Question 1

A tax placed on a good that is a necessity for consumers will likely generate a tax burden that

Accepted Answer

A)   falls more heavily on sellers.
B)   falls entirely on sellers.
C)   falls more heavily on buyers.
D)   is evenly distributed between buyers and sellers.E) A) and C)
F) A) and D)

Question 2

A tax creates a tax wedge between a buyer and a seller. This causes the price paid by the buyer to rise, the price received by the seller to fall, and the quantity sold to fall.

Accepted Answer

A) True 
 B)False

Question 3

The burden of a tax falls more heavily on the sellers in a market when

Accepted Answer

A)   both supply and demand are elastic.
B)   both supply and demand are inelastic.
C)   demand is inelastic and supply is elastic.
D)   demand is elastic and supply is inelastic.E) A) and D)
F) None of the above

Question 4

When a tax is collected from the buyers in a market,

Accepted Answer

A)   the tax burden falls most heavily on the buyers.
B)   the buyers bear the burden of the tax.
C)   the sellers bear the burden of the tax.
D)   the tax burden on the buyers and sellers is the same as an equivalent tax collected from the sellers.E) B) and C)
F) A) and B)

Question 5

The government is thinking about increasing the tax on petrol to promote conservation. The tax will discourage the consumption of petrol most when the price elasticity of demand equals

Accepted Answer

A)   0.1
B)   0.7
C)   1.3
D)   2.0E) None of the above
F) A) and B)

Question 6

A price ceiling that is not a binding constraint today could cause a shortage in the future if demand were to increase and raise the equilibrium price above the fixed price ceiling.

Accepted Answer

A) True 
 B)False

Question 7

The quantity sold in a market will decrease if the government

Accepted Answer

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

Question 8

A price ceiling set below the equilibrium price causes a surplus.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is correct? A tax burden

Accepted Answer

A)   falls more heavily on the side of the market that is more elastic.
B)   falls more heavily on the side of the market that is less elastic.
C)   falls more heavily on the side of the market that is closest to unit elastic.
D)   is distributed independently of the relative elasticities of supply and demand.E) None of the above
F) C) and D)

Question 10

Refer to the graph above. What is the amount of the tax per unit?

Accepted Answer

A)   €8
B)   €6
C)   €4
D)   €2E) B) and C)
F) None of the above

Question 11

A €10 tax on football boots will always raise the price that the buyers pay for football boots by €10.

Accepted Answer

A) True 
 B)False

Question 12

If the equilibrium price of petrol is €1.00 per litre and the government places a price ceiling on petrol of €1.50 per litre, the result will be a shortage of petrol.

Accepted Answer

A) True 
 B)False

Question 13

The tax per unit on a good is the

Accepted Answer

A)   difference between the list price and the actual price paid by the buyer.
B)   licensing fees and other business taxes paid by sellers, averaged over the total quantity of goods sold.
C)   difference between the total price paid by the buyer and the price received by the seller.
D)   difference between wholesale and retail prices.E) B) and C)
F) B) and D)

Question 14

Which of the following statements about a binding price ceiling is true?

Accepted Answer

A)   The shortage created by the price ceiling is greater in the short run than in the long run.
B)   The surplus created by the price ceiling is greater in the short run than in the long run.
C)   The surplus created by the price ceiling is greater in the long run than in the short run.
D)   The shortage created by the price ceiling is greater in the long run than in the short run.E) C) and D)
F) All of the above

Question 15

For which of the following products would the burden of a tax likely fall more heavily on the sellers?

Accepted Answer

A)   clothing
B)   food
C)   housing
D)   entertainmentE) A) and B)
F) A) and C)

Question 16

A 10 per cent increase in the minimum wage is more likely to raise unemployment among teenage workers than among mid-career professional workers

Accepted Answer

A) True 
 B)False

Question 17

If the equilibrium price of bread is €2 and the government imposes a €1.50 price ceiling on the price of bread,

Accepted Answer

A)   more bread will be produced to meet the increased demand.
B)   there will be a shortage of bread.
C)   the demand for bread will decrease because suppliers will reduce their supply.
D)   a surplus of bread will emerge.E) A) and D)
F) A) and C)

Question 18

Which of the following is an example of a price floor?

Accepted Answer

A)   the minimum wage
B)   rent controls
C)   restricting petrol prices to €1.00 per litre when the equilibrium price is €1.50 per litre
D)   All of these answers are price floors.E) A) and B)
F) A) and C)

Question 19

Why would policymakers choose to impose a price ceiling or price floor?

Accepted Answer

More than one reason may exist for polic...

Question 20

Taxes levied directly on consumers

Accepted Answer

A)   always hurt consumers rather than producers.
B)   always hurt producers rather than consumers.
C)   generate more revenue than taxes levied on producers.
D)   have the same effect as taxes directly levied on producers.E) A) and D)
F) A) and C)

Exam 8: Supply, Demand and Government Policies

Taxes levied directly on consumers

Correct AnswerverifiedShow Answer

A 10 per cent increase in the minimum wage is more likely to raise unemployment among teenage workers than among mid-career professional workers

Correct AnswerverifiedShow Answer

The government is thinking about increasing the tax on petrol to promote conservation. The tax will discourage the consumption of petrol most when the price elasticity of demand equals

Correct AnswerverifiedShow Answer

For which of the following products would the burden of a tax likely fall more heavily on the sellers?

Correct AnswerverifiedShow Answer

When a tax is collected from the buyers in a market,

Correct AnswerverifiedShow Answer

A tax placed on a good that is a necessity for consumers will likely generate a tax burden that

Correct AnswerverifiedShow Answer

The burden of a tax falls more heavily on the sellers in a market when

Correct AnswerverifiedShow Answer

A price ceiling set below the equilibrium price causes a surplus.

Correct AnswerverifiedShow Answer

If the equilibrium price of petrol is €1.00 per litre and the government places a price ceiling on petrol of €1.50 per litre, the result will be a shortage of petrol.

Correct AnswerverifiedShow Answer

A price ceiling that is not a binding constraint today could cause a shortage in the future if demand were to increase and raise the equilibrium price above the fixed price ceiling.

Correct AnswerverifiedShow Answer

A tax creates a tax wedge between a buyer and a seller. This causes the price paid by the buyer to rise, the price received by the seller to fall, and the quantity sold to fall.

Correct AnswerverifiedShow Answer

Which of the following is correct? A tax burden

Correct AnswerverifiedShow Answer

If the equilibrium price of bread is €2 and the government imposes a €1.50 price ceiling on the price of bread,

Correct AnswerverifiedShow Answer

The tax per unit on a good is the

Correct AnswerverifiedShow Answer

Refer to the graph above. What is the amount of the tax per unit?

Correct AnswerverifiedShow Answer

A €10 tax on football boots will always raise the price that the buyers pay for football boots by €10.

Correct AnswerverifiedShow Answer

Why would policymakers choose to impose a price ceiling or price floor?

Correct AnswerverifiedMore than one reason may exist for polic...View AnswerShow Answer

Which of the following is an example of a price floor?

Correct AnswerverifiedShow Answer

The quantity sold in a market will decrease if the government

Correct AnswerverifiedShow Answer

Which of the following statements about a binding price ceiling is true?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
More than one reason may exist for polic...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified