Question 1

How is the burden of a tax divided?
(i) When the tax is levied on the sellers,the sellers bear a higher proportion of the tax burden.
(ii) When the tax is levied on the buyers,the buyers bear a higher proportion of the tax burden.
(iii) Regardless of whether the tax is levied on the buyers or the sellers,the buyers and sellers bear an equal proportion of the tax burden.
(iv) Regardless of whether the tax is levied on the buyers or the sellers,the buyers and sellers bear some proportion of the tax burden.

Accepted Answer

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

Question 2

The quantity sold in a market will increase if the government

Accepted Answer

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

Question 3

The quantity sold 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)   More than one of the above is correct.E) B) and C)
F) None of the above

Question 4

In a competitive market free of government regulation,

Accepted Answer

A)   price adjusts until quantity demanded is greater than quantity supplied.
B)   price adjusts until quantity demanded is less than quantity supplied.
C)   price adjusts until quantity demanded equals quantity supplied.
D)   supply adjusts to meet demand at every price.E) All of the above
F) A) and B)

Question 5

A binding price ceiling
(i) causes a surplus.
(ii) causes a shortage.
(iii) is set at a price above the equilibrium price.
(iv) is set at a price below the equilibrium price.

Accepted Answer

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

Question 6

If a binding price floor is imposed on the video game market,then

Accepted Answer

A)   the demand for video games will decrease.
B)   the supply of video games will increase.
C)   a surplus of video games will develop.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 7

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 8

A price floor set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 9

Consider the market for watermelons.Buyers

Accepted Answer

A)   and sellers would lobby for a price ceiling.
B)   and sellers would lobby for a price floor.
C)   would lobby for a price ceiling, whereas sellers would lobby for a price floor.
D)   would lobby for a price floor, whereas sellers would lobby for a price ceiling.E) A) and C)
F) B) and C)

Question 10

Figure 6-9
 
-Refer to Figure 6-9.At which price would a price floor be binding?

Accepted Answer

A)   $6
B)   $5
C)   $4
D)   $3E) None of the above
F) C) and D)

Question 11

Suppose that the demand for picture frames is highly inelastic,and the supply of picture frames is highly elastic.A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Accepted Answer

A)   less than $0.50.
B)   $0.50.
C)   between $0.50 and $1.
D)   $1.E) All of the above
F) A) and B)

Question 12

The minimum wage is an example of a

Accepted Answer

A)   price ceiling.
B)   price floor.
C)   wage subsidy.
D)   tax.E) All of the above
F) A) and B)

Question 13

A tax imposed on the sellers of a good will raise the

Accepted Answer

A)   price paid by buyers and lower the equilibrium quantity.
B)   price paid by buyers and raise the equilibrium quantity.
C)   effective price received by sellers and lower the equilibrium quantity.
D)   effective price received by sellers and raise the equilibrium quantity.E) A) and B)
F) A) and C)

Question 14

Figure 6-24
Suppose the government imposes a $2 on this market.
 
-Refer to Figure 6-24.Suppose D1 represents the demand curve for gasoline in both the short run and long run,S1 represents the supply curve for gasoline in the short run,and S2 represents the supply curve for gasoline in the long run.After the imposition of the $2,the price paid by buyers will be

Accepted Answer

A)   higher in the long run than in the short run.
B)   higher in the short run than in the long run.
C)   equivalent in the short run and the long run.
D)   unable to be determined without additional information.E) None of the above
F) A) and B)

Question 15

Figure 6-13
 
-Refer to Figure 6-13.In this market,a minimum wage of $2.75 creates a labor

Accepted Answer

A)   shortage of 2,250 workers.
B)   shortage of 4,500 workers.
C)   surplus of 2,250 workers.
D)   neither a labor shortage nor surplus.E) All of the above
F) A) and D)

Question 16

Figure 6-20
 
-Refer to Figure 6-20.What is the amount of the tax per unit?

Accepted Answer

A)   $8
B)   $6
C)   $4
D)   $2E) All of the above
F) B) and D)

Question 17

As a rationing mechanism,discrimination according to seller bias is

Accepted Answer

A)   efficient and fair.
B)   efficient, but potentially unfair.
C)   inefficient, but fair.
D)   inefficient and potentially unfair.E) A) and B)
F) A) and C)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The long-run effects of rent controls are a good illustration of the principle that

Accepted Answer

A)   society faces a short-run tradeoff between unemployment and inflation.
B)   the cost of something is what you give up to get it.
C)   people respond to incentives.
D)   government can sometimes improve on market outcomes.E) None of the above
F) A) and B)

Question 20

Figure 6-9
 
-Refer to Figure 6-9.A price ceiling set at

Accepted Answer

A)   $4 will be binding and will result in a shortage of 3 units.
B)   $4 will be binding and will result in a shortage of 6 units.
C)   $7 will be binding and will result in a surplus of 6 units.
D)   $7 will be binding and will result in a surplus of 12 units.E) All of the above
F) B) and C)

Exam 6: Supply, Demand, And Government Policies.

Correct Answer
verified

Consider the market for watermelons.Buyers

Correct Answer
verified

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

Correct Answer
verified

As a rationing mechanism,discrimination according to seller bias is

Correct Answer
verified

A tax imposed on the sellers of a good will raise the

Correct Answer
verified

A binding price ceiling (i) causes a surplus. (ii) causes a shortage. (iii) is set at a price above the equilibrium price. (iv) is set at a price below the equilibrium price.

Correct Answer
verified

Price ceilings are typically imposed to benefit buyers.

Correct Answer
verified

Figure 6-9 -Refer to Figure 6-9.At which price would a price floor be binding?

Correct Answer
verified

Figure 6-20 -Refer to Figure 6-20.What is the amount of the tax per unit?

Correct Answer
verified

The quantity sold in a market will increase if the government

Correct Answer
verified

If a binding price floor is imposed on the video game market,then

Correct Answer
verified

Correct Answer
verified

A price floor set above the equilibrium price causes a surplus in the market.

Correct Answer
verified

The minimum wage is an example of a

Correct Answer
verified

The quantity sold in a market will increase if the government

Correct Answer
verified

Figure 6-13 -Refer to Figure 6-13.In this market,a minimum wage of $2.75 creates a labor

Correct Answer
verified

The long-run effects of rent controls are a good illustration of the principle that

Correct Answer
verified

In a competitive market free of government regulation,

Correct Answer
verified

Suppose that the demand for picture frames is highly inelastic,and the supply of picture frames is highly elastic.A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Correct Answer
verified

Figure 6-9 -Refer to Figure 6-9.A price ceiling set at

Correct Answer
verified

Exam 6: Supply, Demand, And Government Policies.

Correct AnswerverifiedShow Answer

Consider the market for watermelons.Buyers

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

As a rationing mechanism,discrimination according to seller bias is

Correct AnswerverifiedShow Answer

A tax imposed on the sellers of a good will raise the

Correct AnswerverifiedShow Answer

A binding price ceiling (i) causes a surplus. (ii) causes a shortage. (iii) is set at a price above the equilibrium price. (iv) is set at a price below the equilibrium price.

Correct AnswerverifiedShow Answer

Price ceilings are typically imposed to benefit buyers.

Correct AnswerverifiedShow Answer

Figure 6-9 -Refer to Figure 6-9.At which price would a price floor be binding?

Correct AnswerverifiedShow Answer

Figure 6-20 -Refer to Figure 6-20.What is the amount of the tax per unit?

Correct AnswerverifiedShow Answer

The quantity sold in a market will increase if the government

Correct AnswerverifiedShow Answer

If a binding price floor is imposed on the video game market,then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A price floor set above the equilibrium price causes a surplus in the market.

Correct AnswerverifiedShow Answer

The minimum wage is an example of a

Correct AnswerverifiedShow Answer

The quantity sold in a market will increase if the government

Correct AnswerverifiedShow Answer

Figure 6-13 -Refer to Figure 6-13.In this market,a minimum wage of $2.75 creates a labor

Correct AnswerverifiedShow Answer

The long-run effects of rent controls are a good illustration of the principle that

Correct AnswerverifiedShow Answer

In a competitive market free of government regulation,

Correct AnswerverifiedShow Answer

Suppose that the demand for picture frames is highly inelastic,and the supply of picture frames is highly elastic.A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Correct AnswerverifiedShow Answer

Figure 6-9 -Refer to Figure 6-9.A price ceiling set at

Correct AnswerverifiedShow Answer

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