Question 1

A shortage results when a

Accepted Answer

A)  nonbinding price ceiling is imposed on a market. 
B)  nonbinding price ceiling is removed from a market. 
C)  binding price ceiling is imposed on a market. 
D)  binding price ceiling is removed from a market. 
A)  nonbinding price ceiling is imposed on a market. 
B)  nonbinding price ceiling is removed from a market. 
C)  binding price ceiling is imposed on a market. 
D)  binding price ceiling is removed from a market.

Question 2

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

Accepted Answer

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

Question 3

The long-run effects of rent controls are a good illustration of the principle that

Accepted Answer

A)  society faces a short-run tradeoff between unemployment and inflation. 
B)  the cost of something is what you give up to get it. 
C)  people respond to incentives. 
D)  government can sometimes improve on market outcomes. 
A)  society faces a short-run tradeoff between unemployment and inflation. 
B)  the cost of something is what you give up to get it. 
C)  people respond to incentives. 
D)  government can sometimes improve on market outcomes.

Question 4

Figure 6-36  
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 5

Workers with high skills and much experience are not typically affected by the minimum wage.

Accepted Answer

A) True 
 B)False

Question 6

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

Accepted Answer

A)  not change, and the price received by sellers will not change. 
B)  not change, and the price received by sellers will decrease. 
C)  decrease, and the price received by sellers will not change. 
D)  decrease, and the price received by sellers will decrease. 
A)  not change, and the price received by sellers will not change. 
B)  not change, and the price received by sellers will decrease. 
C)  decrease, and the price received by sellers will not change. 
D)  decrease, and the price received by sellers will decrease.

Question 7

Figure 6-15  
-Refer to Figure 6-15. Suppose a price ceiling of $2 is imposed on this market. As a result,

Accepted Answer

A)  the quantity of the good supplied decreases by 30 units. 
B)  the demand curve shifts to the left so as to now pass through the point (quantity = 30, price = $2). 
C)  buyers' total expenditure on the good decreases by $75. 
D)  buyers' total expenditure on the good falls by $15. 
A)  the quantity of the good supplied decreases by 30 units. 
B)  the demand curve shifts to the left so as to now pass through the point (quantity = 30, price = $2). 
C)  buyers' total expenditure on the good decreases by $75. 
D)  buyers' total expenditure on the good falls by $15.

Question 8

A price ceiling is

Accepted Answer

A)  often imposed on markets in which "cutthroat competition" would prevail without a price ceiling. 
B)  a legal maximum on the price at which a good can be sold. 
C)  often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling. 
D)  All of the above are correct. 
A)  often imposed on markets in which "cutthroat competition" would prevail without a price ceiling. 
B)  a legal maximum on the price at which a good can be sold. 
C)  often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling. 
D)  All of the above are correct.

Question 9

Figure 6-32  
-Refer to Figure 6-32. If the government set a price floor at $70, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at

Question 10

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 $7 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 11

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

Accepted Answer

A)  Buyers bear the entire burden of the tax. 
B)  Sellers bear the entire burden of the tax. 
C)  Buyers and sellers share the burden of the tax. 
D)  We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination. 
A)  Buyers bear the entire burden of the tax. 
B)  Sellers bear the entire burden of the tax. 
C)  Buyers and sellers share the burden of the tax. 
D)  We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination.

Question 12

Figure 6-34  
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

Accepted Answer

With a $6 tax per unit, the bu

Question 13

Figure 6-4  
-Refer to Figure 6-4. A government-imposed price of $12 in this market is an example of a

Accepted Answer

A)  binding price ceiling that creates a shortage. 
B)  non-binding price ceiling that creates a shortage. 
C)  binding price floor that creates a surplus. 
D)  non-binding price floor that creates a surplus. 
A)  binding price ceiling that creates a shortage. 
B)  non-binding price ceiling that creates a shortage. 
C)  binding price floor that creates a surplus. 
D)  non-binding price floor that creates a surplus.

Question 14

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

Accepted Answer

A)  buyers of gasoline. 
B)  sellers of gasoline. 
C)  either buyers or sellers of gasoline. 
D)  whichever side of the market is less elastic. 
A)  buyers of gasoline. 
B)  sellers of gasoline. 
C)  either buyers or sellers of gasoline. 
D)  whichever side of the market is less elastic.

Question 15

You receive a paycheck from your employer, and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

Accepted Answer

A)  This type of tax is an example of a payback tax. 
B)  Your employer is required by law to pay $400 to match the $400 deducted from your check. 
C)  The $400 that you paid is the true burden of the tax that falls on you, the employee. 
D)  All of the above are correct. 
A)  This type of tax is an example of a payback tax. 
B)  Your employer is required by law to pay $400 to match the $400 deducted from your check. 
C)  The $400 that you paid is the true burden of the tax that falls on you, the employee. 
D)  All of the above are correct.

Question 16

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Accepted Answer

A) True 
 B)False

Question 17

A price ceiling set below the equilibrium price causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 18

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Accepted Answer

A)  upward by exactly $2.00. 
B)  upward by less than $2.00. 
C)  downward by exactly $2.00. 
D)  downward by less than $2.00. 
A)  upward by exactly $2.00. 
B)  upward by less than $2.00. 
C)  downward by exactly $2.00. 
D)  downward by less than $2.00.

Question 19

Figure 6-23    
-Refer to Figure 6-23. Which of the following is correct?

Accepted Answer

A)  The entire burden of the tax falls on sellers, and none of the burden of the tax falls on buyers. 
B)  One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers. 
C)  One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers. 
D)  Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers. 
A)  The entire burden of the tax falls on sellers, and none of the burden of the tax falls on buyers. 
B)  One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers. 
C)  One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers. 
D)  Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers.

Question 20

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Accepted Answer

@#IMG-DLM& The tax burden fall

Exam 6: Supply, Demand, and Government Policies

A shortage results when a

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

The long-run effects of rent controls are a good illustration of the principle that

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.

Workers with high skills and much experience are not typically affected by the minimum wage.

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

Figure 6-15 -Refer to Figure 6-15. Suppose a price ceiling of $2 is imposed on this market. As a result,

A price ceiling is

Figure 6-32 -Refer to Figure 6-32. If the government set a price floor at $70, would there be a shortage or surplus, and how large would be the shortage/surplus?

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 $7 on this market, then there will be

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $12 in this market is an example of a

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

You receive a paycheck from your employer, and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

A tax on sellers and an increase in input prices affect the supply curve in the same way.

A price ceiling set below the equilibrium price causes a shortage in the market.

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Figure 6-23 -Refer to Figure 6-23. Which of the following is correct?

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

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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