Question 1

Figure 6-16 
-Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

Accepted Answer

A)   less than 25 units
B)   25 units
C)   between 25 units and 50 units
D)   greater than 50 unitsE) A) and D)
F) A) and C)

Question 2

To be binding,a price floor must be set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 3

You receive a paycheck from your employer,and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare) tax.Which of the following statements is correct?

Accepted Answer

A)   This type of tax is an example of a payback tax.
B)   Your employer is required by law to pay $400 to match the $400 deducted from your check.
C)   The $400 that you paid is the true burden of the tax that falls on you,the employee.
D)   All of the above are correct.E) A) and B)
F) A) and C)

Question 4

Congress intended that

Accepted Answer

A)   the entire FICA tax be paid by workers.
B)   the entire FICA tax be paid by firms.
C)   one-quarter of the FICA tax be paid by workers,and three-quarters be paid by firms.
D)   half the FICA tax be paid by workers,and half be paid by firms.E) B) and C)
F) A) and B)

Question 5

Suppose the government has imposed a price floor on the market for soybeans.Which of the following events could transform the price floor from one that is not binding into one that is binding?

Accepted Answer

A)   Farmers use improved,draught-resistant seeds,which lowers the cost of growing soybeans.
B)   The number of farmers selling soybeans decreases.
C)   Consumers' income increases,and soybeans are a normal good.
D)   The number of consumers buying soybeans increases.E) A) and B)
F) B) and D)

Question 6

If the demand curve is very elastic and the supply curve is very inelastic 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 7

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

Accepted Answer

A)   decreases a binding price floor in that market.
B)   increases a binding price ceiling in that market.
C)   decreases a tax on the good sold in that market.
D)   imposes a binding price ceiling in that market.E) A) and B)
F) A) and D)

Question 8

When government imposes a price ceiling or a price floor on a market,

Accepted Answer

A)   price no longer serves as a rationing device.
B)   efficiency in the market is enhanced.
C)   shortages and surpluses are eliminated.
D)   both buyers and sellers become better off.E) C) and D)
F) A) and B)

Question 9

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

Accepted Answer

A)   increases a binding price floor in that market.
B)   increases a binding price ceiling in that market.
C)   decreases a tax on the good sold in that market.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 10

A tax on buyers shifts the demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-7 
-Refer to Figure 6-7.For a price floor to be binding in this market,it would have to be set at

Accepted Answer

A)   any price below $6.
B)   a price between $3 and $6.
C)   a price between $6 and $9.
D)   any price above $6.E) B) and C)
F) A) and D)

Question 12

A binding minimum wage may not help all workers,but it does not hurt any workers.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is correct?

Accepted Answer

A)   Rent control and the minimum wage are both examples of price ceilings.
B)   Rent control is an example of a price ceiling,and the minimum wage is an example of a price floor.
C)   Rent control is an example of a price floor,and the minimum wage is an example of a price ceiling.
D)   Rent control and the minimum wage are both examples of price floors.E) A) and B)
F) All of the above

Question 14

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs.Which of the following is not correct? The tax would

Accepted Answer

A)   shift the demand curve downward by 25 cents.
B)   lower the equilibrium price by 25 cents.
C)   reduce the equilibrium quantity.
D)   discourage market activity.E) A) and B)
F) B) and C)

Question 15

Figure 6-26 
-Refer to Figure 6-26.A price floor set at $60 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 16

A tax imposed on the buyers of a good will

Accepted Answer

A)   raise both the price buyers pay and the effective price sellers receive.
B)   raise the price buyers pay and lower the effective price sellers receive.
C)   lower the price buyers pay and raise the effective price sellers receive.
D)   lower both the price buyers pay and the effective price sellers receive.E) None of the above
F) B) and D)

Question 17

If the government removes a binding price ceiling from a market,then the price paid by buyers will

Accepted Answer

A)   increase,and the quantity sold in the market will increase.
B)   increase,and the quantity sold in the market will decrease.
C)   decrease,and the quantity sold in the market will increase.
D)   decrease,and the quantity sold in the market will decrease.E) None of the above
F) All of the above

Question 18

Figure 6-20 
-Refer to Figure 6-20.The price paid by buyers after the tax is imposed is

Accepted Answer

A)   $24.
B)   $21.
C)   $18.
D)   $16.E) None of the above
F) A) and B)

Question 19

In an unregulated labor market,the wage adjusts to balance labor supply and labor demand.

Accepted Answer

A) True 
 B)False

Question 20

A price floor is a legal minimum on the price at which a good or service can be sold.

Accepted Answer

A) True 
 B)False

Exam 6: Supply,demand,and Government Policies

If the government removes a binding price ceiling from a market,then the price paid by buyers will

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A tax on buyers shifts the demand curve to the right.

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A price floor is a legal minimum on the price at which a good or service can be sold.

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A binding minimum wage may not help all workers,but it does not hurt any workers.

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

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Congress intended that

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Suppose the government has imposed a price floor on the market for soybeans.Which of the following events could transform the price floor from one that is not binding into one that is binding?

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When government imposes a price ceiling or a price floor on a market,

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Figure 6-16 -Refer to Figure 6-16.Suppose a tax of $5 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

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In an unregulated labor market,the wage adjusts to balance labor supply and labor demand.

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A tax imposed on the buyers of a good will

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

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Figure 6-7 -Refer to Figure 6-7.For a price floor to be binding in this market,it would have to be set at

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You receive a paycheck from your employer,and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare) tax.Which of the following statements is correct?

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Figure 6-26 -Refer to Figure 6-26.A price floor set at $60 would create a surplus of 20 units.

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Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs.Which of the following is not correct? The tax would

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To be binding,a price floor must be set above the equilibrium price.

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Figure 6-20 -Refer to Figure 6-20.The price paid by buyers after the tax is imposed is

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Which of the following is correct?

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If the demand curve is very elastic and the supply curve is very inelastic 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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