Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

A tax burden falls more heavily on the side of the market that is less elastic.

Accepted Answer

A) True 
 B)False

Question 3

When a tax is imposed on the buyers of a good, the demand curve shifts

Accepted Answer

A)   upward by the amount of the tax.
B)   downward by the amount of the tax.
C)   upward by less than the amount of the tax.
D)   downward by less than the amount of the tax.E) B) and C)
F) A) and D)

Question 4

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 5

If a price ceiling is not binding, then

Accepted Answer

A)   there will be a surplus in the market.
B)   there will be a shortage in the market.
C)   the market will be less efficient than it would be without the price ceiling.
D)   there will be no effect on the market price or quantity sold.E) A) and C)
F) All of the above

Question 6

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-5 
-Refer to Figure 6-5. If the horizontal line on the graph represents a price ceiling, then the price ceiling 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)   not binding but 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) None of the above

Question 8

The minimum wage

Accepted Answer

A)   is an example of a price ceiling.
B)   has its greatest impact on middle-aged and immigrant workers.
C)   does not apply to unpaid internships.
D)   does not affect the quantity of labor demanded; it only affects the quantity of labor supplied.E) C) and D)
F) B) and D)

Question 9

Figure 6-22 
-Refer to Figure 6-22. The amount of the tax per unit is

Accepted Answer

A)   $2.00.
B)   $1.50.
C)   $3.00.
D)   $0.50.E) None of the above
F) B) and C)

Question 10

To say that a price ceiling is binding is to say that the price ceiling

Accepted Answer

A)   results in a surplus.
B)   is set above the equilibrium price.
C)   causes quantity demanded to exceed quantity supplied.
D)   All of the above are correct.E) A) and B)
F) A) and D)

Question 11

Suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

Accepted Answer

A)   less than $1.
B)   $1.
C)   between $1 and $2.
D)   $2.E) None of the above
F) A) and D)

Question 12

A tax levied on the sellers of blueberries

Accepted Answer

A)   increases sellers' costs, reduces profits, and shifts the supply curve up.
B)   increases sellers' costs, reduces profits, and shifts the supply curve down.
C)   decreases sellers' costs, increases profits, and shifts the supply curve up.
D)   decreases sellers' costs, increases profits, and shifts the supply curve down.E) B) and C)
F) C) and D)

Question 13

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

Accepted Answer

A)   a shortage of 8 units.
B)   a shortage of 4 units.
C)   14 units sold.
D)   10 units sold.E) A) and B)
F) A) and C)

Question 14

Whether a tax is levied on sellers or buyers, buyers and sellers usually share the burden of taxes.

Accepted Answer

A) True 
 B)False

Question 15

Under rent control, bribery is a mechanism to

Accepted Answer

A)   bring the total price of an apartment (including the bribe)  closer to the equilibrium price.
B)   allocate housing to the poorest individuals in the market.
C)   force the total price of an apartment (including the bribe)  to be less than the market price.
D)   allocate housing to the most deserving tenants.E) None of the above
F) A) and D)

Question 16

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Accepted Answer

A) True 
 B)False

Question 17

Table 6-6
 
-Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

Accepted Answer

A price floor must be set abov...

Question 18

Prices are inefficient rationing devices.

Accepted Answer

A) True 
 B)False

Question 19

When government imposes a price ceiling or a price floor on a market,

Accepted Answer

A)   price no longer serves as a rationing device.
B)   efficiency in the market is enhanced.
C)   shortages and surpluses are eliminated.
D)   both buyers and sellers become better off.E) C) and D)
F) A) and D)

Question 20

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Under rent control, bribery is a mechanism to

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Whether a tax is levied on sellers or buyers, buyers and sellers usually share the burden of taxes.

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When government imposes a price ceiling or a price floor on a market,

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A tax burden falls more heavily on the side of the market that is less elastic.

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To say that a price ceiling is binding is to say that the price ceiling

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

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Table 6-6 -Refer to Table 6-6. In this market, over what range of prices would a price floor set by the government be binding?

Correct AnswerverifiedA price floor must be set abov...View AnswerShow Answer

Prices are inefficient rationing devices.

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Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

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The minimum wage

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A tax levied on the sellers of blueberries

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A binding price ceiling causes quantity demanded to be less than quantity supplied.

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

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

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If a price ceiling is not binding, then

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Suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

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When a tax is imposed on the buyers of a good, the demand curve shifts

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

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Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

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Figure 6-22 -Refer to Figure 6-22. The amount of the tax per unit is

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A price floor must be set abov...
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