Question 1

A tax of $1 on buyers shifts the demand curve downward by exactly $1.

Accepted Answer

A) True 
 B)False

Question 2

A tax imposed on the buyers 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) A) and B)

Question 3

A legal minimum on the price at which a good can be sold is called a

Accepted Answer

A)   price subsidy.
B)   price floor.
C)   tax.
D)   price ceiling.E) None of the above
F) B) and D)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

When a binding price ceiling is imposed on a market to benefit buyers,

Accepted Answer

A)   no buyers actually benefit.
B)   some buyers benefit, but no buyers are harmed.
C)   some buyers benefit, and some buyers are harmed.
D)   all buyers benefit.E) B) and D)
F) B) and C)

Question 6

A tax imposed on the buyers of a good will raise 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) None of the above

Question 7

Figure 6-5 
-Refer to Figure 6-5. If the horizontal line on the graph represents a price floor, then the price floor is

Accepted Answer

A)   binding and creates a surplus of 60 units of the good.
B)   binding and creates a surplus of 20 units of the good.
C)   binding and creates a surplus of 40 units of the good.
D)   not binding, and there will be no surplus or shortage of the good.E) None of the above
F) All of the above

Question 8

If the equilibrium price of an airline ticket is $500 and the government imposes a price floor of $400 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Accepted Answer

A) True 
 B)False

Question 9

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 $20 per ticket, then the

Accepted Answer

A)   demand curve will shift upward by $30, and the price paid by buyers will decrease by less than $30.
B)   demand curve will shift upward by $30, and the price paid by buyers will decrease by $30.
C)   supply curve will shift downward by $30, and the effective price received by sellers will increase by less than $30.
D)   supply curve will shift downward by $30, and the effective price received by sellers will increase by $30.E) B) and C)
F) A) and D)

Question 10

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

Accepted Answer

A)   a surplus of 2 units.
B)   a surplus of 4 units.
C)   12 units sold.
D)   10 units sold.E) A) and D)
F) A) and C)

Question 11

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. Workers will bear

Accepted Answer

A)   an equal share of the tax in comparison to firms.
B)   a greater share of the tax in comparison to firms.
C)   a smaller share of the tax in comparison to firms.
D)   All of the above are possible.E) A) and B)
F) B) and D)

Question 12

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the sellers in this market?

Accepted Answer

With a $6 tax per unit, the am...

Question 13

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 floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at...

Question 14

If a tax is imposed on the buyers of a product, then the tax burden will fall entirely on the buyers.

Accepted Answer

A) True 
 B)False

Question 15

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

Accepted Answer

A) True 
 B)False

Question 16

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) B) and C)
F) C) and D)

Question 17

A tax on buyers increases the size of a market.

Accepted Answer

A) True 
 B)False

Question 18

If the government removes a binding price floor 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 B)
F) A) and C)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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 $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price ceiling set ...

Exam 6: Supply, Demand, and Government Policies

A tax imposed on the buyers of a good will

Correct AnswerverifiedShow Answer

If a tax is imposed on the buyers of a product, then the tax burden will fall entirely on the buyers.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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. Workers will bear

Correct AnswerverifiedShow Answer

A tax of $1 on buyers shifts the demand curve downward by exactly $1.

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 much is the burden of the tax on the sellers in this market?

Correct AnswerverifiedWith a $6 tax per unit, the am...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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 floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price floor set at...View AnswerShow Answer

Figure 6-5 -Refer to Figure 6-5. If the horizontal line on the graph represents a price floor, then the price floor is

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Figure 6-4 -Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

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A tax imposed on the buyers of a good will raise the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA price ceiling set ...View AnswerShow Answer

If the equilibrium price of an airline ticket is $500 and the government imposes a price floor of $400 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A legal minimum on the price at which a good can be sold is called a

Correct AnswerverifiedShow Answer

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

Correct AnswerverifiedShow Answer

When a binding price ceiling is imposed on a market to benefit buyers,

Correct AnswerverifiedShow Answer

A tax on buyers increases the size of a market.

Correct AnswerverifiedShow Answer

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 $20 per ticket, then the

Correct AnswerverifiedShow Answer

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With a $6 tax per unit, the am...
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A price floor set at...
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A price ceiling set ...
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