Question 1

If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would

Accepted Answer

A)  increase by more than $1,000. 
B)  increase by exactly $1,000. 
C)  increase by less than $1,000. 
D)  decrease by an indeterminate amount. 
A)  increase by more than $1,000. 
B)  increase by exactly $1,000. 
C)  increase by less than $1,000. 
D)  decrease by an indeterminate amount.

Question 2

In "Venezuela Versus the Market," the price control placed on coffee

Accepted Answer

A)  created a shortage of coffee. 
B)  resulted in higher profits for coffee growers. 
C)  increased coffee exports to other countries. 
D)  increased the amount of land and coffee used in production. 
A)  created a shortage of coffee. 
B)  resulted in higher profits for coffee growers. 
C)  increased coffee exports to other countries. 
D)  increased the amount of land and coffee used in production.

Question 3

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 4

If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-16  
-Refer to Figure 6-16. In this market, a minimum wage of $2.75 is

Accepted Answer

A)  binding and creates a labor shortage. 
B)  binding and creates unemployment. 
C)  nonbinding and creates a labor shortage. 
D)  nonbinding and creates neither a labor shortage nor unemployment. 
A)  binding and creates a labor shortage. 
B)  binding and creates unemployment. 
C)  nonbinding and creates a labor shortage. 
D)  nonbinding and creates neither a labor shortage nor unemployment.

Question 6

Table 6-1  
-Refer to Table 6-1. Suppose the government imposes a price ceiling of $70 on this market. What will be the size of the shortage in this market?

Accepted Answer

A)  0 units 
B)  400 units 
C)  600 units 
D)  1000 units 
A)  0 units 
B)  400 units 
C)  600 units 
D)  1000 units

Question 7

When a binding price ceiling is imposed on a market to benefit buyers,

Accepted Answer

A)  every buyer in the market benefits. 
B)  every buyer and seller in the market benefits. 
C)  every buyer who wants to buy the good will be able to do so, but only if he waits in long lines. 
D)  some buyers will not be able to buy any amount of the good. 
A)  every buyer in the market benefits. 
B)  every buyer and seller in the market benefits. 
C)  every buyer who wants to buy the good will be able to do so, but only if he waits in long lines. 
D)  some buyers will not be able to buy any amount of the good.

Question 8

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Accepted Answer

A) True 
 B)False

Question 9

A $0.10 tax levied on the sellers of chocolate bars will cause the

Accepted Answer

A)  supply curve for chocolate bars to shift down by $0.10. 
B)  supply curve for chocolate bars to shift up by $0.10. 
C)  demand curve for chocolate bars to shift down by $0.10. 
D)  demand curve for chocolate bars to shift up by $0.10. 
A)  supply curve for chocolate bars to shift down by $0.10. 
B)  supply curve for chocolate bars to shift up by $0.10. 
C)  demand curve for chocolate bars to shift down by $0.10. 
D)  demand curve for chocolate bars to shift up by $0.10.

Question 10

Figure 6-13
This figure shows the market demand and market supply curves for good X.  
-Refer to Figure 6-13. Which of the following price floors would be binding in this market?

Accepted Answer

A)  $3 
B)  $4 
C)  $5 
D)  $6 
A)  $3 
B)  $4 
C)  $5 
D)  $6

Question 11

Figure 6-22  
-Refer to Figure 6-22. The amount of the tax per unit is

Accepted Answer

A)  $2.00. 
B)  $1.50. 
C)  $3.00. 
D)  $0.50. 
A)  $2.00. 
B)  $1.50. 
C)  $3.00. 
D)  $0.50.

Question 12

A tax burden falls more heavily on the side of the market that is less elastic.

Accepted Answer

A) True 
 B)False

Question 13

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

Accepted Answer

A)  lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. 
B)  the tax raises too little revenue for the government, so it should be eliminated. 
C)  firms bear most of the burden of the tax. 
D)  workers bear most of the burden of the tax. 
A)  lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided. 
B)  the tax raises too little revenue for the government, so it should be eliminated. 
C)  firms bear most of the burden of the tax. 
D)  workers bear most of the burden of the tax.

Question 14

When a tax is placed on the buyers of lemonade, the

Accepted Answer

A)  sellers bear the entire burden of the tax. 
B)  buyers bear the entire burden of the tax. 
C)  burden of the tax will be always be equally divided between the buyers and the sellers. 
D)  burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal. 
A)  sellers bear the entire burden of the tax. 
B)  buyers bear the entire burden of the tax. 
C)  burden of the tax will be always be equally divided between the buyers and the sellers. 
D)  burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

Question 15

Whether a tax is levied on sellers or buyers, buyers and sellers usually share the burden of taxes.

Accepted Answer

A) True 
 B)False

Question 16

Figure 6-3
Panel (a) Panel (b)    
-Refer to Figure 6-3. In panel (a), 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 17

Scenario 6-2
Suppose demand for a product is given by the equation   and supply for the product is given by the equation  
-Refer to Scenario 6-2. Suppose the government sets a price ceiling at $17 for this product. Is this price ceiling binding, and what will be the size of the shortage/surplus in this market?

Accepted Answer

The price ceiling will not be

Question 18

Figure 6-28  
-Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. How much will buyers pay 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 19

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 $12, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $12 wou

Question 20

Long lines

Accepted Answer

A)  and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B)  and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C)  are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D)  are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time. 
A)  and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time. 
B)  and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly. 
C)  are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly. 
D)  are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.

Exam 6: Supply, Demand, and Government Policies

If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would

In "Venezuela Versus the Market," the price control placed on coffee

Which of the following causes a surplus of a good?

If a tax is imposed on the sellers of a product, then the tax burden will fall entirely on the sellers.

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $2.75 is

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price ceiling of $70 on this market. What will be the size of the shortage in this market?

When a binding price ceiling is imposed on a market to benefit buyers,

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

A $0.10 tax levied on the sellers of chocolate bars will cause the

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following price floors would be binding in this market?

Figure 6-22 -Refer to Figure 6-22. The amount of the tax per unit is

A tax burden falls more heavily on the side of the market that is less elastic.

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

When a tax is placed on the buyers of lemonade, the

Whether a tax is levied on sellers or buyers, buyers and sellers usually share the burden of taxes.

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

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Long lines

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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