Question 1

Figure 6-9
 
-Refer to Figure 6-9.A price floor set at

Accepted Answer

A)   $4 will be binding and will result in a shortage of 3 units.
B)   $4 will be binding and will result in a shortage of 6 units.
C)   $7 will be binding and will result in a surplus of 6 units.
D)   $7 will be binding and will result in a surplus of 12 units.E) B) and D)
F) A) and B)

Question 2

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

Accepted Answer

A)   upward by exactly $2.00.
B)   upward by less than $2.00.
C)   downward by exactly $2.00.
D)   downward by less than $2.00.E) A) and D)
F) A) and B)

Question 3

If the demand curve is very inelastic and the supply curve is very elastic in a market,then the sellers will bear a greater burden of a tax imposed on the market,even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 4

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 shortage of 40 units of the good.
B)   binding and creates a surplus of 50 units of the good.
C)   binding and creates a surplus of 90 units of the good.
D)   not binding but creates a surplus of 40 units of the good.E) None of the above
F) A) and C)

Question 5

Economists generally believe that rent control is

Accepted Answer

A)   an efficient and fair way to help the poor.
B)   inefficient but the best available means of solving a serious social problem.
C)   a highly inefficient way to help the poor raise their standard of living.
D)   an efficient way to allocate housing, but not a good way to help the poor.E) A) and B)
F) None of the above

Question 6

Figure 6-17
 
-Refer to Figure 6-17.Acme,Inc.is a seller of the good.Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government.Acme is left with how much money?

Accepted Answer

A)   $8.00
B)   $9.00
C)   $10.50
D)   $12.00E) B) and C)
F) A) and D)

Question 7

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) B) and C)

Question 8

Suppose that a tax is placed on books.If the buyers pay the majority of the tax,then we know that the

Accepted Answer

A)   demand is more inelastic than the supply.
B)   supply is more inelastic than the demand.
C)   government has required that buyers remit the tax payments.
D)   government has required that sellers remit the tax payments.E) All of the above
F) None of the above

Question 9

When a tax is placed on the sellers of cell phones,the size of the cell phone market

Accepted Answer

A)   and the price paid by buyers both increase.
B)   increases, but the price paid by buyers decreases.
C)   decreases, but the price paid by buyers increases.
D)   and the price paid by buyers both decrease.E) A) and B)
F) A) and C)

Question 10

Figure 6-19
 
-Refer to Figure 6-19.The price paid by buyers after the tax is imposed is

Accepted Answer

A)   $3.
B)   $4.
C)   $5.
D)   $7.E) B) and D)
F) None of the above

Question 11

If the government wants to reduce smoking,it should impose a tax on

Accepted Answer

A)   buyers of cigarettes.
B)   sellers of cigarettes.
C)   either buyers or sellers of cigarettes.
D)   whichever side of the market is less elastic.E) All of the above
F) None of the above

Question 12

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

Accepted Answer

A)   Buyers bear the entire burden of the tax.
B)   Sellers bear the entire burden of the tax.
C)   Buyers and sellers share the burden of the tax.
D)   We have to know whether it is the buyers or the sellers that are required to pay the tax to the government in order to make this determination.E) All of the above
F) B) and C)

Question 13

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Accepted Answer

A) True 
 B)False

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

A legal maximum on the price at which a good can be sold is called a price

Accepted Answer

A)   floor.
B)   subsidy.
C)   support.
D)   ceiling.E) None of the above
F) All of the above

Question 16

A $0.50 tax levied on the buyers of pomegranate juice will shift the demand curve

Accepted Answer

A)   upward by exactly $0.50.
B)   upward by less than $0.50.
C)   downward by exactly $0.50.
D)   downward by less than $0.50.E) A) and B)
F) A) and C)

Question 17

Suppose the government wants to encourage Americans to exercise more,so it imposes a binding price ceiling on the market for in-home treadmills.As a result,

Accepted Answer

A)   the demand for treadmills will increase.
B)   the supply of treadmills will decrease.
C)   a shortage of treadmills will develop.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 18

Figure 6-15
 
-Refer to Figure 6-15.Suppose a tax of $2 per unit is imposed on this market.Which of the following is correct?

Accepted Answer

A)   One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers.
B)   One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers.
C)   One-half of the burden of the tax will fall on buyers ,and one-half of the burden of the tax will fall on sellers.
D)   Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers.E) All of the above
F) C) and D)

Question 19

Advocates of the minimum wage admit that it has some adverse effects,but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 6: Supply, Demand, And Government Policies.

Suppose the government wants to encourage Americans to exercise more,so it imposes a binding price ceiling on the market for in-home treadmills.As a result,

Correct AnswerverifiedShow Answer

Suppose that a tax is placed on books.If the buyers pay the majority of the tax,then we know that the

Correct AnswerverifiedShow Answer

Advocates of the minimum wage admit that it has some adverse effects,but they believe that these effects are small and that a higher minimum wage makes the poor better off.

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If the government wants to reduce smoking,it should impose a tax on

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Figure 6-9 -Refer to Figure 6-9.A price floor set at

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A legal maximum on the price at which a good can be sold is called a price

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

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Economists generally believe that rent control is

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

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Figure 6-19 -Refer to Figure 6-19.The price paid by buyers after the tax is imposed is

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A $0.50 tax levied on the buyers of pomegranate juice will shift the demand curve

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When a tax is placed on the sellers of cell phones,the size of the cell phone market

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

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Figure 6-15 -Refer to Figure 6-15.Suppose a tax of $2 per unit is imposed on this market.Which of the following is correct?

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

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A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

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Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

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The rationing mechanisms that develop under binding price ceilings are usually inefficient.

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Figure 6-17 -Refer to Figure 6-17.Acme,Inc.is a seller of the good.Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government.Acme is left with how much money?

Correct AnswerverifiedShow Answer

If the demand curve is very inelastic and the supply curve is very elastic in a market,then the sellers will bear a greater burden of a tax imposed on the market,even if the tax is imposed on the buyers.

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