Question 1

A binding price floor may not help all sellers, but it does not hurt any sellers.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)   downward shift of the supply curve.
B)   upward shift of the supply curve.
C)   decrease in quantity supplied.
D)   increase in quantity supplied.E) A) and B)
F) None of the above

Question 3

Figure 6-22 
-Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

Accepted Answer

A)   $80.
B)   $60.
C)   $15.
D)   $45.E) A) and B)
F) C) and D)

Question 4

A tax imposed on the buyers of a good will

Accepted Answer

A)   raise both the price buyers pay and the effective price sellers receive.
B)   raise the price buyers pay and lower the effective price sellers receive.
C)   lower the price buyers pay and raise the effective price sellers receive.
D)   lower both the price buyers pay and the effective price sellers receive.E) C) and D)
F) B) and C)

Question 5

Congress intended that

Accepted Answer

A)   the entire FICA tax be paid by workers.
B)   the entire FICA tax be paid by firms.
C)   one-quarter of the FICA tax be paid by workers, and three-quarters be paid by firms.
D)   half the FICA tax be paid by workers, and half be paid by firms.E) None of the above
F) All of the above

Question 6

If a price floor is not binding, then

Accepted Answer

A)   the equilibrium price is above the price floor.
B)   the equilibrium price is below the price floor.
C)   there will be a surplus in the market.
D)   there will be a shortage in the market.E) A) and D)
F) None of the above

Question 7

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Accepted Answer

A)   both taxes would fall more heavily on the buyers than on the sellers.
B)   the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers.
C)   the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers.
D)   both taxes would fall more heavily on the sellers than on the buyers.E) B) and D)
F) B) and C)

Question 8

A tax on buyers shifts the demand curve to the right.

Accepted Answer

A) True 
 B)False

Question 9

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

Accepted Answer

A)   buyers of gasoline.
B)   sellers of gasoline.
C)   either buyers or sellers of gasoline.
D)   whichever side of the market is less elastic.E) A) and C)
F) None of the above

Question 10

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Accepted Answer

A) True 
 B)False

Question 11

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price of $12 in this market is an example of a

Accepted Answer

A)   binding price ceiling that creates a shortage.
B)   non-binding price ceiling that creates a shortage.
C)   binding price floor that creates a surplus.
D)   non-binding price floor that creates a surplus.E) A) and D)
F) None of the above

Question 12

Figure 6-19 
-Refer to Figure 6-19. 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) C) and D)
F) None of the above

Question 13

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a result of rent control?

Accepted Answer

A)   fewer new apartments offered for rent
B)   less maintenance provided by landlords
C)   bribery
D)   higher quality housingE) A) and C)
F) All of the above

Question 15

A tax on buyers decreases the quantity of the good sold in the market.

Accepted Answer

A) True 
 B)False

Question 16

A price floor set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Question 19

Most economists are in favor of price controls as a way of allocating resources in the economy.

Accepted Answer

A) True 
 B)False

Question 20

If a price ceiling is not binding, then

Accepted Answer

A)   the equilibrium price is above the price ceiling.
B)   the equilibrium price is below the price ceiling.
C)   it has no legal enforcement mechanism.
D)   None of the above is correct because all price ceilings must be binding.E) C) and D)
F) A) and D)

Exam 6: Supply, Demand, and Government Policies

A price floor set above the equilibrium price is not binding.

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If a price floor is not binding, then

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Most economists are in favor of price controls as a way of allocating resources in the economy.

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Figure 6-19 -Refer to Figure 6-19. 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 6-22 -Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

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The quantity sold in a market will increase if the government

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A tax imposed on the buyers of a good will

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

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A tax on buyers shifts the demand curve to the right.

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If the government wants to reduce the burning of fossil fuels, it should impose a tax on

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Rent-control laws dictate a minimum rent that landlords may charge tenants.

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A tax on buyers decreases the quantity of the good sold in the market.

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Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

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Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $12 in this market is an example of a

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If a price ceiling is not binding, then

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Congress intended that

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Which of the following is not a result of rent control?

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A binding price floor may not help all sellers, but it does not hurt any sellers.

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

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Minimum-wage laws dictate the lowest wage that firms may pay workers.

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