
A)  an efficient and fair way to help the poor. 
B)  inefficient but the best available means of solving a serious social problem. 
C)  a highly inefficient way to help the poor raise their standard of living. 
D)  an efficient way to allocate housing, but not a good way to help the poor.

Question 17

Figure 6-31  
-Refer to Figure 6-31. If the government set a price ceiling at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

There woul

Question 18

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by

Accepted Answer

A)  less than $0.50. 
B)  $0.50. 
C)  between $0.50 and $1. 
D)  $1. 
A)  less than $0.50. 
B)  $0.50. 
C)  between $0.50 and $1. 
D)  $1.

Question 19

Figure 6-10  
-Refer to Figure 6-10. A price floor set at

Accepted Answer

A)  $6 will be binding and will result in a surplus of 10 units. 
B)  $6 will be binding and will result in a surplus of 6 units. 
C)  $16 will be binding and will result in a surplus of 10 units. 
D)  $16 will be binding and will result in a surplus of 4 units. 
A)  $6 will be binding and will result in a surplus of 10 units. 
B)  $6 will be binding and will result in a surplus of 6 units. 
C)  $16 will be binding and will result in a surplus of 10 units. 
D)  $16 will be binding and will result in a surplus of 4 units.

Question 20

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

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

Figure 6-25 -Refer to Figure 6-25. The burden of the tax on sellers is

Figure 6-22 -Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The per-unit burden of the tax on buyers is

When a tax is levied on sellers of tea,

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price floor of $3 on this market, then there will be

The following table shows the demand and supply schedules in a particular market. If the government sets a price floor $2 above the equilibrium price, how many units will be sold in this market?

When a binding price floor is imposed on a market to benefit sellers,

A binding price floor may not help all sellers, but it does not hurt any sellers.

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

One common example of a price ceiling is rent control.

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

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

Economists generally believe that rent control is

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by

Figure 6-10 -Refer to Figure 6-10. A price floor set at

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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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