Question 1

The quantity sold in a market will decrease if the government

Accepted Answer

A)  decreases a binding price floor in that market. 
B)  increases a binding price ceiling in that market. 
C)  increases a tax on the good sold in that market. 
D)  All of the above are correct. 
A)  decreases a binding price floor in that market. 
B)  increases a binding price ceiling in that market. 
C)  increases a tax on the good sold in that market. 
D)  All of the above are correct.

Question 2

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

Accepted Answer

A)  downward shift of the supply curve. 
B)  upward shift of the supply curve. 
C)  decrease in quantity supplied. 
D)  increase in quantity supplied. 
A)  downward shift of the supply curve. 
B)  upward shift of the supply curve. 
C)  decrease in quantity supplied. 
D)  increase in quantity supplied.

Question 3

The burden of a luxury tax falls

Accepted Answer

A)  more on the rich than on the middle class. 
B)  more on the poor than on the rich. 
C)  more on the middle class than on the rich. 
D)  equally on the rich, the middle class, and the poor. 
A)  more on the rich than on the middle class. 
B)  more on the poor than on the rich. 
C)  more on the middle class than on the rich. 
D)  equally on the rich, the middle class, and the poor.

Question 4

If a tax is imposed on a market with inelastic demand and elastic supply, 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 5

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 sellers?

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 6

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Accepted Answer

A) True 
 B)False

Question 7

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Accepted Answer

A)  the actual tax incidence is unaffected by the legislated tax incidence. 
B)  the employer now is required by law to pay more than 50 percent of the tax. 
C)  the employee now is required by law to pay more than 50 percent of the tax. 
D)  employers are no longer required by law to pay any portion of the tax. 
A)  the actual tax incidence is unaffected by the legislated tax incidence. 
B)  the employer now is required by law to pay more than 50 percent of the tax. 
C)  the employee now is required by law to pay more than 50 percent of the tax. 
D)  employers are no longer required by law to pay any portion of the tax.

Question 8

Figure 6-6  
-Refer to Figure 6-6. Which of the following price floors would be binding in this market?

Accepted Answer

A)  $6 
B)  $8 
C)  $10 
D)  $4 
A)  $6 
B)  $8 
C)  $10 
D)  $4

Question 9

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

Accepted Answer

A) True 
 B)False

Question 10

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

Accepted Answer

A) True 
 B)False

Question 11

A tax of $1 on buyers always decreases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-30
Panel (a) Panel (b)     Panel (c)  
-Refer to Figure 6-30. In which market will the tax burden be most equally divided between buyers and sellers?

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 14

Table 6-2  
-Refer to Table 6-2. A price floor set at $5 will

Accepted Answer

A)  be binding and will result in a surplus of 50 units. 
B)  be binding and will result in a surplus of 250 units. 
C)  be binding and will result in a surplus of 300 units. 
D)  not be binding. 
A)  be binding and will result in a surplus of 50 units. 
B)  be binding and will result in a surplus of 250 units. 
C)  be binding and will result in a surplus of 300 units. 
D)  not be binding.

Question 15

Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.

Accepted Answer

A) True 
 B)False

Question 16

If the government removes a binding price floor from a market, then the price received by sellers will

Accepted Answer

A)  decrease, and the quantity sold in the market will decrease. 
B)  decrease, and the quantity sold in the market will increase. 
C)  increase, and the quantity sold in the market will decrease. 
D)  increase, and the quantity sold in the market will increase. 
A)  decrease, and the quantity sold in the market will decrease. 
B)  decrease, and the quantity sold in the market will increase. 
C)  increase, and the quantity sold in the market will decrease. 
D)  increase, and the quantity sold in the market will increase.

Question 17

When a tax is placed on the sellers of cell phones, the size of the cell phone market

Accepted Answer

A)  and the price paid by buyers both increase. 
B)  increases, but the price paid by buyers decreases. 
C)  decreases, but the price paid by buyers increases. 
D)  and the price paid by buyers both decrease. 
A)  and the price paid by buyers both increase. 
B)  increases, but the price paid by buyers decreases. 
C)  decreases, but the price paid by buyers increases. 
D)  and the price paid by buyers both decrease.

Question 18

Minimum wage laws

Accepted Answer

A)  may encourage some teenagers to drop out and take jobs. 
B)  create labor shortages. 
C)  have the greatest impact in the market for skilled labor. 
D)  All of the above are correct. 
A)  may encourage some teenagers to drop out and take jobs. 
B)  create labor shortages. 
C)  have the greatest impact in the market for skilled labor. 
D)  All of the above are correct.

Question 19

Prices are inefficient rationing devices.

Accepted Answer

A) True 
 B)False

Question 20

To be binding, a price floor must be set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

The quantity sold in a market will decrease if the government

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

The burden of a luxury tax falls

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

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 sellers?

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Figure 6-6 -Refer to Figure 6-6. Which of the following price floors would be binding in this market?

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

A tax of $1 on buyers always decreases the equilibrium price by $1.

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

Figure 6-30 Panel (a) Panel (b) Panel (c) -Refer to Figure 6-30. In which market will the tax burden be most equally divided between buyers and sellers?

Table 6-2 -Refer to Table 6-2. A price floor set at $5 will

Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.

If the government removes a binding price floor from a market, then the price received by sellers will

When a tax is placed on the sellers of cell phones, the size of the cell phone market

Minimum wage laws

Prices are inefficient rationing devices.

To be binding, a price floor must be set above the equilibrium price.

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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