Question 1

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) B) and C)
F) C) and D)

Question 2

Figure 6-18
 
-Refer to Figure 6-18.The amount of the tax per unit is

Accepted Answer

A)   $1.
B)   $1.50.
C)   $2.50.
D)   $3.50.E) None of the above
F) A) and B)

Question 3

Figure 6-19
 
-Refer to Figure 6-19.How much tax revenue does this tax produce for the government?

Accepted Answer

A)   $24
B)   $30
C)   $32
D)   $56E) B) and C)
F) All of the above

Question 4

Tax incidence

Accepted Answer

A)   depends on the legislated burden.
B)   is entirely random.
C)   depends on the elasticities of supply and demand.
D)   falls entirely on buyers or entirely on sellers.E) A) and B)
F) All of the above

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets,then fewer airline tickets will be sold than at the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 7

Price controls are usually enacted

Accepted Answer

A)   as a means of raising revenue for public purposes.
B)   when policymakers believe that the market price of a good or service is unfair to buyers or sellers.
C)   when policymakers detect inefficiencies in a market.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 8

A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

FICA is an example of a payroll tax,which is a tax on the wages that firms pay their workers.

Accepted Answer

A) True 
 B)False

Question 11

If the government removes a binding price floor 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) C) and D)

Question 12

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Accepted Answer

A)   the actual tax incidence is unaffected by the legislated tax incidence.
B)   the employer now is required by law to pay more than 50 percent of the tax.
C)   the employee now is required by law to pay more than 50 percent of the tax.
D)   employers are no longer required by law to pay any portion of the tax.E) A) and B)
F) None of the above

Question 13

Which of the following was not a result of the luxury tax imposed by Congress in 1990?

Accepted Answer

A)   The larger part of the tax burden fell on sellers.
B)   A larger part of the tax burden fell on the middle class than on the rich.
C)   Even the wealthy demanded fewer luxury goods.
D)   The tax was never repealed or even modified.E) A) and D)
F) None of the above

Question 14

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

Question 15

Suppose that a tax is placed on books.If the sellers 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) A) and D)
F) B) and C)

Question 16

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

Accepted Answer

A)   $8
B)   $7
C)   $6
D)   $5E) A) and C)
F) All of the above

Question 17

Figure 6-6
 
-Refer to Figure 6-6.Which of the following price floors would be binding in this market?

Accepted Answer

A)   $6
B)   $8
C)   $10
D)   $12E) None of the above
F) B) and C)

Question 18

Figure 6-7
 
-Refer to Figure 6-7.Which of the following price controls would cause a shortage 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 D)
F) A) and B)

Question 19

Figure 6-1

-Refer to Figure 6-1.In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

Accepted Answer

A)   panel (a)  only
B)   panel (b)  only
C)   both panel (a)  and panel (b) 
D)   neither panel (a)  nor panel (b) E) A) and B)
F) A) and C)

Question 20

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

Accepted Answer

A)   Policymakers have studied the effects of the price floor carefully, and they recognize that the price floor is advantageous for society as a whole.
B)   Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into imposing the price floor.
C)   Buyers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor.
D)   Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor.E) B) and D)
F) B) and C)

Exam 6: Supply, Demand, And Government Policies.

Figure 6-6 -Refer to Figure 6-6.Which of the following price floors would be binding in this market?

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FICA is an example of a payroll tax,which is a tax on the wages that firms pay their workers.

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Figure 6-18 -Refer to Figure 6-18.The amount of the tax per unit is

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

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Price controls are usually enacted

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

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Which of the following is correct? A tax burden

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Figure 6-19 -Refer to Figure 6-19.How much tax revenue does this tax produce for the government?

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

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Which of the following was not a result of the luxury tax imposed by Congress in 1990?

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

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Figure 6-1 -Refer to Figure 6-1.In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

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Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

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

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Tax incidence

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Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

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A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded.

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

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If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets,then fewer airline tickets will be sold than at the market equilibrium.

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

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