Question 1

The tax burden will fall most heavily on sellers of the good when the demand curve

Accepted Answer

A)   is relatively steep, and the supply curve is relatively flat.
B)   is relatively flat, and the supply curve is relatively steep.
C)   and the supply curve are both relatively flat.
D)   and the supply curve are both relatively steep.E) B) and C)
F) A) and D)

Question 2

When a tax is imposed on a good, the result is always a shortage of the good.

Accepted Answer

A) True 
 B)False

Question 3

A price ceiling set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 4

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 5

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

Accepted Answer

A)   Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans.
B)   The number of farmers selling soybeans decreases.
C)   Consumers' income increases, and soybeans are a normal good.
D)   The number of consumers buying soybeans increases.E) A) and D)
F) A) and C)

Question 6

Price is the rationing mechanism in a free, competitive market.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-32 
-Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at $55 would...

Question 8

A price floor set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 9

The U.S. Congress first instituted a minimum wage in

Accepted Answer

A)   1776.
B)   1812.
C)   1938.
D)   1975.E) All of the above
F) C) and D)

Question 10

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.E) All of the above
F) None of the above

Question 11

Advocates of the minimum wage

Accepted Answer

A)   deny that the minimum wage produces any adverse effects.
B)   emphasize the benefits to teenagers of increases in the minimum wage.
C)   emphasize the low annual incomes of those who work for the minimum wage.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 12

The minimum wage is an example of a

Accepted Answer

A)   price ceiling.
B)   price floor.
C)   wage subsidy.
D)   tax.E) B) and C)
F) A) and D)

Question 13

A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

Accepted Answer

A) True 
 B)False

Question 14

A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Accepted Answer

A) True 
 B)False

Question 15

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

Accepted Answer

A)   decrease by less than $500.
B)   decrease by exactly $500.
C)   decrease by more than $500.
D)   increase by an indeterminate amount.E) B) and C)
F) B) and D)

Question 16

Figure 6-17
This figure shows the market demand and market supply curves for good Y 
-Refer to Figure 6-17. A government-imposed price of $24 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.E) A) and B)
F) A) and C)

Question 17

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

Accepted Answer

A)   no surplus.
B)   a surplus of 20 units.
C)   a surplus of 30 units.
D)   a surplus of 40 units.E) C) and D)
F) A) and B)

Question 18

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 elastid.E) None of the above
F) B) and D)

Question 19

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.E) All of the above
F) A) and D)

Question 20

Figure 6-21 
-Refer to Figure 6-21. What is the amount of the tax per unit?

Accepted Answer

A)   $1
B)   $2
C)   $3
D)   $4E) None of the above
F) B) and C)

Exam 6: Supply, Demand, and Government Policies

Price ceilings are typically imposed to benefit buyers.

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The U.S. Congress first instituted a minimum wage in

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When a tax is imposed on a good, the result is always a shortage of the good.

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Advocates of the minimum wage

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The tax burden will fall most heavily on sellers of the good when the demand curve

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Figure 6-17 This figure shows the market demand and market supply curves for good Y -Refer to Figure 6-17. A government-imposed price of $24 in this market is an example of a

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Figure 6-21 -Refer to Figure 6-21. What is the amount of the tax per unit?

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A price floor set above the equilibrium price causes a surplus in the market.

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

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

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Price is the rationing mechanism in a free, competitive market.

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A tax on buyers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

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

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Figure 6-32 -Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price floor set at $55 would...View AnswerShow Answer

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

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A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

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A price ceiling set above the equilibrium price causes a surplus in the market.

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The minimum wage is an example of a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the government has imposed a price floor on the market for soybeans. Which of the following events could transform the price floor from one that is not binding into one that is binding?

Correct AnswerverifiedShow Answer

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A price floor set at $55 would...
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