Question 1

The imposition of a binding price ceiling on a market causes quantity demanded to be

Accepted Answer

A)  greater than quantity supplied. 
B)  less than quantity supplied. 
C)  equal to quantity supplied. 
D)  Both a) and b) are possible. 
A)  greater than quantity supplied. 
B)  less than quantity supplied. 
C)  equal to quantity supplied. 
D)  Both a) and b) are possible. A

Question 2

A price floor will be binding only if it is set

Accepted Answer

A)  equal to the equilibrium price. 
B)  above the equilibrium price. 
C)  below the equilibrium price. 
D)  either above or below the equilibrium price. 
A)  equal to the equilibrium price. 
B)  above the equilibrium price. 
C)  below the equilibrium price. 
D)  either above or below the equilibrium price. B

Question 3

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Accepted Answer

The tax burden falls more heavily on the side of the market that is more inelastic.

Question 4

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Accepted Answer

A) True 
 B)False

Question 5

Price controls often hurt those they are trying to help.

Accepted Answer

A) True 
 B)False

Question 6

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell,then

Accepted Answer

A)  the supply curve for mopeds shifts downward by $200. 
B)  sellers of mopeds receive $200 less per mopeds than they were receiving before the tax. 
C)  buyers of mopeds are unaffected by the tax. 
D)  None of the above is correct. 
A)  the supply curve for mopeds shifts downward by $200. 
B)  sellers of mopeds receive $200 less per mopeds than they were receiving before the tax. 
C)  buyers of mopeds are unaffected by the tax. 
D)  None of the above is correct.

Question 7

Which of the following is not a function of prices in a market system?

Accepted Answer

A)  Prices have the crucial job of balancing supply and demand. 
B)  Prices send signals to buyers and sellers to help them make rational economic decisions. 
C)  Prices coordinate economic activity. 
D)  Prices ensure an equal distribution of goods and services among consumers. 
A)  Prices have the crucial job of balancing supply and demand. 
B)  Prices send signals to buyers and sellers to help them make rational economic decisions. 
C)  Prices coordinate economic activity. 
D)  Prices ensure an equal distribution of goods and services among consumers.

Question 8

The quantity sold in a market will decrease if the government

Accepted Answer

A)  decreases a binding price floor in that market. 
B)  increases a binding price ceiling in that market. 
C)  increases a tax on the good sold in that market. 
D)  All of the above are correct. 
A)  decreases a binding price floor in that market. 
B)  increases a binding price ceiling in that market. 
C)  increases a tax on the good sold in that market. 
D)  All of the above are correct.

Question 9

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. 
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.

Question 10

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Accepted Answer

A) True 
 B)False

Question 11

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 $4 is imposed. 
B)  a price ceiling of $5 is imposed. 
C)  a price floor of $3 is imposed. 
D)  All of the above are correct. 
A)  a price ceiling of $4 is imposed. 
B)  a price ceiling of $5 is imposed. 
C)  a price floor of $3 is imposed. 
D)  All of the above are correct.

Question 12

Which of the following is not a short-run effect of rent control on the housing market?

Accepted Answer

A)  reduced rents 
B)  a large shortage 
C)  a small increase in quantity demanded 
D)  a small decrease in quantity supplied 
A)  reduced rents 
B)  a large shortage 
C)  a small increase in quantity demanded 
D)  a small decrease in quantity supplied

Question 13

Workers with high skills and much experience are not typically affected by the minimum wage.

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

Suppose the government has imposed a price floor on cellular phones.Which of the following events could transform the price floor from one that is binding to one that is not binding?

Accepted Answer

A)  Cellular phones become less popular. 
B)  Traditional land line phones become more expensive. 
C)  The components used to produce cellular phones become less expensive. 
D)  Firms expect the price of cellular phones to fall in the future. 
A)  Cellular phones become less popular. 
B)  Traditional land line phones become more expensive. 
C)  The components used to produce cellular phones become less expensive. 
D)  Firms expect the price of cellular phones to fall in the future.

Question 16

You receive a paycheck from your employer,and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare)tax.Which of the following statements is correct?

Accepted Answer

A)  The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee. 
B)  Your employer is required by law to pay $300 to match the $300 deducted from your check. 
C)  This type of tax is an example of a payroll tax. 
D)  All of the above are correct. 
A)  The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee. 
B)  Your employer is required by law to pay $300 to match the $300 deducted from your check. 
C)  This type of tax is an example of a payroll tax. 
D)  All of the above are correct.

Question 17

Figure 6-17
  
-Refer to Figure 6-17.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. 
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.

Question 18

A tax on sellers shifts the supply curve but not the demand curve.

Accepted Answer

A) True 
 B)False

Question 19

Figure 6-14
The vertical distance between points A and B represents the tax in the market.
  
-Refer to Figure 6-14.The price that buyers pay after the tax is imposed is

Accepted Answer

A)  $8. 
B)  $10. 
C)  $16. 
D)  $24. 
A)  $8. 
B)  $10. 
C)  $16. 
D)  $24.

Question 20

Figure 6-27
  
-Refer to Figure 6-27.If the government places a $2 tax in the market,the buyer pays $4.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, And Government Policies.

The imposition of a binding price ceiling on a market causes quantity demanded to be

A price floor will be binding only if it is set

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Price controls often hurt those they are trying to help.

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell,then

Which of the following is not a function of prices in a market system?

The quantity sold in a market will decrease if the government

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

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

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

Which of the following is not a short-run effect of rent control on the housing market?

Workers with high skills and much experience are not typically affected by the minimum wage.

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.

Suppose the government has imposed a price floor on cellular phones.Which of the following events could transform the price floor from one that is binding to one that is not binding?

You receive a paycheck from your employer,and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare)tax.Which of the following statements is correct?

Figure 6-17 -Refer to Figure 6-17.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

A tax on sellers shifts the supply curve but not the demand curve.

Figure 6-14 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-14.The price that buyers pay after the tax is imposed is

Figure 6-27 -Refer to Figure 6-27.If the government places a $2 tax in the market,the buyer pays $4.

Ten Principles of Economics.

Thinking Like an Economist.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Externalities.

Public Goods and Common Resources.

The Design of the Tax System.

The Costs of Production.

Firms in Competitive Markets.

Monopoly.

Monopolistic Competition.

Oligopoly.

The Market For the Factors of Production.

Earnings and Discrimination.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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