Question 1

A tax on the buyers of sofas

Accepted Answer

A)   increases the size of the sofa market.
B)   decreases the size of the sofa market.
C)   has no effect on the size of the sofa market.
D)   may increase, decrease, or have no effect on the size of the sofa market.E) None of the above
F) A) and D)

Question 2

Figure 6-18
The vertical distance between points A and B represents the tax in the market. 
-Refer to Figure 6-18. The price that buyers pay after the tax is imposed is

Accepted Answer

A)   $8.
B)   $10.
C)   $16.
D)   $24.E) A) and D)
F) None of the above

Question 3

Which of the following is correct? Price controls

Accepted Answer

A)   always help those they are designed to help.
B)   never help those they are designed to help.
C)   often hurt those they are designed to help.
D)   always hurt those they are designed to help.E) C) and D)
F) A) and B)

Question 4

Scenario 6-2
Suppose demand for a product is given by the equation  and supply for the product is given by the equation 
-Refer to Scenario 6-2. Suppose the government sets a price floor at $13 for this product. Initially, is this price floor binding? Suppose that for some reason demand were to decrease to  Would the $13 price floor be binding after the shift in the demand curve? If so, what is the size of the resulting shortage/surplus?

Accepted Answer

Initially the price floor is not binding...

Question 5

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.E) A) and B)
F) B) and C)

Question 6

Figure 6-18
The vertical distance between points A and B represents the tax in the market. 
-Refer to Figure 6-18. The per-unit burden of the tax on sellers is

Accepted Answer

A)   $6.
B)   $8.
C)   $10.
D)   $14.E) A) and C)
F) A) and B)

Question 7

A tax burden falls more heavily on the side of the market that

Accepted Answer

A)   has a fewer number of participants.
B)   is more inelastic.
C)   is closer to unit elastic.
D)   is less inelastic.E) A) and B)
F) All of the above

Question 8

Figure 6-6 
-Refer to Figure 6-6. Which of the following statements is not correct?

Accepted Answer

A)   A price ceiling set at $6 would be binding, but a price ceiling set at $12 would not be binding.
B)   A price floor set at $14 would be binding, but a price floor set at $8 would not be binding.
C)   A price ceiling set at $9 would result in a shortage.
D)   A price floor set at $6 would result in a shortage.E) A) and B)
F) B) and D)

Question 9

Figure 6-27
This figure shows the market demand and market supply curves for good Z. 
-Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)   $16
B)   between $16 and $20
C)   between $20 and $22
D)   $22E) C) and D)
F) B) and C)

Question 10

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A)   buyers will bear a greater burden of the tax than the sellers.
B)   sellers will bear a greater burden of the tax than the buyers.
C)   buyers and sellers are likely to share the burden of the tax equally.
D)   buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.E) B) and C)
F) A) and D)

Question 11

When a tax is placed on the buyers of lemonade, the

Accepted Answer

A)   sellers bear the entire burden of the tax.
B)   buyers bear the entire burden of the tax.
C)   burden of the tax will be always be equally divided between the buyers and the sellers.
D)   burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.E) A) and D)
F) C) and D)

Question 12

A tax on sellers shifts the supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

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

Question 14

Figure 6-24 
-Refer to Figure 6-24. What is the amount of the tax per unit?

Accepted Answer

A)   $8
B)   $6
C)   $4
D)   $2E) A) and B)
F) All of the above

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Minimum-wage laws dictate

Accepted Answer

A)   the exact wage that firms must pay workers.
B)   a maximum wage that firms may pay workers.
C)   a minimum wage that firms may pay workers.
D)   both a minimum wage and a maximum wage that firms may pay workers.E) All of the above
F) A) and D)

Question 17

Figure 6-28 
-Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)   Buyers and sellers will share the burden of the tax equally.
B)   Buyers will bear more of the burden of the tax than sellers.
C)   Sellers will bear more of the burden of the tax than buyers.
D)   Any of the above is possible in this market.E) C) and D)
F) B) and D)

Question 18

In the housing market, supply and demand are

Accepted Answer

A)   more elastic in the short run than in the long run, and so rent control leads to a larger shortage of apartments in the short run than in the long run.
B)   more elastic in the short run than in the long run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.
C)   more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the short run than in the long run.
D)   more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.E) All of the above
F) None of the above

Question 19

Figure 6-3
Panel a)  Panel b) 
  
-Refer to Figure 6-3. In panel b) , there will be

Accepted Answer

A)   a shortage.
B)   equilibrium in the market.
C)   a surplus.
D)   lines of people waiting to buy the good.E) A) and C)
F) All of the above

Question 20

The quantity sold in a market will increase if the government

Accepted Answer

A)   decreases a binding price floor in that market.
B)   decreases a binding price ceiling in that market.
C)   increases a tax on the good sold in that market.
D)   More than one of the above is correct.E) All of the above
F) A) and C)

Exam 6: Supply, Demand, and Government Policies

When a tax is placed on the buyers of lemonade, the

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

Correct Answer
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Minimum-wage laws dictate

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Which of the following is correct? Price controls

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Figure 6-6 -Refer to Figure 6-6. Which of the following statements is not correct?

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A tax on the buyers of sofas

Correct Answer
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Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Correct Answer
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Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

Correct Answer
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A tax burden falls more heavily on the side of the market that

Correct Answer
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In the housing market, supply and demand are

Correct Answer
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Initially the price floor is not binding...
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Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. In panel b) , there will be

Correct Answer
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Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The per-unit burden of the tax on sellers is

Correct Answer
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The quantity sold in a market will increase if the government

Correct Answer
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A tax on sellers shifts the supply curve to the left.

Correct Answer
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Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The price that buyers pay after the tax is imposed is

Correct Answer
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If a tax is levied on the sellers of a product, then the demand curve will

Correct Answer
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Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Correct Answer
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Figure 6-24 -Refer to Figure 6-24. What is the amount of the tax per unit?

Correct Answer
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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?

Correct Answer
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Exam 6: Supply, Demand, and Government Policies

When a tax is placed on the buyers of lemonade, the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Minimum-wage laws dictate

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Which of the following is correct? Price controls

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Figure 6-6 -Refer to Figure 6-6. Which of the following statements is not correct?

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A tax on the buyers of sofas

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Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Correct AnswerverifiedShow Answer

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

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A tax burden falls more heavily on the side of the market that

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In the housing market, supply and demand are

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Correct AnswerverifiedInitially the price floor is not binding...View AnswerShow Answer

Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. In panel b) , there will be

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Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The per-unit burden of the tax on sellers is

Correct AnswerverifiedShow Answer

The quantity sold in a market will increase if the government

Correct AnswerverifiedShow Answer

A tax on sellers shifts the supply curve to the left.

Correct AnswerverifiedShow Answer

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The price that buyers pay after the tax is imposed is

Correct AnswerverifiedShow Answer

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

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Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Correct AnswerverifiedShow Answer

Figure 6-24 -Refer to Figure 6-24. What is the amount of the tax per unit?

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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?

Correct AnswerverifiedShow Answer

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Initially the price floor is not binding...
View Answer

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