Question 1

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

Accepted Answer

A)  and the effective price received by sellers both decrease.
B)  decreases, but the effective price received by sellers increases.
C)  increases, but the effective price received by sellers decreases.
D)  and the effective price received by sellers both increase.E) B) and C)
F) None of the above

Question 2

The Earned Income Tax Credit is an example of a

Accepted Answer

A)  minimum-wage law.
B)  price ceiling.
C)  wage subsidy.
D)  rent subsidy.E) A) and B)
F) A) and C)

Question 3

Figure 6-8 
-Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Accepted Answer

A)  no surplus of the good.
B)  a surplus of 5 units of the good.
C)  a surplus of 10 units of the good.
D)  a surplus of 15 units of the good.E) All of the above
F) A) and B)

Question 4

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 5

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 6

If a tax is imposed on a market with inelastic supply and elastic demand, 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.E) A) and D)
F) C) and D)

Question 7

Figure 6-7 
-Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

Accepted Answer

A)  the quantity of the good supplied decreases by 20 units.
B)  the demand curve shifts to the left; quantity sold is now 30 units and the price is $5.
C)  buyers' total expenditure on the good decreases by $80.
D)  the price of the good continues to serve as the rationing mechanism.E) None of the above
F) C) and D)

Question 8

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

Accepted Answer

A)  downward shift of the demand curve.
B)  upward shift of the demand curve.
C)  decrease in quantity demanded.
D)  increase in quantity demanded.E) None of the above
F) A) and D)

Question 9

Figure 6-32 
-Refer to Figure 6-32. If the government set a price ceiling at $50, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set ...

Question 10

Buyers and sellers rarely share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 11

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell, then

Accepted Answer

A)  the supply curve for mopeds shifts downward by $200.
B)  sellers of mopeds receive $200 less per moped than they were receiving before the tax.
C)  buyers of mopeds are unaffected by the tax.
D)  None of the above is correct.E) C) and D)
F) None of the above

Question 12

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.E) B) and D)
F) A) and D)

Question 13

Which of the following observations would be consistent with the imposition of a binding price floor on a market? After the price floor becomes effective,

Accepted Answer

A)  a smaller quantity of the good is bought and sold.
B)  a larger quantity of the good is demanded.
C)  a smaller quantity of the good is supplied.
D)  the price falls below the equilibrium price.E) C) and D)
F) All of the above

Question 14

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

Accepted Answer

A)  U.S. government regulations pertaining to the price of gasoline.
B)  the Organization of Petroleum Exporting Countries (OPE
C)  .
C)  major oil companies operating in the U.S.
D)  consumers who bought gasoline frequently, even when their cars' gasoline tanks were nearly full.E) B) and C)
F) A) and D)

Question 15

When a free market for a good reaches equilibrium, anyone who is willing and able to pay the market price can buy the good.

Accepted Answer

A) True 
 B)False

Question 16

Policymakers use taxes

Accepted Answer

A)  to raise revenue for public purposes but not to influence market outcomes.
B)  both to raise revenue for public purposes and to influence market outcomes.
C)  when they realize that price controls alone are insufficient to correct market inequities.
D)  only in those markets in which the burden of the tax falls clearly on the sellers.E) All of the above
F) C) and D)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Accepted Answer

A)  Policymakers have studied the effects of the price ceiling carefully, and they recognize that the price ceiling is advantageous for society as a whole.
B)  Buyers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling.
C)  Sellers of milk, recognizing that the price ceiling is good for them, have pressured policymakers into imposing the price ceiling.
D)  Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling.E) A) and D)
F) A) and B)

Question 19

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market. 
-Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting shortage is

Accepted Answer

A)  0 units.
B)  4 units.
C)  5 units.
D)  10 units.E) All of the above
F) C) and D)

Question 20

Figure 6-20 
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)  less than 25 units
B)  25 units
C)  between 25 units and 50 units
D)  greater than 50 unitsE) A) and C)
F) B) and D)

Exam 6: Supply, Demand, and Government Policies

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

Correct Answer
verified

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

Correct Answer
verified

Buyers and sellers rarely share the burden of a tax equally.

Correct Answer
verified

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

Correct Answer
verified

Policymakers use taxes

Correct Answer
verified

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Correct Answer
verified

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.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

Correct Answer
verified

Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $50, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct Answer
verified
A price ceiling set ...
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Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Correct Answer
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Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Correct Answer
verified

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell, then

Correct Answer
verified

Figure 6-7 -Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

Correct Answer
verified

Correct Answer
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A price ceiling set at $12 wou...
View Answer

When a free market for a good reaches equilibrium, anyone who is willing and able to pay the market price can buy the good.

Correct Answer
verified

In the short run, rent control causes the quantity supplied

Correct Answer
verified

The Earned Income Tax Credit is an example of a

Correct Answer
verified

Which of the following observations would be consistent with the imposition of a binding price floor on a market? After the price floor becomes effective,

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Buyers and sellers rarely share the burden of a tax equally.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Policymakers use taxes

Correct AnswerverifiedShow Answer

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price floor of $5 on this market, then there will be

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Economists blame the long lines at gasoline stations in the U.S. in the 1970s on

Correct AnswerverifiedShow Answer

Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $50, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set ...View AnswerShow Answer

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Correct AnswerverifiedShow Answer

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Correct AnswerverifiedShow Answer

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell, then

Correct AnswerverifiedShow Answer

Figure 6-7 -Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA price ceiling set at $12 wou...View AnswerShow Answer

When a free market for a good reaches equilibrium, anyone who is willing and able to pay the market price can buy the good.

Correct AnswerverifiedShow Answer

In the short run, rent control causes the quantity supplied

Correct AnswerverifiedShow Answer

The Earned Income Tax Credit is an example of a

Correct AnswerverifiedShow Answer

Which of the following observations would be consistent with the imposition of a binding price floor on a market? After the price floor becomes effective,

Correct AnswerverifiedShow Answer

Correct Answer
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A price ceiling set ...
View Answer

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A price ceiling set at $12 wou...
View Answer

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