Question 1

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Accepted Answer

A)   a binding price floor
B)   a binding price ceiling
C)   a tax on the good
D)   All of the above are correct.E) None of the above
F) A) and C)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Figure 6-20 
-Refer to Figure 6-20.Andrew is a buyer of the good.Taking the tax into account,how much does Andrew effectively pay to acquire one unit of the good?

Accepted Answer

A)   $16
B)   $18
C)   $24
D)   $26E) A) and D)
F) A) and C)

Question 4

Figure 6-7 
-Refer to Figure 6-7.Which of the following price controls would cause a surplus of 20 units of the good?

Accepted Answer

A)   a price ceiling set at $4
B)   a price ceiling set at $5
C)   a price floor set at $7
D)   a price floor set at $8E) A) and C)
F) A) and B)

Question 5

The Federal Insurance Contribution Act (FICA) tax is an example of a(n)

Accepted Answer

A)   payroll tax.
B)   sales tax.
C)   farm subsidy.
D)   income subsidy.E) A) and C)
F) A) and B)

Question 6

Figure 6-27 
-Refer to Figure 6-27.If the government places a $2 tax in the market,the buyer bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 7

If a tax is imposed on a market with inelastic supply and elastic demand,then

Accepted Answer

A)   buyers will bear most of the burden of the tax.
B)   sellers will bear most of the burden of the tax.
C)   the burden of the tax will be shared equally between buyers and sellers.
D)   it is impossible to determine how the burden of the tax will be shared.E) None of the above
F) B) and D)

Question 8

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A)   a surplus in the market.
B)   a shortage in the market.
C)   a nonbinding price control.
D)   long lines of frustrated buyers.E) C) and D)
F) B) and C)

Question 9

Figure 6-24
Suppose the government imposes a $2 on this market. 
-Refer to Figure 6-24.Suppose D1 represents the demand curve for paperback novels,D2 represents the demand curve for gasoline,and S1 represents the supply curve for paperback novels and gasoline.After the imposition of the $2 on paperback novels and on gasoline,the

Accepted Answer

A)   buyers of gasoline bear a higher burden of the $2 tax than buyers of paperback novels.
B)   sellers of gasoline bear a higher burden of the $2 tax than sellers of paperback novels.
C)   buyers of gasoline bear an equal burden of the $2 tax as buyers of paperback novels.
D)   Both a) and b) are correct.E) None of the above
F) A) and D)

Question 10

When a tax is placed on the buyers of lemonade,the

Accepted Answer

A)   sellers bear the entire burden of the tax.
B)   buyers bear the entire burden of the tax.
C)   burden of the tax will be always be equally divided between the buyers and the sellers.
D)   burden of the tax will be shared by the buyers and the sellers,but the division of the burden is not always equal.E) A) and D)
F) B) and C)

Question 11

If the government passes a law requiring buyers of college textbooks to send $5 to the government for every textbook they buy,then

Accepted Answer

A)   the demand curve for textbooks shifts downward by $5.
B)   buyers of textbooks pay $5 more per textbook than they were paying before the tax.
C)   sellers of textbooks are unaffected by the tax.
D)   All of the above are correct.E) All of the above
F) B) and C)

Question 12

If a tax is levied on the sellers of a product,then the demand curve will

Accepted Answer

A)   shift down.
B)   shift up.
C)   become flatter.
D)   not shift.E) A) and B)
F) All of the above

Question 13

Which of the following would not interfere with market equilibria?

Accepted Answer

A)   a minimum wage
B)   a rent control
C)   a non-binding price floor
D)   a binding price ceilingE) A) and B)
F) A) and C)

Question 14

A price floor is binding when it is set

Accepted Answer

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

Question 15

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) B) and D)
F) All of the above

Question 16

Rent control may lead to lower rents for those who find housing,but the quality of the housing may also be lower.

Accepted Answer

A) True 
 B)False

Question 17

Suppose buyers of vodka are required to send $1.00 to the government for every bottle of vodka they buy.Further,suppose this tax causes the effective price received by sellers of vodka to fall by $0.60 per bottle.Which of the following statements is correct?

Accepted Answer

A)   This tax causes the supply curve for vodka to shift upward by $1.00 at each quantity of vodka.
B)   The price paid by buyers is $0.40 per bottle more than it was before the tax.
C)   Sixty percent of the burden of the tax falls on buyers.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 18

Figure 6-26 
-Refer to Figure 6-26.A price ceiling set at $70 would create a shortage of 40 units.

Accepted Answer

A) True 
 B)False

Question 19

The tax burden will fall most heavily on buyers of the good when the demand curve

Accepted Answer

A)   is relatively steep,and the supply curve is relatively flat.
B)   is relatively flat,and the supply curve is relatively steep.
C)   and the supply curve are both relatively flat.
D)   and the supply curve are both relatively steep.E) None of the above
F) A) and D)

Question 20

If a tax is imposed on the buyers of a product,then the tax burden will fall entirely on the buyers.

Accepted Answer

A) True 
 B)False

Exam 6: Supply,demand,and Government Policies

Suppose buyers of vodka are required to send $1.00 to the government for every bottle of vodka they buy.Further,suppose this tax causes the effective price received by sellers of vodka to fall by $0.60 per bottle.Which of the following statements is correct?

Correct Answer
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Figure 6-27 -Refer to Figure 6-27.If the government places a $2 tax in the market,the buyer bears $1 of the tax burden.

Correct Answer
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The Federal Insurance Contribution Act (FICA) tax is an example of a(n)

Correct Answer
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Rent control may lead to lower rents for those who find housing,but the quality of the housing may also be lower.

Correct Answer
verified

When a tax is placed on the buyers of lemonade,the

Correct Answer
verified

The tax burden will fall most heavily on buyers of the good when the demand curve

Correct Answer
verified

Correct Answer
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Figure 6-7 -Refer to Figure 6-7.Which of the following price controls would cause a surplus of 20 units of the good?

Correct Answer
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If a tax is levied on the sellers of a product,then the demand curve will

Correct Answer
verified

If a tax is imposed on a market with inelastic supply and elastic demand,then

Correct Answer
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Figure 6-20 -Refer to Figure 6-20.Andrew is a buyer of the good.Taking the tax into account,how much does Andrew effectively pay to acquire one unit of the good?

Correct Answer
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Figure 6-26 -Refer to Figure 6-26.A price ceiling set at $70 would create a shortage of 40 units.

Correct Answer
verified

If a tax is imposed on the buyers of a product,then the tax burden will fall entirely on the buyers.

Correct Answer
verified

An outcome that can result from either a price ceiling or a price floor is

Correct Answer
verified

A price floor is binding when it is set

Correct Answer
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If the government passes a law requiring buyers of college textbooks to send $5 to the government for every textbook they buy,then

Correct Answer
verified

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Which of the following would not interfere with market equilibria?

Correct Answer
verified

Exam 6: Supply,demand,and Government Policies

Suppose buyers of vodka are required to send $1.00 to the government for every bottle of vodka they buy.Further,suppose this tax causes the effective price received by sellers of vodka to fall by $0.60 per bottle.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Figure 6-27 -Refer to Figure 6-27.If the government places a $2 tax in the market,the buyer bears $1 of the tax burden.

Correct AnswerverifiedShow Answer

The Federal Insurance Contribution Act (FICA) tax is an example of a(n)

Correct AnswerverifiedShow Answer

Rent control may lead to lower rents for those who find housing,but the quality of the housing may also be lower.

Correct AnswerverifiedShow Answer

When a tax is placed on the buyers of lemonade,the

Correct AnswerverifiedShow Answer

The tax burden will fall most heavily on buyers of the good when the demand curve

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 6-7 -Refer to Figure 6-7.Which of the following price controls would cause a surplus of 20 units of the good?

Correct AnswerverifiedShow Answer

If a tax is levied on the sellers of a product,then the demand curve will

Correct AnswerverifiedShow Answer

If a tax is imposed on a market with inelastic supply and elastic demand,then

Correct AnswerverifiedShow Answer

Figure 6-20 -Refer to Figure 6-20.Andrew is a buyer of the good.Taking the tax into account,how much does Andrew effectively pay to acquire one unit of the good?

Correct AnswerverifiedShow Answer

Figure 6-26 -Refer to Figure 6-26.A price ceiling set at $70 would create a shortage of 40 units.

Correct AnswerverifiedShow Answer

If a tax is imposed on the buyers of a product,then the tax burden will fall entirely on the buyers.

Correct AnswerverifiedShow Answer

An outcome that can result from either a price ceiling or a price floor is

Correct AnswerverifiedShow Answer

A price floor is binding when it is set

Correct AnswerverifiedShow Answer

If the government passes a law requiring buyers of college textbooks to send $5 to the government for every textbook they buy,then

Correct AnswerverifiedShow Answer

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Correct AnswerverifiedShow Answer

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

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

Which of the following would not interfere with market equilibria?

Correct AnswerverifiedShow Answer

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