Question 1

Figure 6-24 
-Refer to Figure 6-24. The per-unit burden of the tax on buyers of the good is

Accepted Answer

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

Question 2

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Accepted Answer

A)  Improvements in production technology reduce the costs of producing laptop computers.
B)  The number of firms selling laptop computers decreases.
C)  Consumers' income decreases, and laptop computers are a normal good.
D)  The number of consumers buying laptop computers decreases.E) A) and B)
F) A) and C)

Question 3

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Accepted Answer

A) True 
 B)False

Question 4

Figure 6-2 
-Refer to Figure 6-2. The price ceiling

Accepted Answer

A)  causes a shortage of 45 units of the good.
B)  makes it necessary for sellers to ration the good.
C)  is not binding because it is set below the equilibrium price.
D)  causes a shortage of 40 units of the good.E) None of the above
F) A) and B)

Question 5

Minimum-wage laws dictate the

Accepted Answer

A)  average price employers must pay for labor.
B)  highest price employers may pay for labor.
C)  lowest price employers may pay for labor.
D)  the highest and lowest prices employers may pay for labor.E) C) and D)
F) A) and B)

Question 6

Figure 6-20 
-Refer to Figure 6-20. Suppose a tax of $5 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 will.
C)  Sellers will bear more of the burden of the tax than buyers will.
D)  Any of the above is possible.E) A) and D)
F) A) and C)

Question 7

Figure 6-5 
-Refer to Figure 6-5. If the solid 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) B) and C)
F) A) and D)

Question 8

The price paid by buyers in a market will decrease if the government

Accepted Answer

A)  imposes 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)  decreases a binding price floor in that market.E) None of the above
F) C) and D)

Question 9

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

Accepted Answer

A)  increase, and the price received by sellers will increase.
B)  increase, and the price received by sellers will not change.
C)  not change, and the price received by sellers will increase.
D)  not change, and the price received by sellers will not change.E) A) and B)
F) All of the above

Question 10

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 buyers is

Accepted Answer

A)  $6.
B)  $8.
C)  $14.
D)  $24.E) A) and C)
F) A) and B)

Question 11

Table 6-5 
-Refer to Table 6-5. Which of the following price ceilings would be binding in this market?

Accepted Answer

A)  $3
B)  $6
C)  $9
D)  None of the above price ceilings would be binding.E) C) and D)
F) B) and C)

Question 12

Figure 6-23 
-If a tax is levied on the buyers of dog food, then

Accepted Answer

A)  buyers will bear the entire burden of the tax.
B)  sellers will bear the entire burden of the tax.
C)  buyers and sellers will share the burden of the tax.
D)  the government will bear the entire burden of the tax.E) A) and D)
F) B) and C)

Question 13

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

Accepted Answer

A)  nonbinding price floor on gasoline to become binding.
B)  binding price floor on gasoline to become nonbinding.
C)  nonbinding price ceiling on gasoline to become binding.
D)  binding price ceiling on gasoline to become nonbinding.E) C) and D)
F) B) and C)

Question 14

Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  demand for gasoline to increase.
B)  demand for gasoline to decrease.
C)  supply of gasoline to increase.
D)  supply of gasoline to decrease.E) B) and D)
F) B) and C)

Question 17

All buyers benefit from a binding price ceiling.

Accepted Answer

A) True 
 B)False

Question 18

Figure 6-24 
-Refer to Figure 6-24. Suppose sellers, rather than buyers, were required to pay this tax (in the same amount per unit as shown in the graph) . Relative to the tax on buyers, the tax on sellers would result in

Accepted Answer

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

Question 19

​Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

Accepted Answer

A)  ​a government study that shows that consuming chocolate increases the incidence of cancer.
B)  ​a large increase in the size of the cocoa bean crop; cocoa beans are used to produce chocolate.
C)  ​South American cocoa bean producers refuse to ship to chocolate producers in the US.
D)  ​a sharp drop in consumer income; chocolate is a normal good.E) A) and D)
F) A) and C)

Question 20

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

Accepted Answer

A)  decrease by less than $500.
B)  decrease by exactly $500.
C)  decrease by more than $500.
D)  increase by an indeterminate amount.E) B) and C)
F) A) and B)

Exam 6: Supply, Demand, and Government Policies

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

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Figure 6-2 -Refer to Figure 6-2. The price ceiling

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Figure 6-24 -Refer to Figure 6-24. Suppose sellers, rather than buyers, were required to pay this tax (in the same amount per unit as shown in the graph) . Relative to the tax on buyers, the tax on sellers would result in

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Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

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If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

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Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

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

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Table 6-5 -Refer to Table 6-5. Which of the following price ceilings would be binding in this market?

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

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If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

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

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The price paid by buyers in a market will decrease if the government

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Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.

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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 buyers is

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All buyers benefit from a binding price ceiling.

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Figure 6-23 -If a tax is levied on the buyers of dog food, then

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Figure 6-24 -Refer to Figure 6-24. The per-unit burden of the tax on buyers of the good is

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

Correct AnswerverifiedShow Answer

Minimum-wage laws dictate the

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​Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

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Consider the US market for chocolate, a market in which the government has imposed a price ceiling. Which of the following events could convert the price ceiling from a nonbinding to a binding price ceiling?

Correct Answer
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