Question 1

Which of the following is not correct?

Accepted Answer

A)   The economy contains many labor markets for different types of workers.
B)   The impact of the minimum wage depends on the skill and experience of the worker.
C)   The minimum wage is binding for workers with high skills and much experience.
D)   The minimum wage is not binding when the equilibrium wage is above the minimum wage.E) A) and B)
F) A) and C) C

Question 2

Figure 6-31 
-Refer to Figure 6-31. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set ...

Question 3

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

Question 4

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 5

The term tax incidence refers to

Accepted Answer

A)   whether buyers or sellers of a good are required to send tax payments to the government.
B)   whether the demand curve or the supply curve shifts when the tax is imposed.
C)   the distribution of the tax burden between buyers and sellers.
D)   widespread view that taxes and death)  are the only certainties in life.E) A) and B)
F) B) and C)

Question 6

Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the

Accepted Answer

A)   demand is more inelastic than the supply.
B)   supply is more inelastic than the demand.
C)   government has required that buyers remit the tax payments.
D)   government has required that sellers remit the tax payments.E) B) and C)
F) B) and D)

Question 7

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is correct?

Accepted Answer

A)   Workers determine the supply of labor, and firms determine the demand for labor.
B)   Workers determine the demand for labor, and firms determine the supply of labor.
C)   The labor market is a single market for all different types of workers.
D)   The price of the product produced by labor adjusts to balance the supply of labor and the demand for labor.E) B) and C)
F) A) and D)

Question 9

Figure 6-6 
-Refer to Figure 6-6. If the government imposes a price floor of $6 on this market, then there will be

Accepted Answer

A)   no surplus.
B)   a surplus of 20 units.
C)   a surplus of 30 units.
D)   a surplus of 40 units.E) A) and C)
F) None of the above

Question 10

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Accepted Answer

A) True 
 B)False

Question 11

When a tax is imposed on the sellers of a good, the supply curve shifts

Accepted Answer

A)   upward by the amount of the tax.
B)   downward by the amount of the tax.
C)   upward by less than the amount of the tax.
D)   downward by less than the amount of the tax.E) None of the above
F) All of the above

Question 12

Scenario 6-1
Suppose that demand in the market for good X is given by the equation  and that supply in the market for good X is given by the equation 
-Refer to Scenario 6-1. If the government set a price ceiling at $12, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set at $12 wou...

Question 13

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

Accepted Answer

A) True 
 B)False

Question 14

The Earned Income Tax Credit is an example of a

Accepted Answer

A)   minimum-wage law.
B)   price ceiling.
C)   wage subsidy.
D)   rent subsidy.E) A) and D)
F) B) and C)

Question 15

In "Venezuela Versus the Market," the price control placed on coffee

Accepted Answer

A)   created a shortage of coffee.
B)   resulted in higher profits for coffee growers.
C)   increased coffee exports to other countries.
D)   increased the amount of land and coffee used in production.E) A) and D)
F) C) and D)

Question 16

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

Accepted Answer

A)   This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity.
B)   The price paid by buyers is $0.30 per drink more than it was before the tax.
C)   Forty percent of the burden of the tax falls on sellers.
D)   All of the above are correct.E) B) and C)
F) A) and D) D

Question 17

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

Question 18

Figure 6-11 
-Refer to Figure 6-11. Which of the following statements is not correct?

Accepted Answer

A)   A government-imposed price of $8 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B.
B)   A government-imposed price of $10 would be a binding price ceiling if market demand is either Demand A or Demand B.
C)   A government-imposed price of $4 would be a binding price ceiling if market demand is either Demand A or Demand B.
D)   A government-imposed price of $10 would be a binding price floor if market demand is Demand A and a non-binding price ceiling if market demand is Demand B.E) A) and B)
F) None of the above

Question 19

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) A) and C)

Question 20

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Accepted Answer

A)   OPEC raised the price of crude oil in world markets.
B)   U.S. gasoline producers raised the price of gasoline.
C)   the U.S. government maintained a price ceiling on gasoline.
D)   Americans typically commuted long distances.E) C) and D)
F) A) and B) C

Exam 6: Supply, Demand, and Government Policies

Which of the following is not correct?

Correct Answer
verified
C

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct Answer
verified
A price ceiling set ...
View Answer

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

Correct Answer
verified

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Correct Answer
verified

The term tax incidence refers to

Correct Answer
verified

Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the

Correct Answer
verified

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

Correct Answer
verified

Which of the following is correct?

Correct Answer
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Figure 6-6 -Refer to Figure 6-6. If the government imposes a price floor of $6 on this market, then there will be

Correct Answer
verified

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Correct Answer
verified

When a tax is imposed on the sellers of a good, the supply curve shifts

Correct Answer
verified

Correct Answer
verified
A price ceiling set at $12 wou...
View Answer

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

Correct Answer
verified

The Earned Income Tax Credit is an example of a

Correct Answer
verified

In "Venezuela Versus the Market," the price control placed on coffee

Correct Answer
verified

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

Correct Answer
verified
D

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

Correct Answer
verified

Figure 6-11 -Refer to Figure 6-11. Which of the following statements is not correct?

Correct Answer
verified

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

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Correct Answer
verified
C

Exam 6: Supply, Demand, and Government Policies

Which of the following is not correct?

Correct AnswerverifiedC

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price ceiling set ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Correct AnswerverifiedShow Answer

The term tax incidence refers to

Correct AnswerverifiedShow Answer

Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the

Correct AnswerverifiedShow Answer

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Figure 6-6 -Refer to Figure 6-6. If the government imposes a price floor of $6 on this market, then there will be

Correct AnswerverifiedShow Answer

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Correct AnswerverifiedShow Answer

When a tax is imposed on the sellers of a good, the supply curve shifts

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA price ceiling set at $12 wou...View AnswerShow Answer

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

Correct AnswerverifiedShow Answer

The Earned Income Tax Credit is an example of a

Correct AnswerverifiedShow Answer

In "Venezuela Versus the Market," the price control placed on coffee

Correct AnswerverifiedShow Answer

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

Correct AnswerverifiedD

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

Correct AnswerverifiedShow Answer

Figure 6-11 -Refer to Figure 6-11. Which of the following statements is not correct?

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

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Correct AnswerverifiedC

Correct Answer
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C

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A price ceiling set ...
View Answer

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A price ceiling set at $12 wou...
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D

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C