Question 1

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Accepted Answer

A)   Policymakers have studied the effects of the price ceiling carefully,and they recognize that the price ceiling is advantageous for society as a whole.
B)   Buyers of milk,recognizing that the price ceiling is good for them,have pressured policymakers into imposing the price ceiling.
C)   Sellers of milk,recognizing that the price ceiling is good for them,have pressured policymakers into imposing the price ceiling.
D)   Buyers and sellers of milk have agreed that the price ceiling is good for both of them and have therefore pressured policymakers into imposing the price ceiling.E) None of the above
F) A) and D)

Question 2

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Accepted Answer

A) True 
 B)False

Question 3

When a free market for a good reaches equilibrium,anyone who is willing and able to pay the market price can buy the good.

Accepted Answer

A) True 
 B)False

Question 4

Price controls are usually enacted

Accepted Answer

A)   as a means of raising revenue for public purposes.
B)   when policymakers believe that the market price of a good or service is unfair to buyers or sellers.
C)   when policymakers detect inefficiencies in a market.
D)   All of the above are correct.E) A) and D)
F) A) and C)

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

Accepted Answer

A)   the demand curve will shift upward by $20,and the effective price received by sellers will increase by $20.
B)   the demand curve will shift upward by $20,and the effective price received by sellers will increase by less than $20.
C)   the supply curve will shift downward by $20,and the price paid by buyers will decrease by $20.
D)   the supply curve will shift downward by $20,and the price paid by buyers will decrease by less than $20.E) B) and C)
F) None of the above

Question 6

Opponents of the minimum wage point out that the minimum wage

Accepted Answer

A)   encourages teenagers to drop out of school.
B)   prevents some workers from getting needed on-the-job training.
C)   contributes to the problem of unemployment.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 7

In which of these cases will the tax burden fall most heavily on sellers of the good?

Accepted Answer

A)   The demand curve is relatively steep and the supply curve is relatively flat.
B)   The demand curve is relatively flat and the supply curve is relatively steep.
C)   The demand curve and the supply curve are both relatively flat.
D)   The demand curve and the supply curve are both relatively steep.E) A) and B)
F) All of the above

Question 8

A tax on buyers decreases demand.

Accepted Answer

A) True 
 B)False

Question 9

Figure 6-3 
-Refer to Figure 6-3.If the government imposes a price ceiling of $8 on this market,then there will be a

Accepted Answer

A)   shortage of 0.
B)   shortage of 10.
C)   shortage of 20.
D)   shortage of 40.E) A) and B)
F) All of the above

Question 10

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market?

Accepted Answer

A)   A smaller quantity of the good is bought and sold after the price ceiling becomes effective.
B)   A smaller quantity of the good is demanded after the price ceiling becomes effective.
C)   A larger quantity of the good is supplied after the price ceiling becomes effective.
D)   All of the above are correct.E) A) and B)
F) C) and D)

Question 11

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Accepted Answer

A) True 
 B)False

Question 12

When a tax is placed on the buyers 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)   demand for the product decreases.
D)   All of the above are correct.E) A) and C)
F) C) and D)

Question 13

Figure 6-12 
-Refer to Figure 6-12.How much tax revenue does this tax produce for the government?

Accepted Answer

A)   $24
B)   $30
C)   $32
D)   $56E) All of the above
F) A) and C)

Question 14

Using the graph shown,in which the vertical distance between points A and B represents the tax in the market,answer the following questions.
a.What was the equilibrium price and quantity in this market before the tax?
b.What is the amount of the tax?
c.How much of the tax will the buyers pay?
d.How much of the tax will the sellers pay?
e.How much will the buyer pay for the product after the tax is imposed?
f.How much will the seller receive after the tax is imposed?
g.As a result of the tax,what has happened to the level of market activity?

Accepted Answer

a.
Equilibrium price was $8 and equilibr...

Question 15

If a tax is levied on the buyers of a product,then the demand curve

Accepted Answer

A)   will not shift.
B)   will shift down.
C)   will shift up.
D)   will become flatter.E) None of the above
F) All of the above

Question 16

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) A) and D)

Question 17

A $0.10 tax levied on the buyers of socks will cause the

Accepted Answer

A)   supply curve for socks to shift down by $0.10.
B)   supply curve for socks to shift up by $0.10.
C)   demand curve for socks to shift down by $0.10.
D)   demand curve for socks to shift up by $0.10.E) C) and D)
F) None of the above

Question 18

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

Question 19

Figure 6-6 
-Refer to Figure 6-6.Which of the following statements is correct?

Accepted Answer

A)   A price floor set at $4 will be binding and will result in a shortage of 3 units.
B)   A price floor set at $4 will be binding and will result in a shortage of 6 units.
C)   A price floor set at $7 will be binding and will result in a surplus of 6 units.
D)   A price floor set at $7 will be binding and will result in a surplus of 12 units.E) C) and D)
F) B) and D)

Question 20

Figure 6-1
Panel (a) Panel (b)   
-Refer to Figure 6-1.In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

Accepted Answer

A)   panel (a) but not panel (b) 
B)   panel (b) but not panel (a) 
C)   both panel (a) and panel (b) 
D)   neither panel (a) nor panel (b) E) B) and C)
F) C) and D)

Exam 6: Supply, Demand, and Government Policies

If a tax is levied on the buyers of a product,then the demand curve

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

Correct Answer
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In which of these cases will the tax burden fall most heavily on sellers of the good?

Correct Answer
verified

Figure 6-3 -Refer to Figure 6-3.If the government imposes a price ceiling of $8 on this market,then there will be a

Correct Answer
verified

A $0.10 tax levied on the buyers of socks will cause the

Correct Answer
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A tax imposed on the sellers of a good will

Correct Answer
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Figure 6-12 -Refer to Figure 6-12.How much tax revenue does this tax produce for the government?

Correct Answer
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Which of the following observations would be consistent with the imposition of a binding price ceiling on a market?

Correct Answer
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Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Correct Answer
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Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Correct Answer
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Correct Answer
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a.
Equilibrium price was $8 and equilibr...
View Answer

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Correct Answer
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Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1.In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

Correct Answer
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Figure 6-6 -Refer to Figure 6-6.Which of the following statements is correct?

Correct Answer
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Opponents of the minimum wage point out that the minimum wage

Correct Answer
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When a tax is placed on the buyers of a product,the

Correct Answer
verified

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

Correct Answer
verified

Price controls are usually enacted

Correct Answer
verified

A tax on buyers decreases demand.

Correct Answer
verified

When a free market for a good reaches equilibrium,anyone who is willing and able to pay the market price can buy the good.

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

If a tax is levied on the buyers of a product,then the demand curve

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

In which of these cases will the tax burden fall most heavily on sellers of the good?

Correct AnswerverifiedShow Answer

Figure 6-3 -Refer to Figure 6-3.If the government imposes a price ceiling of $8 on this market,then there will be a

Correct AnswerverifiedShow Answer

A $0.10 tax levied on the buyers of socks will cause the

Correct AnswerverifiedShow Answer

A tax imposed on the sellers of a good will

Correct AnswerverifiedShow Answer

Figure 6-12 -Refer to Figure 6-12.How much tax revenue does this tax produce for the government?

Correct AnswerverifiedShow Answer

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market?

Correct AnswerverifiedShow Answer

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Correct AnswerverifiedShow Answer

Which of the following is the most likely explanation for the imposition of a price ceiling on the market for milk?

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Equilibrium price was $8 and equilibr...View AnswerShow Answer

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Correct AnswerverifiedShow Answer

Figure 6-1 Panel (a) Panel (b) -Refer to Figure 6-1.In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

Correct AnswerverifiedShow Answer

Figure 6-6 -Refer to Figure 6-6.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Opponents of the minimum wage point out that the minimum wage

Correct AnswerverifiedShow Answer

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

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 $30 per ticket,then

Correct AnswerverifiedShow Answer

Price controls are usually enacted

Correct AnswerverifiedShow Answer

A tax on buyers decreases demand.

Correct AnswerverifiedShow Answer

When a free market for a good reaches equilibrium,anyone who is willing and able to pay the market price can buy the good.

Correct AnswerverifiedShow Answer

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a.
Equilibrium price was $8 and equilibr...
View Answer

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