Question 1

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 floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

The answer of Scenario 6-1
Suppose that demand in the market...

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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.

Question 4

Figure 6-5 
-Refer to Figure 6-5. If the horizontal line on the graph represents a price floor, then the price floor is

Accepted Answer

A)  binding and creates a surplus of 60 units of the good. 
B)  binding and creates a surplus of 20 units of the good. 
C)  binding and creates a surplus of 40 units of the good. 
D)  not binding, and there will be no surplus or shortage of the good.

Question 5

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

Accepted Answer

A) True 
 B)False

Question 6

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $20 per ticket, then the

Accepted Answer

A)  demand curve will shift upward by $30, and the price paid by buyers will decrease by less than $30. 
B)  demand curve will shift upward by $30, and the price paid by buyers will decrease by $30. 
C)  supply curve will shift downward by $30, and the effective price received by sellers will increase by less than $30. 
D)  supply curve will shift downward by $30, and the effective price received by sellers will increase by $30.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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. Workers will bear

Accepted Answer

A)  an equal share of the tax in comparison to firms. 
B)  a greater share of the tax in comparison to firms. 
C)  a smaller share of the tax in comparison to firms. 
D)  All of the above are possible.

Question 9

A tax of $1 on sellers always increases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 10

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

Accepted Answer

A)  a surplus of 2 units. 
B)  a surplus of 4 units. 
C)  12 units sold. 
D)  10 units sold.

Question 11

If the equilibrium price of an airline ticket is $500 and the government imposes a price floor of $400 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 12

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 $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

The answer of Scenario 6-1
Suppose that demand in the market...

Question 13

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the sellers in this market?

Accepted Answer

The answer of Figure 6-34 
-Refer to Figure 6-34. If...

Question 14

If the government removes a binding price floor from a market, then the price paid by buyers will

Accepted Answer

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

Question 15

A legal minimum on the price at which a good can be sold is called a

Accepted Answer

A)  price subsidy. 
B)  price floor. 
C)  tax. 
D)  price ceiling.

Question 16

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

Accepted Answer

A)  no buyers actually benefit. 
B)  some buyers benefit, but no buyers are harmed. 
C)  some buyers benefit, and some buyers are harmed. 
D)  all buyers benefit.

Question 17

A tax of $1 on buyers shifts the demand curve downward by exactly $1.

Accepted Answer

A) True 
 B)False

Question 18

A tax imposed on the buyers of a good will

Accepted Answer

A)  raise both the price buyers pay and the effective price sellers receive. 
B)  raise the price buyers pay and lower the effective price sellers receive. 
C)  lower the price buyers pay and raise the effective price sellers receive. 
D)  lower both the price buyers pay and the effective price sellers receive.

Question 19

A tax on buyers increases the size of a market.

Accepted Answer

A) True 
 B)False

Question 20

If the government removes a binding price ceiling from a market, then the price paid by buyers will

Accepted Answer

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

Exam 6: Supply, Demand, and Government Policies

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 floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

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

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

Figure 6-5 -Refer to Figure 6-5. If the horizontal line on the graph represents a price floor, then the price floor is

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $20 per ticket, then the

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

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. Workers will bear

A tax of $1 on sellers always increases the equilibrium price by $1.

Figure 6-4 -Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

If the equilibrium price of an airline ticket is $500 and the government imposes a price floor of $400 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the sellers in this market?

If the government removes a binding price floor from a market, then the price paid by buyers will

A legal minimum on the price at which a good can be sold is called a

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

A tax of $1 on buyers shifts the demand curve downward by exactly $1.

A tax imposed on the buyers of a good will

A tax on buyers increases the size of a market.

If the government removes a binding price ceiling from a market, then the price paid by buyers will