Question 1

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. What are the equilibrium price and quantity in the market for good X?

Accepted Answer

The equilibrium pric...

Question 2

When policymakers set prices by legal decree, they

Accepted Answer

A)   are usually following the advice of mainstream economists.
B)   improve the organization of economic activity.
C)   obscure the signals that normally guide the allocation of society's resources.
D)   are demonstrating a willingness to sacrifice fairness for the sake of a gain in efficiency.E) B) and C)
F) A) and D)

Question 3

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Accepted Answer

A) True 
 B)False

Question 4

The price received by sellers 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)   None of the above is correct.E) A) and B)
F) All of the above

Question 5

When a tax is imposed on the buyers of a good, the demand curve shifts

Accepted Answer

A)   upward by the amount of the tax.
B)   downward by the amount of the tax.
C)   upward by less than the amount of the tax.
D)   downward by less than the amount of the tax.E) None of the above
F) A) and B)

Question 6

Figure 6-36 
-Refer to Figure 6-36. 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

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

Question 8

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $2 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 9

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Accepted Answer

A)   less than one-third.
B)   between one-third and one-half.
C)   between one-half and two-thirds.
D)   greater than two-thirds.E) A) and B)
F) None of the above

Question 10

The primary effect of rent control in the short run is to reduce rents.

Accepted Answer

A) True 
 B)False

Question 11

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 C)
F) B) and C)

Question 12

When policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources.

Accepted Answer

A) True 
 B)False

Question 13

Long lines

Accepted Answer

A)   and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time.
B)   and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly.
C)   are an inefficient rationing mechanism because they waste buyers' time, and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly.
D)   are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly, and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.E) All of the above
F) A) and D)

Question 14

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a i)  binding price ceiling.
Ii)  non-binding price ceiling.
Iii)  binding price floor.
Iv)  non-binding price floor.

Accepted Answer

A)   i)  only
B)   ii)  only
C)   i)  and iv)  only
D)   ii)  and iii)  onlyE) None of the above
F) A) and C)

Question 15

If a binding price floor is imposed on the market for eBooks, then

Accepted Answer

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

Question 16

The term tax incidence refers to

Accepted Answer

A)   whether buyers or sellers of a good are required to send tax payments to the government.
B)   whether the demand curve or the supply curve shifts when the tax is imposed.
C)   the distribution of the tax burden between buyers and sellers.
D)   widespread view that taxes and death)  are the only certainties in life.E) None of the above
F) B) and C)

Question 17

If a tax is levied on the sellers of a product, then there will be an)

Accepted Answer

A)   downward shift of the demand curve.
B)   upward shift of the demand curve.
C)   decrease in quantity demanded.
D)   increase in quantity demanded.E) A) and B)
F) A) and C)

Question 18

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 B)
F) None of the above

Question 19

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

Question 20

Figure 6-27
This figure shows the market demand and market supply curves for good Z. 
-Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)   Buyers and sellers will share the burden of the tax equally.
B)   Buyers will bear more of the burden of the tax than sellers will.
C)   Sellers will bear more of the burden of the tax than buyers will.
D)   Any of the above is possible.E) B) and D)
F) B) and C)

Exam 6: Supply, Demand, and Government Policies

Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. Which of the following is correct?

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

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Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.

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If a binding price floor is imposed on the market for eBooks, then

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The term tax incidence refers to

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When policymakers set prices by legal decree, they

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Long lines

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Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a i) binding price ceiling. Ii) non-binding price ceiling. Iii) binding price floor. Iv) non-binding price floor.

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If a tax is levied on the sellers of a product, then there will be an)

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When policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources.

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The primary effect of rent control in the short run is to reduce rents.

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The proportion of minimum-wage earners who are in families with incomes below the poverty line is

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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. What are the equilibrium price and quantity in the market for good X?

Correct AnswerverifiedThe equilibrium pric...View AnswerShow Answer

Which of the following is correct?

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The price received by sellers in a market will decrease if the government

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Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $2 of the tax burden.

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When a tax is imposed on the buyers of a good, the demand curve shifts

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Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

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

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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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The equilibrium pric...
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