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Exam 6: Supply,demand,and Government Policies

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Question 111

Multiple Choice

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A $0.10 tax levied on the sellers of chocolate bars will cause the

A) supply curve for chocolate bars to shift down by $0.10.
B) supply curve for chocolate bars to shift up by $0.10.
C) demand curve for chocolate bars to shift down by $0.10.
D) demand curve for chocolate bars to shift up by $0.10.

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

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Question 112

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A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

A) True
B) False

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Question 113

Multiple Choice

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In 1990,Congress passed a new luxury tax on items such as yachts,private airplanes,furs,jewelry,and expensive cars.The goal of the tax was to

Table 6-1 -Refer to Table 6-1.Suppose the government imposes a price floor of $5 on this market.What will be the size of the surplus in this market?

Figure 6-21 -Refer to Figure 6-22.The burden of the tax on sellers is

When a binding price ceiling is imposed on a market for a good,some people who want to buy the good cannot do so.

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

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -The following table shows the demand and supply schedules in a particular market. If the government sets a price floor $2 above the equilibrium price,how many units will be sold in this market?

A tax of $1 on sellers always increases the equilibrium price by $1.

Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

The tax incidence depends on whether the tax is levied on buyers or sellers.

Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

When a free market for a good reaches equilibrium,anyone who is willing and able to sell at the market price can sell the good.

Figure 6-14 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-14.The per-unit burden of the tax on sellers is

Figure 6-21 -Refer to Figure 6-22.The burden of the tax on buyers is

Tax incidence

Table 6-4 The following table contains the demand schedule and supply schedule for a market for a particular good.Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market. -Refer to Table 6-4.Following the imposition of a price floor $3 above the equilibrium price,irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor.The resulting shortage is

Which of the following was not a result of the luxury tax imposed by Congress in 1990?

Which of the following is correct?

A tax on buyers shifts the demand curve and the supply curve.