Question 1

Rent control

Accepted Answer

A)  serves as an example of how a social problem can be alleviated or even solved by government policies. 
B)  serves as an example of a price ceiling. 
C)  is regarded by most economists as an efficient way of helping the poor. 
D)  is the most efficient way to allocate scarce housing resources. 
A)  serves as an example of how a social problem can be alleviated or even solved by government policies. 
B)  serves as an example of a price ceiling. 
C)  is regarded by most economists as an efficient way of helping the poor. 
D)  is the most efficient way to allocate scarce housing resources.

Question 2

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Accepted Answer

A) True 
 B)False

Question 3

Figure 6-25  
-Refer to Figure 6-25. 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 sellers of the good, rather than the buyers, are required to pay the tax to the government. After the sellers are required to pay the tax, relative to the case depicted in the graph, 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 4

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. The mayor will be able to successfully divide the burden of the tax equally if the

Accepted Answer

A)  demand for labor is more elastic than the supply of labor. 
B)  supply of labor is more elastic than the demand for labor. 
C)  demand for labor and supply of labor are equally elastic. 
D)  It is not possible for the tax burden to fall equally on firms and workers. 
A)  demand for labor is more elastic than the supply of labor. 
B)  supply of labor is more elastic than the demand for labor. 
C)  demand for labor and supply of labor are equally elastic. 
D)  It is not possible for the tax burden to fall equally on firms and workers.

Question 5

Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

Accepted Answer

A) True 
 B)False

Question 6

In the short run, rent control causes the quantity supplied

Accepted Answer

A)  and quantity demanded to fall. 
B)  to fall and quantity demanded to rise. 
C)  to rise and quantity demanded to fall. 
D)  and quantity demanded to rise. 
A)  and quantity demanded to fall. 
B)  to fall and quantity demanded to rise. 
C)  to rise and quantity demanded to fall. 
D)  and quantity demanded to rise.

Question 7

A binding price floor will reduce a firm's total revenue

Accepted Answer

A)  always. 
B)  when demand is elastic. 
C)  when demand is inelastic. 
D)  never. 
A)  always. 
B)  when demand is elastic. 
C)  when demand is inelastic. 
D)  never.

Question 8

If a tax is levied on the sellers of flour, then

Accepted Answer

A)  buyers will bear the entire burden of the tax. 
B)  sellers will bear the entire burden of the tax. 
C)  buyers and sellers will share the burden of the tax. 
D)  the government will bear the entire burden of the tax. 
A)  buyers will bear the entire burden of the tax. 
B)  sellers will bear the entire burden of the tax. 
C)  buyers and sellers will share the burden of the tax. 
D)  the government will bear the entire burden of the tax.

Question 9

The incidence of a tax falls more heavily on

Accepted Answer

A)  consumers than producers if demand is more inelastic than supply. 
B)  producers than consumers if supply is more inelastic than demand. 
C)  consumers than producers if supply is more elastic than demand. 
D)  All of the above are correct. 
A)  consumers than producers if demand is more inelastic than supply. 
B)  producers than consumers if supply is more inelastic than demand. 
C)  consumers than producers if supply is more elastic than demand. 
D)  All of the above are correct.

Question 10

One common example of a price floor is the minimum wage.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

Accepted Answer

A) True 
 B)False

Question 12

Figure 6-25  
-Refer to Figure 6-25. The burden of the tax on buyers 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 13

Figure 6-20  
-Refer to Figure 6-20. Suppose a tax of $5 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 will. 
C)  Sellers will bear more of the burden of the tax than buyers will. 
D)  Any of the above is possible. 
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 will. 
C)  Sellers will bear more of the burden of the tax than buyers will. 
D)  Any of the above is possible.

Question 14

Figure 6-1
Panel (a) Panel (b)    
-Refer to Figure 6-1. A binding price ceiling is shown in

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 15

The minimum wage

Accepted Answer

A)  is an example of a price ceiling. 
B)  has its greatest impact on middle-aged and immigrant workers. 
C)  does not apply to unpaid internships. 
D)  does not affect the quantity of labor demanded; it only affects the quantity of labor supplied. 
A)  is an example of a price ceiling. 
B)  has its greatest impact on middle-aged and immigrant workers. 
C)  does not apply to unpaid internships. 
D)  does not affect the quantity of labor demanded; it only affects the quantity of labor supplied.

Question 16

Figure 6-31  
-Refer to Figure 6-31. If the government set a price ceiling at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $15 wou

Question 17

Figure 6-28  
-Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)  $4 
B)  between $4 and $7 
C)  between $7 and $10 
D)  $10 
A)  $4 
B)  between $4 and $7 
C)  between $7 and $10 
D)  $10

Question 18

A price floor set above the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 19

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

Accepted Answer

A) True 
 B)False

Question 20

When OPEC raised the price of crude oil in the 1970s, it caused the

Accepted Answer

A)  supply of gasoline to decrease. 
B)  quantity of gasoline demanded to decrease. 
C)  equilibrium price of gasoline to increase. 
D)  All of the above are correct. 
A)  supply of gasoline to decrease. 
B)  quantity of gasoline demanded to decrease. 
C)  equilibrium price of gasoline to increase. 
D)  All of the above are correct.

Exam 6: Supply, Demand, and Government Policies

Rent control

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

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. The mayor will be able to successfully divide the burden of the tax equally if the

Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

In the short run, rent control causes the quantity supplied

A binding price floor will reduce a firm's total revenue

If a tax is levied on the sellers of flour, then

The incidence of a tax falls more heavily on

One common example of a price floor is the minimum wage.

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

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

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. A binding price ceiling is shown in

The minimum wage

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

A price floor set above the equilibrium price is binding.

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

When OPEC raised the price of crude oil in the 1970s, it caused the

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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