Question 1

Rent control

Accepted Answer

A)   serves as an example of how a social problem can be alleviated or even solved by government policies.
B)   serves as an example of a price ceiling.
C)   is regarded by most economists as an efficient way of helping the poor.
D)   is the most efficient way to allocate scarce housing resources.E) A) and D)
F) All of the above

Question 2

Figure 6-31 
-Refer to Figure 6-31. If the government set a price ceiling at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $15 wou...

Question 3

A price floor set above the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 4

Figure 6-25 
-Refer to Figure 6-25. 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 D)
F) C) and D)

Question 5

Figure 6-1
Panel (a)  Panel (b)   
-Refer to Figure 6-1. A binding price ceiling is shown in

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

Question 6

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

Accepted Answer

A) True 
 B)False

Question 7

The minimum wage

Accepted Answer

A)   is an example of a price ceiling.
B)   has its greatest impact on middle-aged and immigrant workers.
C)   does not apply to unpaid internships.
D)   does not affect the quantity of labor demanded; it only affects the quantity of labor supplied.E) B) and C)
F) C) and D)

Question 8

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Accepted Answer

A)   demand for labor is more elastic than the supply of labor.
B)   supply of labor is more elastic than the demand for labor.
C)   demand for labor and supply of labor are equally elastic.
D)   It is not possible for the tax burden to fall equally on firms and workers.E) A) and B)
F) C) and D)

Question 9

Figure 6-20 
-Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)   Buyers and sellers will share the burden of the tax equally.
B)   Buyers will bear more of the burden of the tax than sellers will.
C)   Sellers will bear more of the burden of the tax than buyers will.
D)   Any of the above is possible.E) C) and D)
F) All of the above

Question 10

In the short run, rent control causes the quantity supplied

Accepted Answer

A)   and quantity demanded to fall.
B)   to fall and quantity demanded to rise.
C)   to rise and quantity demanded to fall.
D)   and quantity demanded to rise.E) B) and D)
F) A) and D)

Question 11

Figure 6-28 
-Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)   $4
B)   between $4 and $7
C)   between $7 and $10
D)   $10E) A) and B)
F) B) and C)

Question 12

If a tax is levied on the sellers of flour, 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) None of the above
F) A) and D)

Question 13

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

Accepted Answer

A) True 
 B)False

Question 14

When OPEC raised the price of crude oil in the 1970s, it caused the

Accepted Answer

A)   supply of gasoline to decrease.
B)   quantity of gasoline demanded to decrease.
C)   equilibrium price of gasoline to increase.
D)   All of the above are correct.E) None of the above
F) All of the above

Question 15

One common example of a price floor is the minimum wage.

Accepted Answer

A) True 
 B)False

Question 16

Figure 6-25 
-Refer to Figure 6-25. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. After the sellers are required to pay the tax, relative to the case depicted in the graph, the burden on buyers will be

Accepted Answer

A)   larger, and the burden on sellers will be smaller.
B)   smaller, and the burden on sellers will be larger.
C)   the same, and the burden on sellers will be the same.
D)   The relative burdens in the two cases cannot be determined without further information.E) A) and D)
F) None of the above

Question 17

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Accepted Answer

A) True 
 B)False

Question 18

The incidence of a tax falls more heavily on

Accepted Answer

A)   consumers than producers if demand is more inelastic than supply.
B)   producers than consumers if supply is more inelastic than demand.
C)   consumers than producers if supply is more elastic than demand.
D)   All of the above are correct.E) B) and C)
F) C) and D)

Question 19

A binding price floor will reduce a firm's total revenue

Accepted Answer

A)   always.
B)   when demand is elastic.
C)   when demand is inelastic.
D)   never.E) None of the above
F) A) and D)

Question 20

Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

The incidence of a tax falls more heavily on

Correct Answer
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Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

Correct Answer
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When OPEC raised the price of crude oil in the 1970s, it caused the

Correct Answer
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The minimum wage

Correct Answer
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A binding price floor will reduce a firm's total revenue

Correct Answer
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Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

Correct Answer
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A price floor set above the equilibrium price is binding.

Correct Answer
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Rent control

Correct Answer
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Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Correct Answer
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Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

Correct Answer
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Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct Answer
verified
A price ceiling set at $15 wou...
View Answer

In the short run, rent control causes the quantity supplied

Correct Answer
verified

Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

Correct Answer
verified

If a tax is levied on the sellers of flour, then

Correct Answer
verified

One common example of a price floor is the minimum wage.

Correct Answer
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Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. A binding price ceiling is shown in

Correct Answer
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The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Correct Answer
verified

Figure 6-25 -Refer to Figure 6-25. The burden of the tax on buyers is

Correct Answer
verified

Correct Answer
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When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

The incidence of a tax falls more heavily on

Correct AnswerverifiedShow Answer

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

Correct AnswerverifiedShow Answer

When OPEC raised the price of crude oil in the 1970s, it caused the

Correct AnswerverifiedShow Answer

The minimum wage

Correct AnswerverifiedShow Answer

A binding price floor will reduce a firm's total revenue

Correct AnswerverifiedShow Answer

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

Correct AnswerverifiedShow Answer

A price floor set above the equilibrium price is binding.

Correct AnswerverifiedShow Answer

Rent control

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Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Correct AnswerverifiedShow Answer

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

Correct AnswerverifiedShow Answer

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set at $15 wou...View AnswerShow Answer

In the short run, rent control causes the quantity supplied

Correct AnswerverifiedShow Answer

Regardless of whether a tax is levied on sellers or buyers, taxes encourage market activity.

Correct AnswerverifiedShow Answer

If a tax is levied on the sellers of flour, then

Correct AnswerverifiedShow Answer

One common example of a price floor is the minimum wage.

Correct AnswerverifiedShow Answer

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1. A binding price ceiling is shown in

Correct AnswerverifiedShow Answer

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Correct AnswerverifiedShow Answer

Figure 6-25 -Refer to Figure 6-25. The burden of the tax on buyers is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Correct AnswerverifiedShow Answer

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A price ceiling set at $15 wou...
View Answer

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