Question 1

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for

Accepted Answer

A)  unemployment compensation. 
B)  the salaries of members of Congress. 
C)  Social Security and Medicare. 
D)  housing subsidies for low-income people. 
A)  unemployment compensation. 
B)  the salaries of members of Congress. 
C)  Social Security and Medicare. 
D)  housing subsidies for low-income people.

Question 2

A tax imposed on the buyers of a good will raise the

Accepted Answer

A)  price paid by buyers and lower the equilibrium quantity. 
B)  price paid by buyers and raise the equilibrium quantity. 
C)  effective price received by sellers and lower the equilibrium quantity. 
D)  effective price received by sellers and raise the equilibrium quantity. 
A)  price paid by buyers and lower the equilibrium quantity. 
B)  price paid by buyers and raise the equilibrium quantity. 
C)  effective price received by sellers and lower the equilibrium quantity. 
D)  effective price received by sellers and raise the equilibrium quantity.

Question 3

Figure 6-30
Panel (a) Panel (b)     Panel (c)  
-Refer to Figure 6-30. In which market will the majority of the tax burden fall on buyers?

Accepted Answer

A)  the market shown in panel (a). 
B)  the market shown in panel (b). 
C)  the market shown in panel (c). 
D)  All of the above are correct. 
A)  the market shown in panel (a). 
B)  the market shown in panel (b). 
C)  the market shown in panel (c). 
D)  All of the above are correct.

Question 4

A tax on the buyers of cameras encourages

Accepted Answer

A)  sellers to supply a smaller quantity at every price. 
B)  buyers to demand a smaller quantity at every price. 
C)  sellers to supply a larger quantity at every price. 
D)  Both a) and b) are correct. 
A)  sellers to supply a smaller quantity at every price. 
B)  buyers to demand a smaller quantity at every price. 
C)  sellers to supply a larger quantity at every price. 
D)  Both a) and b) are correct.

Question 5

Figure 6-21  
-Refer to Figure 6-21. The price that buyers pay after the tax is imposed is

Accepted Answer

A)  $8.00. 
B)  $9.00. 
C)  $10.50. 
D)  $12.00. 
A)  $8.00. 
B)  $9.00. 
C)  $10.50. 
D)  $12.00.

Question 6

A price floor is a legal minimum on the price at which a good or service can be sold.

Accepted Answer

A) True 
 B)False

Question 7

Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

Accepted Answer

A)  Cellular phones become less popular. 
B)  Traditional land line phones become more expensive. 
C)  The components used to produce cellular phones become less expensive. 
D)  Firms expect the price of cellular phones to fall in the future. 
A)  Cellular phones become less popular. 
B)  Traditional land line phones become more expensive. 
C)  The components used to produce cellular phones become less expensive. 
D)  Firms expect the price of cellular phones to fall in the future.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Under rent control, bribery is a mechanism to

Accepted Answer

A)  bring the total price of an apartment (including the bribe) closer to the equilibrium price. 
B)  allocate housing to the poorest individuals in the market. 
C)  force the total price of an apartment (including the bribe) to be less than the market price. 
D)  allocate housing to the most deserving tenants. 
A)  bring the total price of an apartment (including the bribe) closer to the equilibrium price. 
B)  allocate housing to the poorest individuals in the market. 
C)  force the total price of an apartment (including the bribe) to be less than the market price. 
D)  allocate housing to the most deserving tenants.

Question 10

If a tax is levied on the sellers of a product, then the demand curve will

Accepted Answer

A)  shift down. 
B)  shift up. 
C)  become flatter. 
D)  not shift. 
A)  shift down. 
B)  shift up. 
C)  become flatter. 
D)  not shift.

Question 11

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 12

An example of a price floor is

Accepted Answer

A)  the regulation of gasoline prices in the U.S. in the 1970s. 
B)  rent control. 
C)  the minimum wage. 
D)  any restriction on price that leads to a shortage. 
A)  the regulation of gasoline prices in the U.S. in the 1970s. 
B)  rent control. 
C)  the minimum wage. 
D)  any restriction on price that leads to a shortage.

Question 13

One disadvantage of government subsidies over price controls is that subsidies

Accepted Answer

A)  prevent the attainment of equilibrium in the markets in which they are imposed. 
B)  make higher taxes necessary. 
C)  are always unfair to those with low incomes. 
D)  cause unemployment. 
A)  prevent the attainment of equilibrium in the markets in which they are imposed. 
B)  make higher taxes necessary. 
C)  are always unfair to those with low incomes. 
D)  cause unemployment.

Question 14

Economic policies often have effects that their architects did not intend or anticipate.

Accepted Answer

A) True 
 B)False

Question 15

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Accepted Answer

A)  a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B)  the government's policy of maintaining a price ceiling on gasoline. 
C)  an indifference among U.S. consumers toward conservation. 
D)  the lack of substitutes for crude oil. 
A)  a sharp increase in the demand for gasoline that was brought on by the Vietnam War. 
B)  the government's policy of maintaining a price ceiling on gasoline. 
C)  an indifference among U.S. consumers toward conservation. 
D)  the lack of substitutes for crude oil.

Question 16

A $5 tax levied on the buyers of pants will cause the

Accepted Answer

A)  supply curve for pants to shift down by $5. 
B)  supply curve for pants to shift up by $5. 
C)  demand curve for pants to shift down by $5. 
D)  demand curve for pants to shift up by $5. 
A)  supply curve for pants to shift down by $5. 
B)  supply curve for pants to shift up by $5. 
C)  demand curve for pants to shift down by $5. 
D)  demand curve for pants to shift up by $5.

Question 17

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 ceiling of $4 on this market, then there will be

Accepted Answer

A)  no shortage. 
B)  a shortage of 5 units. 
C)  a shortage of 10 units. 
D)  a shortage of 20 units. 
A)  no shortage. 
B)  a shortage of 5 units. 
C)  a shortage of 10 units. 
D)  a shortage of 20 units.

Question 18

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, 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 not change. 
C)  not change, and the price received by sellers will increase. 
D)  not change, and the price received by sellers will not change. 
A)  increase, and the price received by sellers will increase. 
B)  increase, and the price received by sellers will not change. 
C)  not change, and the price received by sellers will increase. 
D)  not change, and the price received by sellers will not change.

Question 19

Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy. Further, suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle. Which of the following statements is correct?

Accepted Answer

A)  This tax causes the demand curve for vodka to shift downward by $5.00 at each quantity of vodka. 
B)  The price paid by buyers is $2.00 per bottle more than it was before the tax. 
C)  Sixty percent of the burden of the tax falls on sellers. 
D)  All of the above are correct. 
A)  This tax causes the demand curve for vodka to shift downward by $5.00 at each quantity of vodka. 
B)  The price paid by buyers is $2.00 per bottle more than it was before the tax. 
C)  Sixty percent of the burden of the tax falls on sellers. 
D)  All of the above are correct.

Question 20

Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

Accepted Answer

A)  An increase in the price of flour, which is used to make bread. 
B)  A decrease in the price of lunch meat. 
C)  A decease in the price of unsliced bread, which people consider as a substitute for sliced bread. 
D)  An decrease in the price of peanut butter and jelly. 
A)  An increase in the price of flour, which is used to make bread. 
B)  A decrease in the price of lunch meat. 
C)  A decease in the price of unsliced bread, which people consider as a substitute for sliced bread. 
D)  An decrease in the price of peanut butter and jelly.

Exam 6: Supply, Demand, and Government Policies

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for

A tax imposed on the buyers of a good will raise the

Figure 6-30 Panel (a) Panel (b) Panel (c) -Refer to Figure 6-30. In which market will the majority of the tax burden fall on buyers?

A tax on the buyers of cameras encourages

Figure 6-21 -Refer to Figure 6-21. The price that buyers pay after the tax is imposed is

A price floor is a legal minimum on the price at which a good or service can be sold.

Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

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

Under rent control, bribery is a mechanism to

If a tax is levied on the sellers of a product, then the demand curve will

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

An example of a price floor is

One disadvantage of government subsidies over price controls is that subsidies

Economic policies often have effects that their architects did not intend or anticipate.

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

A $5 tax levied on the buyers of pants will cause the

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 ceiling of $4 on this market, then there will be

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy. Further, suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle. Which of the following statements is correct?

Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

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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