Question 1

Suppose sellers of liquor are required to send $1.00 to the government for every bottle of liquor they sell.Further,suppose this tax causes the price paid by buyers of liquor to rise by $0.60 per bottle.Which of the following statements is correct?

Accepted Answer

A)   The effective price received by sellers is $0.40 per bottle less than it was before the tax.
B)   Sixty percent of the burden of the tax falls on sellers.
C)   This tax causes the demand curve for liquor to shift downward by $1.00 at each quantity of liquor.
D)   All of the above are correct.E) C) and D)
F) All of the above

Question 2

Figure 6-10 
-Refer to Figure 6-10.The per-unit burden of the tax is

Accepted Answer

A)   $4 on buyers and $6 on sellers.
B)   $5 on buyers and $5 on sellers.
C)   $6 on buyers and $4 on sellers.
D)   $10 on buyers and $0 on sellers.E) B) and D)
F) B) and C)

Question 3

Suppose the demand for macaroni is inelastic and the supply of macaroni is elastic,and the demand for cigarettes is inelastic and the supply of cigarettes is elastic.If a tax were levied on the sellers of both of these commodities,we would expect that the

Accepted Answer

A)   burden of both taxes would fall more heavily on the buyers than on the sellers.
B)   burden of the macaroni tax would fall more heavily on the sellers than on the buyers,and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers.
C)   burden of the macaroni tax would fall more heavily on the buyers than on the sellers,and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers.
D)   burden of both taxes would fall more heavily on the sellers than on the buyers.E) None of the above
F) All of the above

Question 4

When a binding price ceiling is imposed on a market,

Accepted Answer

A)   price no longer serves as a rationing device.
B)   the quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling.
C)   all buyers benefit.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 5

A $2.00 tax levied on the sellers of mailboxes will shift the supply curve

Accepted Answer

A)   upward by exactly $2.00.
B)   upward by less than $2.00.
C)   downward by exactly $2.00.
D)   downward by less than $2.00.E) A) and B)
F) A) and C)

Question 6

Minimum-wage laws dictate the

Accepted Answer

A)   average price employers must pay for labor.
B)   highest price employers may pay for labor.
C)   lowest price employers may pay for labor.
D)   the highest and lowest prices employers may pay for labor.E) B) and D)
F) A) and C)

Question 7

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Accepted Answer

A) True 
 B)False

Question 8

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

Accepted Answer

A) True 
 B)False

Question 9

Over time,housing shortages caused by rent control

Accepted Answer

A)   increase,because the demand for and supply of housing are less elastic in the long run.
B)   increase,because the demand for and supply of housing are more elastic in the long run.
C)   decrease,because the demand for and supply of housing are less elastic in the long run.
D)   decrease,because the demand for and supply of housing are more elastic in the long run.E) None of the above
F) A) and C)

Question 10

Most labor economists believe that the supply of labor is

Accepted Answer

A)   less elastic than the demand and,therefore,firms bear most of the burden of the payroll tax.
B)   less elastic than the demand and,therefore,workers bear most of the burden of the payroll tax.
C)   more elastic than the demand and,therefore,workers bear most of the burden of the payroll tax.
D)   more elastic than the demand and,therefore,firms bear most of the burden of the payroll tax.E) B) and D)
F) A) and D)

Question 11

A tax levied on the sellers of blueberries

Accepted Answer

A)   increases sellers' costs,reduces profits,and shifts the supply curve up.
B)   increases sellers' costs,reduces profits,and shifts the supply curve down.
C)   decreases sellers' costs,increases profits,and shifts the supply curve up.
D)   decreases sellers' costs,increases profits,and shifts the supply curve down.E) C) and D)
F) A) and D)

Question 12

In a competitive market free of government regulation,

Accepted Answer

A)   price adjusts until quantity demanded is greater than quantity supplied.
B)   price adjusts until quantity demanded is less than quantity supplied.
C)   price adjusts until quantity demanded equals quantity supplied.
D)   supply adjusts to meet demand at every price.E) None of the above
F) C) and D)

Question 13

Which of the following statements about the effects of rent control is correct?

Accepted Answer

A)   The short-run effect of rent control is a surplus of apartments,and the long-run effect of rent control is a shortage of apartments.
B)   The short-run effect of rent control is a relatively small shortage of apartments,and the long-run effect of rent control is a larger shortage of apartments.
C)   In the long run,rent control leads to a shortage of apartments and an improvement in the quality of available apartments.
D)   The effects of rent control are very noticeable to the public in the short run because the primary effects of rent control occur very quickly.E) None of the above
F) A) and B)

Question 14

A tax on golf clubs will cause buyers of golf clubs to pay a higher price,sellers of golf clubs to receive a lower price,and fewer golf clubs to be sold.

Accepted Answer

A) True 
 B)False

Question 15

Table 6-2
 
-Refer to Table 6-2.Which of the following statements is correct?

Accepted Answer

A)   A price ceiling set at $15 will be binding and will result in a shortage of 50 units.
B)   A price ceiling set at $15 will be binding and will result in a shortage of 100 units.
C)   A price ceiling set at $15 will be binding and will result in a shortage of 125 units.
D)   A price ceiling set at $15 will not be binding.E) A) and B)
F) C) and D)

Question 16

In the final analysis,tax incidence

Accepted Answer

A)   depends on the legislated burden.
B)   is entirely random.
C)   depends on the forces of supply and demand.
D)   falls entirely on buyers or entirely on sellers.E) C) and D)
F) All of the above

Question 17

Most labor economists believe that the supply of labor is much more elastic than the demand.

Accepted Answer

A) True 
 B)False

Question 18

A tax on buyers increases the size of a market.

Accepted Answer

A) True 
 B)False

Question 19

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

Accepted Answer

A) True 
 B)False

Question 20

One common example of a price floor is the minimum wage.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

A $2.00 tax levied on the sellers of mailboxes will shift the supply curve

Correct AnswerverifiedShow Answer

Figure 6-10 -Refer to Figure 6-10.The per-unit burden of the tax is

Correct AnswerverifiedShow Answer

Over time,housing shortages caused by rent control

Correct AnswerverifiedShow Answer

Suppose the demand for macaroni is inelastic and the supply of macaroni is elastic,and the demand for cigarettes is inelastic and the supply of cigarettes is elastic.If a tax were levied on the sellers of both of these commodities,we would expect that the

Correct AnswerverifiedShow Answer

Most labor economists believe that the supply of labor is

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Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

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Most labor economists believe that the supply of labor is much more elastic than the demand.

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Minimum-wage laws dictate the lowest wage that firms may pay workers.

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Table 6-2 -Refer to Table 6-2.Which of the following statements is correct?

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Which of the following statements about the effects of rent control is correct?

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One common example of a price floor is the minimum wage.

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A tax levied on the sellers of blueberries

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When a binding price ceiling is imposed on a market,

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Minimum-wage laws dictate the

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The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

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Suppose sellers of liquor are required to send $1.00 to the government for every bottle of liquor they sell.Further,suppose this tax causes the price paid by buyers of liquor to rise by $0.60 per bottle.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

In the final analysis,tax incidence

Correct AnswerverifiedShow Answer

In a competitive market free of government regulation,

Correct AnswerverifiedShow Answer

A tax on golf clubs will cause buyers of golf clubs to pay a higher price,sellers of golf clubs to receive a lower price,and fewer golf clubs to be sold.

Correct AnswerverifiedShow Answer

A tax on buyers increases the size of a market.

Correct AnswerverifiedShow Answer

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