Question 1

Table 6-1
 
-Refer to Table 6-1.Suppose the government imposes a price floor of $5 on this market.What will be the size of the surplus in this market?

Accepted Answer

A)   0 units
B)   2 units
C)   8 units
D)   10 unitsE) C) and D)
F) B) and D)

Question 2

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

Question 3

A tax on sellers increases the quantity of the good sold in the market.

Accepted Answer

A) True 
 B)False

Question 4

Figure 6-23
 
-Refer to Figure 6-23.The amount of the tax per unit is

Accepted Answer

A)   $4.
B)   $5.
C)   $6.
D)   $10.E) B) and C)
F) All of the above

Question 5

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

Question 6

A price ceiling set below the equilibrium price is nonbinding.

Accepted Answer

A) True 
 B)False

Question 7

Price controls can generate inequities.

Accepted Answer

A) True 
 B)False

Question 8

If the government levies a $500 tax per car on sellers of cars,then the price received by sellers of cars would

Accepted Answer

A)   decrease by less than $500.
B)   decrease by exactly $500.
C)   decrease by more than $500.
D)   increase by an indeterminate amount.E) B) and C)
F) All of the above

Question 9

Suppose the equilibrium price of a tube of toothpaste is $2,and the government imposes a price floor of $3 per tube.As a result of the price floor,the

Accepted Answer

A)   demand curve for toothpaste shifts to the left.
B)   supply curve for toothpaste shifts to the right.
C)   quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases.
D)   quantity supplied of toothpaste stays the same.E) A) and B)
F) None of the above

Question 10

A tax of $1 on sellers always increases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 11

A price floor set above the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 12

If the government removes a binding price ceiling 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) A) and C)
F) C) and D)

Question 13

A tax on the sellers of coffee will increase the price of coffee paid by buyers,

Accepted Answer

A)   increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.
B)   increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.
C)   decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.
D)   decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.E) A) and D)
F) A) and C)

Question 14

Figure 6-20
 
-Refer to Figure 6-20.Andrew is a buyer of the good.Taking the tax into account,how much does Andrew effectively pay to acquire one unit of the good?

Accepted Answer

A)   $16
B)   $18
C)   $24
D)   $26E) B) and D)
F) A) and D)

Question 15

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

Accepted Answer

A)   $8
B)   $10
C)   $12
D)   $14E) B) and D)
F) B) and C)

Question 16

Figure 6-24
Suppose the government imposes a $2 on this market.
 
-Refer to Figure 6-24.The buyers will bear a higher share of the tax burden than sellers if the demand is

Accepted Answer

A)   D1, and the supply is S1.
B)   D2, and the supply is S1.
C)   D1, and the supply is S2.
D)   D2, and the supply is S2.E) B) and C)
F) A) and D)

Question 17

Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum.The tax would

Accepted Answer

A)   shift the supply curve upward by less than 50 cents.
B)   raise the equilibrium price by 50 cents.
C)   create a 50-cent tax burden each for buyers and sellers.
D)   discourage market activity.E) A) and D)
F) All of the above

Question 18

If a binding price ceiling is imposed on the baby formula market,then

Accepted Answer

A)   the quantity of baby formula demanded will increase.
B)   the quantity of baby formula supplied will decrease.
C)   a shortage of baby formula will develop.
D)   All of the above are correct.E) None of the above
F) A) and D)

Question 19

You receive a paycheck from your employer,and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare) tax.Which of the following statements is correct?

Accepted Answer

A)   This type of tax is an example of a payback tax.
B)   Your employer is required by law to pay $400 to match the $400 deducted from your check.
C)   The $400 that you paid is the true burden of the tax that falls on you, the employee.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 20

To be binding,a price floor must be set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, And Government Policies.

Suppose the equilibrium price of a tube of toothpaste is $2,and the government imposes a price floor of $3 per tube.As a result of the price floor,the

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Figure 6-23 -Refer to Figure 6-23.The amount of the tax per unit is

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Figure 6-24 Suppose the government imposes a $2 on this market. -Refer to Figure 6-24.The buyers will bear a higher share of the tax burden than sellers if the demand is

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To be binding,a price floor must be set above the equilibrium price.

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A tax on the sellers of coffee will increase the price of coffee paid by buyers,

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If the government levies a $500 tax per car on sellers of cars,then the price received by sellers of cars would

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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

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If a binding price ceiling is imposed on the baby formula market,then

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A price ceiling set below the equilibrium price is nonbinding.

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

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

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Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum.The tax would

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A tax on sellers increases the quantity of the good sold in the market.

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

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Table 6-1 -Refer to Table 6-1.Suppose the government imposes a price floor of $5 on this market.What will be the size of the surplus in this market?

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A tax of $1 on sellers always increases the equilibrium price by $1.

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Price controls can generate inequities.

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You receive a paycheck from your employer,and your pay stub indicates that $400 was deducted to pay the FICA (Social Security/Medicare) tax.Which of the following statements is correct?

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A price floor set above the equilibrium price is binding.

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Figure 6-20 -Refer to Figure 6-20.Andrew is a buyer of the good.Taking the tax into account,how much does Andrew effectively pay to acquire one unit of the good?

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