Question 1

A price ceiling set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 2

Policymakers use taxes

Accepted Answer

A)   to raise revenue for public purposes but not to influence market outcomes.
B)   both to raise revenue for public purposes and to influence market outcomes.
C)   when they realize that price controls alone are insufficient to correct market inequities.
D)   only in those markets in which the burden of the tax falls clearly on the sellers.E) All of the above
F) C) and D)

Question 3

The burden of a luxury tax falls

Accepted Answer

A)   more on the rich than on the middle class.
B)   more on the poor than on the rich.
C)   more on the middle class than on the rich.
D)   equally on the rich,the middle class,and the poor.E) A) and C)
F) B) and D)

Question 4

Figure 6-20 
-Refer to Figure 6-20.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 D)
F) B) and C)

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

If the government levies a $1,000 tax per boat on sellers of boats,then the price paid by buyers of boats would

Accepted Answer

A)   increase by more than $1,000.
B)   increase by exactly $1,000.
C)   increase by less than $1,000.
D)   decrease by an indeterminate amount.E) A) and B)
F) A) and C)

Question 7

The goal of rent control is to

Accepted Answer

A)   facilitate controlled economic experiments in urban areas.
B)   help landlords by assuring them a low vacancy rate for their apartments.
C)   help the poor by assuring them an adequate supply of apartments.
D)   help the poor by making housing more affordable.E) All of the above
F) A) and B)

Question 8

Figure 6-1
 
-Refer to Figure 6-1.The price ceiling shown in panel (b)

Accepted Answer

A)   is not binding.
B)   creates a surplus.
C)   creates a shortage.
D)   Both a) and b) are correct.E) A) and B)
F) B) and C)

Question 9

One economist has argued that rent control is "the best way to destroy a city,other than bombing." Why would an economist say this?

Accepted Answer

A)   He fears that low rents will cause low-income people to move into the city,reducing the quality of life for other people.
B)   He fears that rent control will benefit landlords at the expense of tenants,increasing inequality in the city.
C)   He fears that rent controls will cause a construction boom,which will make the city crowded and more polluted.
D)   He fears that rent control will eliminate the incentive to maintain buildings,leading to a deterioration of the city.E) A) and B)
F) A) and C)

Question 10

Figure 6-16 
-Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)   $5
B)   between $5 and $10
C)   between $10 and $14
D)   $14E) A) and B)
F) B) and C)

Question 11

A tax burden falls more heavily on the side of the market that

Accepted Answer

A)   has a fewer number of participants.
B)   is more inelastic.
C)   is closer to unit elastic.
D)   is less inelastic.E) A) and D)
F) A) and C)

Question 12

Figure 6-3
 
-Refer to Figure 6-3.A binding price floor is shown in

Accepted Answer

A)   both panel (a) and panel (b) .
B)   panel (a) only.
C)   panel (b) only.
D)   neither panel (a) nor panel (b) .E) All of the above
F) A) and B)

Question 13

Figure 6-18 
-Refer to Figure 6-18.Suppose the same supply and demand curves apply,and a tax of the same amount per unit as shown here is imposed.Now,however,the buyers of the good,rather than the sellers,are required to pay the tax to the government.After the buyers pay the tax,relative to the case depicted in the figure,the burden on buyers will be

Accepted Answer

A)   larger,and the burden on sellers will be smaller.
B)   smaller,and the burden on sellers will be larger.
C)   the same,and the burden on sellers will be the same.
D)   The relative burdens in the two cases cannot be determined without further information.E) A) and D)
F) None of the above

Question 14

When a payroll tax is enacted,the wage received by workers

Accepted Answer

A)   falls,and the wage paid by firms rises.
B)   falls,and the wage paid by firms falls.
C)   rises,and the wage paid by firms falls.
D)   rises,and the wage paid by firms rises.E) C) and D)
F) B) and D)

Question 15

Buyers of a good bear the larger share of the tax burden when the (i) supply is more elastic than the demand for the product.
(ii) demand in more elastic than the supply for the product.
(iii) tax is placed on the sellers of the product.
(iv) 
Tax is placed on the buyers of the product.

Accepted Answer

A)   (i) only
B)   (ii) only
C)   (i) and (iii) only
D)   (i) and (iv) onlyE) A) and D)
F) A) and C)

Question 16

A price ceiling set below the equilibrium price is nonbinding.

Accepted Answer

A) True 
 B)False

Question 17

If a nonbinding price ceiling 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) None of the above
F) A) and C)

Question 18

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets,then fewer airline tickets will be sold than at the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 19

Taxes levied on sellers and taxes levied on buyers are equivalent.

Accepted Answer

A) True 
 B)False

Question 20

A tax on golf clubs will cause buyers of golf clubs to pay a higher price,sellers of golf clubs to receive a lower price,and fewer golf clubs to be sold.

Accepted Answer

A) True 
 B)False

Exam 6: Supply,demand,and Government Policies

A price ceiling set above the equilibrium price is not binding.

Correct Answer
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Correct Answer
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The goal of rent control is to

Correct Answer
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A tax on golf clubs will cause buyers of golf clubs to pay a higher price,sellers of golf clubs to receive a lower price,and fewer golf clubs to be sold.

Correct Answer
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A tax burden falls more heavily on the side of the market that

Correct Answer
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Figure 6-16 -Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

Correct Answer
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The burden of a luxury tax falls

Correct Answer
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If a nonbinding price ceiling is imposed on a market,then the

Correct Answer
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Figure 6-3 -Refer to Figure 6-3.A binding price floor is shown in

Correct Answer
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A price ceiling set below the equilibrium price is nonbinding.

Correct Answer
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One economist has argued that rent control is "the best way to destroy a city,other than bombing." Why would an economist say this?

Correct Answer
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Figure 6-20 -Refer to Figure 6-20.The per-unit burden of the tax on buyers of the good is

Correct Answer
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When a payroll tax is enacted,the wage received by workers

Correct Answer
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Figure 6-1 -Refer to Figure 6-1.The price ceiling shown in panel (b)

Correct Answer
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If the government levies a $1,000 tax per boat on sellers of boats,then the price paid by buyers of boats would

Correct Answer
verified

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

Correct Answer
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Buyers of a good bear the larger share of the tax burden when the (i) supply is more elastic than the demand for the product. (ii) demand in more elastic than the supply for the product. (iii) tax is placed on the sellers of the product. (iv) Tax is placed on the buyers of the product.

Correct Answer
verified

Policymakers use taxes

Correct Answer
verified

Taxes levied on sellers and taxes levied on buyers are equivalent.

Correct Answer
verified

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets,then fewer airline tickets will be sold than at the market equilibrium.

Correct Answer
verified

Exam 6: Supply,demand,and Government Policies

A price ceiling set above the equilibrium price is not binding.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The goal of rent control is to

Correct AnswerverifiedShow Answer

A tax on golf clubs will cause buyers of golf clubs to pay a higher price,sellers of golf clubs to receive a lower price,and fewer golf clubs to be sold.

Correct AnswerverifiedShow Answer

A tax burden falls more heavily on the side of the market that

Correct AnswerverifiedShow Answer

Figure 6-16 -Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.How much will buyers pay per unit after the tax is imposed?

Correct AnswerverifiedShow Answer

The burden of a luxury tax falls

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-3 -Refer to Figure 6-3.A binding price floor is shown in

Correct AnswerverifiedShow Answer

A price ceiling set below the equilibrium price is nonbinding.

Correct AnswerverifiedShow Answer

One economist has argued that rent control is "the best way to destroy a city,other than bombing." Why would an economist say this?

Correct AnswerverifiedShow Answer

Figure 6-20 -Refer to Figure 6-20.The per-unit burden of the tax on buyers of the good is

Correct AnswerverifiedShow Answer

When a payroll tax is enacted,the wage received by workers

Correct AnswerverifiedShow Answer

Figure 6-1 -Refer to Figure 6-1.The price ceiling shown in panel (b)

Correct AnswerverifiedShow Answer

If the government levies a $1,000 tax per boat on sellers of boats,then the price paid by buyers of boats would

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Buyers of a good bear the larger share of the tax burden when the (i) supply is more elastic than the demand for the product. (ii) demand in more elastic than the supply for the product. (iii) tax is placed on the sellers of the product. (iv) Tax is placed on the buyers of the product.

Correct AnswerverifiedShow Answer

Policymakers use taxes

Correct AnswerverifiedShow Answer

Taxes levied on sellers and taxes levied on buyers are equivalent.

Correct AnswerverifiedShow Answer

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets,then fewer airline tickets will be sold than at the market equilibrium.

Correct AnswerverifiedShow Answer

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