Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

Accepted Answer

A)   Cellular phones become less popular.
B)   Traditional land line phones become more expensive.
C)   The components used to produce cellular phones become less expensive.
D)   Firms expect the price of cellular phones to fall in the future.E) B) and C)
F) A) and C)

Question 3

Figure 6-12 
-Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Accepted Answer

A)   the market price will increase to P3.
B)   a surplus will occur at the new market price of P2.
C)   the market price will stay at P1.
D)   a shortage will occur at the new market price of P2.E) A) and C)
F) All of the above

Question 4

The imposition of a binding price floor on a market

Accepted Answer

A)   causes quantity demanded to be greater than quantity supplied.
B)   causes quantity demanded to be less than quantity supplied.
C)   causes quantity demanded to be equal to quantity supplied.
D)   causes a decrease in demand.E) B) and D)
F) None of the above

Question 5

When a tax is placed on the sellers of a product, the

Accepted Answer

A)   size of the market decreases.
B)   effective price received by sellers decreases, and the price paid by buyers increases.
C)   supply of the product decreases.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 6

You have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia. George, who is one of your advisors, says that the best way to avoid a shortage of oranges is to take no action at all. Charles, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop. Otto, a third advisor, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Which of your three advisors is most likely to have studied economics?

Accepted Answer

A)   George
B)   Charles
C)   Otto
D)   Apparently, all three advisors have studied economics, but their views on positive economics are different.E) B) and C)
F) A) and D)

Question 7

Minimum-wage laws benefit society by creating a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not an example of a public policy?

Accepted Answer

A)   rent-control laws
B)   minimum-wage laws
C)   taxes
D)   equilibrium lawsE) None of the above
F) A) and D)

Question 11

The price paid by buyers in a market will increase if the government

Accepted Answer

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

Question 12

Workers, rather than firms, bear most of the burden of the payroll tax.

Accepted Answer

A) True 
 B)False

Question 13

A shortage results when a

Accepted Answer

A)   nonbinding price ceiling is imposed on a market.
B)   nonbinding price ceiling is removed from a market.
C)   binding price ceiling is imposed on a market.
D)   binding price ceiling is removed from a market.E) C) and D)
F) None of the above

Question 14

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

Accepted Answer

With a $6 tax per un...

Question 15

A binding price floor causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 16

Figure 6-19 
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)   One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers.
B)   One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers.
C)   One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers.
D)   Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers.E) A) and C)
F) B) and D)

Question 17

A tax imposed on the sellers 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) None of the above
F) B) and C)

Question 18

Scenario 6-2
Suppose demand for a product is given by the equation  and supply for the product is given by the equation 
-The following table shows the demand and supply schedules in a particular market.
  If the government sets a price floor $2 above the equilibrium price, how many units will be sold in this market?

Accepted Answer

The equilibrium price is $3, so the pric...

Question 19

An example of a price floor is

Accepted Answer

A)   the regulation of gasoline prices in the U.S. in the 1970s.
B)   rent control.
C)   the minimum wage.
D)   any restriction on price that leads to a shortage.E) C) and D)
F) None of the above

Question 20

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

The imposition of a binding price floor on a market

Correct Answer
verified

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

Correct Answer
verified
With a $6 tax per un...
View Answer

Workers, rather than firms, bear most of the burden of the payroll tax.

Correct Answer
verified

Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Correct Answer
verified

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Correct Answer
verified

Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

Correct Answer
verified

A shortage results when a

Correct Answer
verified

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

Correct Answer
verified

When a tax is placed on the sellers of a product, the

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

A binding price floor causes a shortage in the market.

Correct Answer
verified

A tax imposed on the sellers of a good will

Correct Answer
verified

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Correct Answer
verified

The price paid by buyers in a market will increase if the government

Correct Answer
verified

Which of the following is not an example of a public policy?

Correct Answer
verified

Minimum-wage laws benefit society by creating a surplus of labor.

Correct Answer
verified

An example of a price floor is

Correct Answer
verified

Correct Answer
verified
The equilibrium price is $3, so the pric...
View Answer

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

The imposition of a binding price floor on a market

Correct AnswerverifiedShow Answer

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many units will be bought and sold in the market after the tax is imposed?

Correct AnswerverifiedWith a $6 tax per un...View AnswerShow Answer

Workers, rather than firms, bear most of the burden of the payroll tax.

Correct AnswerverifiedShow Answer

Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2,

Correct AnswerverifiedShow Answer

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Correct AnswerverifiedShow Answer

Suppose the government has imposed a price floor on cellular phones. Which of the following events could transform the price floor from one that is binding to one that is not binding?

Correct AnswerverifiedShow Answer

A shortage results when a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a tax is placed on the sellers of a product, the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A binding price floor causes a shortage in the market.

Correct AnswerverifiedShow Answer

A tax imposed on the sellers of a good will

Correct AnswerverifiedShow Answer

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Correct AnswerverifiedShow Answer

The price paid by buyers in a market will increase if the government

Correct AnswerverifiedShow Answer

Which of the following is not an example of a public policy?

Correct AnswerverifiedShow Answer

Minimum-wage laws benefit society by creating a surplus of labor.

Correct AnswerverifiedShow Answer

An example of a price floor is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe equilibrium price is $3, so the pric...View AnswerShow Answer

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

Correct AnswerverifiedShow Answer

Correct Answer
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With a $6 tax per un...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The equilibrium price is $3, so the pric...
View Answer

Correct Answer
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