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In a particular market, market demand is given by the equation In a particular market, market demand is given by the equation and market supply is given by the equation Suppose a per-unit tax is imposed that reduces the number of units bought and sold in the market to 25 units. What is the size of the tax, and who bears the greater burden of the tax, buyers or sellers? and market supply is given by the equation In a particular market, market demand is given by the equation and market supply is given by the equation Suppose a per-unit tax is imposed that reduces the number of units bought and sold in the market to 25 units. What is the size of the tax, and who bears the greater burden of the tax, buyers or sellers? Suppose a per-unit tax is imposed that reduces the number of units bought and sold in the market to 25 units. What is the size of the tax, and who bears the greater burden of the tax, buyers or sellers?

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If the number of transactions falls to 2...

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A tax imposed on the buyers of a good will lower the


A) price paid by buyers and lower the equilibrium quantity.
B) price paid by buyers and raise the equilibrium quantity.
C) effective price received by sellers and lower the equilibrium quantity.
D) effective price received by sellers and raise the equilibrium quantity.

E) All of the above
F) None of the above

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Figure 6-6 Figure 6-6 -Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism? A) a price ceiling set at $8 B) a price ceiling set at $6 C) a price floor set at $8 D) a price floor set at $6 -Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?


A) a price ceiling set at $8
B) a price ceiling set at $6
C) a price floor set at $8
D) a price floor set at $6

E) B) and D)
F) A) and C)

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Table 6-6 Table 6-6 -Refer to Table 6-6. In this market, over what range of prices would a price ceiling set by the government be binding? -Refer to Table 6-6. In this market, over what range of prices would a price ceiling set by the government be binding?

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A price ceiling must be set be...

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A binding minimum wage creates a surplus of labor.

A) True
B) False

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


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

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Economic policies often have effects that their architects did not intend or anticipate.

A) True
B) False

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Does a binding price ceiling result in a shortage or a surplus in the market?

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A binding price ceil...

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If the supply curve is more price elastic than the demand curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

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The buyers will bear...

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The incidence of a tax falls more heavily on


A) consumers than producers if demand is more inelastic than supply.
B) producers than consumers if supply is more inelastic than demand.
C) consumers than producers if supply is more elastic than demand.
D) All of the above are correct.

E) All of the above
F) C) and D)

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Figure 6-5 Figure 6-5 -Refer to Figure 6-5. If government imposes a price floor at $9, then the price floor causes A) quantity demanded to decrease by 40 units. B) quantity supplied to increase by 20 units. C) a surplus of 60 units. D) All of the above are correct. -Refer to Figure 6-5. If government imposes a price floor at $9, then the price floor causes


A) quantity demanded to decrease by 40 units.
B) quantity supplied to increase by 20 units.
C) a surplus of 60 units.
D) All of the above are correct.

E) B) and D)
F) A) and B)

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Scenario 6-1 Suppose that demand in the market for good X is given by the equation 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 -Refer to Scenario 6-1. If the government set a price floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus? and that supply in the market for good X is given by the equation 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 -Refer to Scenario 6-1. If the government set a price floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus? -Refer to Scenario 6-1. If the government set a price floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

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A price floor set at...

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Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

A) True
B) False

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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?


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

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Figure 6-23 Figure 6-23 -Refer to Figure 6-23. Which of the following is correct? A) The entire burden of the tax falls on sellers, and none of the burden of the tax falls on buyers. B) One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers. C) One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers. D) Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers. -Refer to Figure 6-23. Which of the following is correct?


A) The entire burden of the tax falls on sellers, and none of the burden of the tax falls on buyers.
B) One-third of the burden of the tax falls on buyers, and two-thirds of the burden of the tax falls on sellers.
C) One-half of the burden of the tax falls on buyers, and one-half of the burden of the tax falls on sellers.
D) Two-thirds of the burden of the tax falls on buyers, and one-third of the burden of the tax falls on sellers.

E) B) and C)
F) C) and D)

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Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?


A) an accumulation of dirt in the interior of rental cars
B) poor engine maintenance in rental cars
C) free gasoline given to people as an incentive to a rent a car
D) slow replacement of old rental cars with newer ones

E) A) and B)
F) All of the above

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Buyers and sellers always share the burden of a tax equally.

A) True
B) False

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Figure 6-11 Figure 6-11 -Refer to Figure 6-11. If the government imposes a price floor at $10, it would be 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 c. D) non-binding if market demand is Demand A and binding if market demand is Demand B. -Refer to Figure 6-11. If the government imposes a price floor at $10, it would be


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 c.
D) non-binding if market demand is Demand A and binding if market demand is Demand B.

E) All of the above
F) C) and D)

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Figure 6-26 Figure 6-26 -Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is A) $16. B) $8. C) $14. D) $12. -Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is


A) $16.
B) $8.
C) $14.
D) $12.

E) A) and B)
F) B) and C)

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A price floor is binding when it is set


A) above the equilibrium price, causing a shortage.
B) above the equilibrium price, causing a surplus.
C) below the equilibrium price, causing a shortage.
D) below the equilibrium price, causing a surplus.

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

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