Question 1

A tax on sellers will shift the

Accepted Answer

A)   demand curve upward by the amount of the tax.
B)   demand curve downward by the amount of the tax.
C)   supply curve upward by the amount of the tax.
D)   supply curve downward by the amount of the tax.E) B) and C)
F) A) and C)

Question 2

A tax on sellers increases the quantity of the good sold in the market.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is correct?

Accepted Answer

A)   A tax levied on buyers will never be partially paid by sellers.
B)   Who actually pays a tax depends on the price elasticities of supply and demand.
C)   Government can decide who actually pays a tax.
D)   A tax levied on sellers always will be passed on completely to buyers.E) A) and B)
F) None of the above

Question 4

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

Accepted Answer

A) True 
 B)False

Question 5

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 6

If the demand curve is more price elastic than the supply curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.

Accepted Answer

When the demand curve is more elastic th...

Question 7

Which of the following is not correct? In a 2006 survey of Ph.D. economists,

Accepted Answer

A)   47 percent favored eliminating the minimum wage.
B)   14 percent would maintain the minimum wage at its current level.
C)   38 percent would increase the minimum wage.
D)   10 percent would decrease the minimum wage.E) A) and D)
F) A) and C)

Question 8

There are several criticisms of the minimum wage. Which of the following is not one of those criticisms? The minimum wage

Accepted Answer

A)   often hurts those people who it is intended to help.
B)   results in an excess supply of low-skilled labor.
C)   prevents some unskilled workers from getting needed on-the-job training.
D)   fails to raise the wage of any employed person.E) A) and D)
F) B) and D)

Question 9

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A)   a surplus in the market.
B)   a shortage in the market.
C)   a nonbinding price control.
D)   long lines of frustrated buyers.E) All of the above
F) A) and B)

Question 10

Figure 6-8 
-Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

Accepted Answer

A)   a price ceiling of $3 is imposed.
B)   a price ceiling of $5 is imposed.
C)   a price floor of $5 is imposed.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 11

If a price floor is not binding, then it will have no effect on the market.

Accepted Answer

A) True 
 B)False

Question 12

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) C) and D)

Question 13

If a nonbinding price ceiling is imposed on a market, then the

Accepted Answer

A)   quantity sold in the market will decrease.
B)   quantity sold in the market will stay the same.
C)   price in the market will increase.
D)   price in the market will decrease.E) A) and D)
F) A) and C)

Question 14

If a nonbinding price floor is imposed on a market, then the

Accepted Answer

A)   quantity sold in the market will decrease.
B)   quantity sold in the market will stay the same.
C)   price in the market will increase.
D)   price in the market will decrease.E) All of the above
F) A) and B)

Question 15

If a binding price ceiling is imposed on the baby formula market, then

Accepted Answer

A)   the quantity of baby formula demanded will increase.
B)   the quantity of baby formula supplied will decrease.
C)   a shortage of baby formula will develop.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 16

Figure 6-26 
-Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

Accepted Answer

A)   $8.
B)   $16.
C)   $14.
D)   $12.E) A) and B)
F) None of the above

Question 17

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) None of the above
F) B) and C)

Question 18

A binding minimum wage may not help all workers, but it does not hurt any workers.

Accepted Answer

A) True 
 B)False

Question 19

A tax imposed on the sellers 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.E) None of the above
F) A) and B)

Question 20

Long lines

Accepted Answer

A)   and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time.
B)   and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly.
C)   are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly.
D)   are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.E) All of the above
F) C) and D)

Exam 6: Supply, Demand, and Government Policies

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

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There are several criticisms of the minimum wage. Which of the following is not one of those criticisms? The minimum wage

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If a price floor is not binding, then it will have no effect on the market.

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A tax on sellers will shift the

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Which of the following statements is correct?

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If a nonbinding price floor is imposed on a market, then the

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Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

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Figure 6-26 -Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

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

Correct AnswerverifiedShow Answer

A binding minimum wage may not help all workers, but it does not hurt any workers.

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Figure 6-8 -Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

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Long lines

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The minimum wage

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If the demand curve is more price elastic than the supply curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.

Correct AnswerverifiedWhen the demand curve is more elastic th...View AnswerShow Answer

If a nonbinding price ceiling is imposed on a market, then the

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A tax on sellers increases the quantity of the good sold in the market.

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An outcome that can result from either a price ceiling or a price floor is

Correct AnswerverifiedShow Answer

Which of the following is not correct? In a 2006 survey of Ph.D. economists,

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

If a binding price ceiling is imposed on the baby formula market, then

Correct AnswerverifiedShow Answer

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When the demand curve is more elastic th...
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