Question 1

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

Accepted Answer

A)   $4
B)   $5
C)   $6
D)   $7E) All of the above
F) C) and D)

Question 2

A price ceiling will be binding only if it is set

Accepted Answer

A)   equal to the equilibrium price.
B)   above the equilibrium price.
C)   below the equilibrium price.
D)   either above or below the equilibrium price.E) All of the above
F) C) and D)

Question 3

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs.Which of the following is not correct? The tax would

Accepted Answer

A)   shift the demand curve downward by 25 cents.
B)   lower the equilibrium price by 25 cents.
C)   reduce the equilibrium quantity.
D)   discourage market activity.E) B) and D)
F) A) and C)

Question 4

The tax incidence

Accepted Answer

A)   is the manner in which the burden of a tax is shared among participants in a market.
B)   can be shifted to the buyer by imposing the tax on the buyers of a product in a market.
C)   can be shifted to the seller by imposing the tax on the sellers of a product in a market.
D)   All of the above are correct.E) None of the above
F) A) and D)

Question 5

The tax burden falls more heavily on the side of the market that is more inelastic.

Accepted Answer

A) True 
 B)False

Question 6

Table 6-2
 
-Refer to Table 6-2.A price ceiling set at $5 will

Accepted Answer

A)   be binding and will result in a shortage of 50 units.
B)   be binding and will result in a shortage of 75 units.
C)   be binding and will result in a shortage of 125 units.
D)   not be binding.E) B) and D)
F) C) and D)

Question 7

A tax on sellers shifts the supply curve but not the demand curve.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-10 
-Refer to Figure 6-10.A price floor set at

Accepted Answer

A)   $6 will be binding and will result in a surplus of 8 units.
B)   $6 will be binding and will result in a surplus of 4 units.
C)   $16 will be binding and will result in a surplus of 12 units.
D)   $16 will be binding and will result in a surplus of 6 units.E) A) and D)
F) B) and C)

Question 9

The price received by sellers in a market will decrease if the government

Accepted Answer

A)   imposes a binding price floor in that market.
B)   decreases a binding price ceiling in that market.
C)   decreases a tax on the good sold in that market.
D)   increases a binding price floor in that market.E) A) and C)
F) A) and D)

Question 10

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 11

Figure 6-3
This figure shows the market demand and market supply curves for good Z. 
-Refer to Figure 6-3.Suppose a tax of $6 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) B) and D)
F) All of the above

Question 12

Figure 6-2 
-Refer to Figure 6-2.The price ceiling causes quantity

Accepted Answer

A)   supplied to exceed quantity demanded by 45 units.
B)   supplied to exceed quantity demanded by 85 units.
C)   demanded to exceed quantity supplied by 45 units.
D)   demanded to exceed quantity supplied by 85 units.E) B) and D)
F) All of the above

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-21 
-Refer to Figure 6-22.The price that buyers pay after the tax is imposed is

Accepted Answer

A)   $5.
B)   $6.
C)   $7.
D)   $8.E) A) and B)
F) C) and D)

Question 15

A tax imposed on the sellers of a good will lower 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) All of the above
F) A) and B)

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A)   a surplus in the market.
B)   a shortage in the market.
C)   a nonbinding price control.
D)   long lines of frustrated buyers.E) C) and D)
F) None of the above

Question 18

Long lines

Accepted Answer

A)   and discrimination according to seller bias are both inefficient rationing mechanisms because they both waste buyers' time.
B)   and discrimination according to seller bias are both inefficient rationing mechanisms because the good does not necessarily go to the buyer who values it most highly.
C)   are an inefficient rationing mechanism because they waste buyers' time,and discrimination according to seller bias is an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly.
D)   are an inefficient rationing mechanism because the good does not necessarily go to the buyer who values it most highly,and discrimination according to seller bias is an inefficient rationing mechanism because it wastes buyers' time.E) A) and D)
F) B) and D)

Question 19

If the demand curve is very elastic and the supply curve is very inelastic in a market,then the sellers will bear a greater burden of a tax imposed on the market,even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 20

Figure 6-2
This figure shows the market demand and market supply curves for good X. 
-Refer to Figure 6-2.Which of the following price ceilings would be binding in this market?

Accepted Answer

A)   $4
B)   $5
C)   $6
D)   $7E) C) and D)
F) None of the above

Exam 6: Supply,demand,and Government Policies

The price received by sellers in a market will decrease if the government

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Figure 6-10 -Refer to Figure 6-10.A price floor set at

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Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs.Which of the following is not correct? The tax would

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An outcome that can result from either a price ceiling or a price floor is

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A tax on sellers shifts the supply curve but not the demand curve.

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Table 6-2 -Refer to Table 6-2.A price ceiling set at $5 will

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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 6-2 -Refer to Figure 6-2.The price ceiling causes quantity

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

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

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Figure 6-3 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-3.Suppose a tax of $6 per unit is imposed on this market.Which of the following is correct?

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

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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.

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Figure 6-2 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-2.Which of the following price ceilings would be binding in this market?

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A price ceiling will be binding only if it is set

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If the demand curve is very elastic and the supply curve is very inelastic in a market,then the sellers will bear a greater burden of a tax imposed on the market,even if the tax is imposed on the buyers.

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Figure 6-21 -Refer to Figure 6-22.The price that buyers pay after the tax is imposed is

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The tax burden falls more heavily on the side of the market that is more inelastic.

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The tax incidence

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Long lines

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