Question 1

Rent control policies tend to cause

Accepted Answer

A)   relatively smaller shortages in the short run than in the long run because supply and demand tend to be more elastic in the short run than in the long run.
B)   relatively larger shortages in the short run than in the long run because supply and demand tend to be more elastic in the short run than in the long run.
C)   relatively larger shortages in the short run than in the long run because supply and demand tend to be more inelastic in the short run than in the long run.
D)   relatively smaller shortages in the short run than in the long run because supply and demand tend to be more inelastic in the short run than in the long run.E) B) and D)
F) All of the above

Question 2

Figure 6-15 
-Refer to Figure 6-15.Suppose a tax of $2 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

Accepted Answer

A)   less than 50 units
B)   50 units
C)   between 50 units and 100 units
D)   greater than 100 unitsE) B) and D)
F) A) and D)

Question 3

If the government levies a $2 tax per DVD on buyers of DVDs,then the price received by sellers of DVDs would

Accepted Answer

A)   decrease by more than $2.
B)   decrease by exactly $2.
C)   decrease by less than $2.
D)   increase by an indeterminate amount.E) A) and D)
F) A) and C)

Question 4

Figure 6-21 
-Refer to Figure 6-22.The burden of the tax on buyers is

Accepted Answer

A)   $1 per unit.
B)   $1.50 per unit.
C)   $2 per unit.
D)   $3 per unit.E) A) and B)
F) C) and D)

Question 5

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

Question 6

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 7

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 B)
F) None of the above

Question 8

Figure 6-17 
-Refer to Figure 6-17.The price that buyers pay after the tax is imposed is

Accepted Answer

A)   $8.00.
B)   $9.00.
C)   $10.50.
D)   $12.00.E) B) and C)
F) A) and D)

Question 9

Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then the

Accepted Answer

A)   demand curve will shift upward by $20,and the price paid by buyers will decrease by less than $20.
B)   demand curve will shift upward by $20,and the price paid by buyers will decrease by $20.
C)   supply curve will shift downward by $20,and the effective price received by sellers will increase by less than $20.
D)   supply curve will shift downward by $20,and the effective price received by sellers will increase by $20.E) B) and C)
F) B) and D)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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 C)
F) A) and B)

Question 12

Buyers and sellers rarely share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 13

If a price ceiling is not binding,then it will have no effect on the market.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-17 
-Refer to Figure 6-17.Suppose buyers,rather than sellers,were required to pay this tax (in the same amount per unit as shown in the graph) .Relative to the tax on sellers,the tax on buyers would result in

Accepted Answer

A)   buyers bearing a larger share of the tax burden.
B)   sellers bearing a smaller share of the tax burden.
C)   the same amount of tax revenue for the government.
D)   Both a) and b) are correct.E) All of the above
F) None of the above

Question 15

Figure 6-20 
-Refer to Figure 6-20.In the after-tax equilibrium,government collects

Accepted Answer

A)   $1,440 in tax revenue; of this amount,$960 represents a burden on buyers and $480 represents a burden on sellers.
B)   $1,440 in tax revenue; of this amount,$720 represents a burden on buyers and $720 represents a burden on sellers.
C)   $1,680 in tax revenue; of this amount,$1,260 represents a burden on buyers and $420 represents a burden on sellers.
D)   $1,680 in tax revenue; of this amount,$840 represents a burden on buyers and $840 represents a burden on sellers.E) A) and D)
F) A) and C)

Question 16

Figure 6-26 
-Refer to Figure 6-26.A price floor set at $40 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 17

The United States is the only country in the world with minimum-wage laws.

Accepted Answer

A) True 
 B)False

Question 18

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

Question 19

If a tax is levied on the buyers of dog food,then

Accepted Answer

A)   buyers will bear the entire burden of the tax.
B)   sellers will bear the entire burden of the tax.
C)   buyers and sellers will share the burden of the tax.
D)   the government will bear the entire burden of the tax.E) B) and C)
F) All of the above

Question 20

Opponents of the minimum wage point out that the minimum wage

Accepted Answer

A)   encourages teenagers to drop out of school.
B)   prevents some workers from getting needed on-the-job training.
C)   contributes to the problem of unemployment.
D)   All of the above are correct.E) C) and D)
F) All of the above

Exam 6: Supply,demand,and Government Policies

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

Correct AnswerverifiedShow Answer

Rent control policies tend to cause

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If a price ceiling is not binding,then it will have no effect on the market.

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Figure 6-21 -Refer to Figure 6-22.The burden of the tax on buyers is

Correct AnswerverifiedShow Answer

If the government levies a $2 tax per DVD on buyers of DVDs,then the price received by sellers of DVDs would

Correct AnswerverifiedShow Answer

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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Opponents of the minimum wage point out that the minimum wage

Correct AnswerverifiedShow Answer

Buyers and sellers rarely share the burden of a tax equally.

Correct AnswerverifiedShow Answer

The United States is the only country in the world with minimum-wage laws.

Correct AnswerverifiedShow Answer

Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-26 -Refer to Figure 6-26.A price floor set at $40 would create a surplus of 20 units.

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Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Correct AnswerverifiedShow Answer

Figure 6-17 -Refer to Figure 6-17.Suppose buyers,rather than sellers,were required to pay this tax (in the same amount per unit as shown in the graph) .Relative to the tax on sellers,the tax on buyers would result in

Correct AnswerverifiedShow Answer

If a tax is levied on the buyers of dog food,then

Correct AnswerverifiedShow Answer

Figure 6-17 -Refer to Figure 6-17.The price that buyers pay after the tax is imposed is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-15 -Refer to Figure 6-15.Suppose a tax of $2 per unit is imposed on this market.What will be the new equilibrium quantity in this market?

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Figure 6-20 -Refer to Figure 6-20.In the after-tax equilibrium,government collects

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