Question 1

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

Accepted Answer

A)   shift up.
B)   shift down.
C)   become flatter.
D)   not shift.E) None of the above
F) All of the above

Question 2

Table 6-2
 
-Refer to Table 6-2. A price ceiling set at $5 will

Accepted Answer

A)   be binding and will result in a shortage of 50 units.
B)   be binding and will result in a shortage of 250 units.
C)   be binding and will result in a shortage of 300 units.
D)   not be binding.E) None of the above
F) C) and D)

Question 3

Suppose that in a particular market, the demand curve is highly elastic, and the supply 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) A) and B)
F) None of the above

Question 4

Figure 6-23
 
-Refer to Figure 6-23. How much tax revenue does this tax produce for the government?

Accepted Answer

A)   $18.
B)   $30.
C)   $6.
D)   $36.E) None of the above
F) C) and D)

Question 5

Figure 6-21 
-Refer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax in the same amount per unit as shown in the graph) . Relative to the tax on sellers, the tax on buyers would result in

Accepted Answer

A)   buyers bearing a larger share of the tax burden.
B)   sellers bearing a smaller share of the tax burden.
C)   the same amount of tax revenue for the government.
D)   Both a)  and b)  are correct.E) A) and C)
F) All of the above

Question 6

Using the graph shown, in which the vertical distance between points A and B represents the tax in the market, answer the following questions.
a. What was the equilibrium price and quantity in this market before the tax?
b. What is the amount of the tax?
c. How much of the tax will the buyers pay?
d. How much of the tax will the sellers pay?
e. How much will the buyer pay for the product after the tax is imposed?
f. How much will the seller receive after the tax is imposed?
g. As a result of the tax, what has happened to the level of market activity?

Accepted Answer

a. $8; 8,000 units
b. $5
c. $3...

Question 7

Figure 6-11 
-Refer to Figure 6-11. If the government imposes a price floor at $10, it would be

Accepted Answer

A)   binding if market demand is Demand A or Demand B.
B)   non-binding if market demand is Demand A or Demand B.
C)   binding if market demand is Demand A and non-binding if market demand is Demand B.
D)   non-binding if market demand is Demand A and binding if market demand is Demand B.E) A) and B)
F) B) and C)

Question 8

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Accepted Answer

A)   a binding price floor
B)   a binding price ceiling
C)   a tax on the good
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 9

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 B)

Question 10

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

Accepted Answer

A)   1776.
B)   1812.
C)   1938.
D)   1975.E) B) and C)
F) A) and C)

Question 11

The federal government uses the revenue from the FICA Federal Insurance Contribution Act)  tax to pay for

Accepted Answer

A)   unemployment compensation.
B)   the salaries of members of Congress.
C)   Social Security and Medicare.
D)   housing subsidies for low-income people.E) B) and D)
F) A) and D)

Question 12

Figure 6-25 
-Refer to Figure 6-25. The amount of the tax per unit is

Accepted Answer

A)   $1.
B)   $1.50.
C)   $2.
D)   $3.E) None of the above
F) B) and D)

Question 13

You have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia. George, who is one of your advisors, says that the best way to avoid a shortage of oranges is to take no action at all. Charles, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop. Otto, a third advisor, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Which of your three advisors is most likely to have studied economics?

Accepted Answer

A)   George
B)   Charles
C)   Otto
D)   Apparently, all three advisors have studied economics, but their views on positive economics are different.E) A) and B)
F) A) and C)

Question 14

The rationing mechanisms that develop under binding price floors are usually efficient.

Accepted Answer

A) True 
 B)False

Question 15

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

Question 16

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 17

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 D)
F) A) and B)

Question 18

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) C) and D)
F) A) and C)

Question 19

When OPEC raised the price of crude oil in the 1970s, it caused the

Accepted Answer

A)   supply of gasoline to decrease.
B)   quantity of gasoline demanded to decrease.
C)   equilibrium price of gasoline to increase.
D)   All of the above are correct.E) A) and D)
F) All of the above

Question 20

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a i)  binding price ceiling.
Ii)  non-binding price ceiling.
Iii)  binding price floor.
Iv)  non-binding price floor.

Accepted Answer

A)   i)  only
B)   ii)  only
C)   i)  and iv)  only
D)   ii)  and iii)  onlyE) None of the above
F) A) and B)

Exam 6: Supply, Demand, and Government Policies

When OPEC raised the price of crude oil in the 1970s, it caused the

Correct Answer
verified

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a i) binding price ceiling. Ii) non-binding price ceiling. Iii) binding price floor. Iv) non-binding price floor.

Correct Answer
verified

Figure 6-23 -Refer to Figure 6-23. How much tax revenue does this tax produce for the government?

Correct Answer
verified

Correct Answer
verified
a. $8; 8,000 units
b. $5
c. $3...
View Answer

Correct Answer
verified

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

Correct Answer
verified

Table 6-2 -Refer to Table 6-2. A price ceiling set at $5 will

Correct Answer
verified

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Correct Answer
verified

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

Correct Answer
verified

The rationing mechanisms that develop under binding price floors are usually efficient.

Correct Answer
verified

Figure 6-25 -Refer to Figure 6-25. The amount of the tax per unit is

Correct Answer
verified

The federal government uses the revenue from the FICA Federal Insurance Contribution Act) tax to pay for

Correct Answer
verified

Figure 6-21 -Refer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax in the same amount per unit as shown in the graph) . Relative to the tax on sellers, the tax on buyers would result in

Correct Answer
verified

Figure 6-11 -Refer to Figure 6-11. If the government imposes a price floor at $10, it would be

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

When OPEC raised the price of crude oil in the 1970s, it caused the

Correct AnswerverifiedShow Answer

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market could be an example of a i) binding price ceiling. Ii) non-binding price ceiling. Iii) binding price floor. Iv) non-binding price floor.

Correct AnswerverifiedShow Answer

Figure 6-23 -Refer to Figure 6-23. How much tax revenue does this tax produce for the government?

Correct AnswerverifiedShow Answer

Correct Answerverifieda. $8; 8,000 unitsb. $5c. $3...View AnswerShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 6-2 -Refer to Table 6-2. A price ceiling set at $5 will

Correct AnswerverifiedShow Answer

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Long lines and discrimination are examples of rationing methods that may naturally develop in response to a binding price ceiling.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The rationing mechanisms that develop under binding price floors are usually efficient.

Correct AnswerverifiedShow Answer

Figure 6-25 -Refer to Figure 6-25. The amount of the tax per unit is

Correct AnswerverifiedShow Answer

The federal government uses the revenue from the FICA Federal Insurance Contribution Act) tax to pay for

Correct AnswerverifiedShow Answer

Figure 6-21 -Refer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax in the same amount per unit as shown in the graph) . Relative to the tax on sellers, the tax on buyers would result in

Correct AnswerverifiedShow Answer

Figure 6-11 -Refer to Figure 6-11. If the government imposes a price floor at $10, it would be

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. $8; 8,000 units
b. $5
c. $3...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified