Question 1

When a tax is placed on the sellers of energy drinks, the

Accepted Answer

A)   sellers bear the entire burden of the tax.
B)   buyers bear the entire burden of the tax.
C)   burden of the tax will be always be equally divided between the buyers and the sellers.
D)   burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.E) All of the above
F) B) and D)

Question 2

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

Accepted Answer

A)   more, and sellers receive more than they did before the tax.
B)   more, and sellers receive less than they did before the tax.
C)   less, and sellers receive more than they did before the tax.
D)   less, and sellers receive less than they did before the tax.E) A) and D)
F) B) and C)

Question 3

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Accepted Answer

A) True 
 B)False

Question 4

Figure 6-18
The vertical distance between points A and B represents the tax in the market. 
-Refer to Figure 6-18. The per-unit burden of the tax on sellers is

Accepted Answer

A)   $6.
B)   $8.
C)   $10.
D)   $14.E) A) and C)
F) B) and D)

Question 5

A price floor set above the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 6

A price ceiling will be binding only if it is set

Accepted Answer

A)   equal to the equilibrium price.
B)   above the equilibrium price.
C)   below the equilibrium price.
D)   either above or below the equilibrium price.E) A) and B)
F) All of the above

Question 7

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-25 
-Refer to Figure 6-25. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. After the sellers are required to pay the tax, relative to the case depicted in the graph, the burden on buyers will be

Accepted Answer

A)   larger, and the burden on sellers will be smaller.
B)   smaller, and the burden on sellers will be larger.
C)   the same, and the burden on sellers will be the same.
D)   The relative burdens in the two cases cannot be determined without further information.E) B) and C)
F) A) and C)

Question 9

The demand for salt is inelastic, and the supply of salt is elastic. The demand for caviar is elastic, and the supply of caviar is inelastic. Suppose that a tax of $1 per pound is levied on the sellers of salt, and a tax of $1 per pound is levied on the buyers of caviar. We would expect that most of the burden of these taxes will fall on

Accepted Answer

A)   sellers of salt and the buyers of caviar.
B)   sellers of salt and the sellers of caviar.
C)   buyers of salt and the sellers of caviar.
D)   buyers of salt and the buyers of caviar.E) A) and B)
F) B) and C)

Question 10

Figure 6-31 
-Refer to Figure 6-31. If the government set a price floor at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at...

Question 11

Figure 6-2 
-Refer to Figure 6-2. The price ceiling

Accepted Answer

A)   causes a shortage of 40 units.
B)   is not binding, because it is set above the equilibrium price.
C)   causes a shortage of 45 units.
D)   causes a shortage of 85 units.E) A) and D)
F) B) and C)

Question 12

Figure 6-32 
-Refer to Figure 6-32. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

There woul...

Question 13

A tax on buyers will shift the

Accepted Answer

A)   demand curve upward by the amount of the tax.
B)   demand curve downward by the amount of the tax.
C)   supply curve upward by the amount of the tax.
D)   supply curve downward by the amount of the tax.E) B) and C)
F) A) and B)

Question 14

A tax on the sellers of coffee will increase the price of coffee paid by buyers,

Accepted Answer

A)   increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.
B)   increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.
C)   decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.
D)   decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.E) None of the above
F) A) and D)

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Price floors are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Question 17

Figure 6-16 
-Refer to Figure 6-16. In this market, a minimum wage of $2.75 creates a labor

Accepted Answer

A)   shortage of 2,250 workers.
B)   shortage of 4,500 workers.
C)   surplus of 2,250 workers.
D)   neither a labor shortage nor surplus.E) C) and D)
F) A) and B)

Question 18

Which of the following is correct? A tax burden

Accepted Answer

A)   falls more heavily on the side of the market that is more elastic.
B)   falls more heavily on the side of the market that is less elastic.
C)   falls more heavily on the side of the market that is closest to unit elastic.
D)   is distributed independently of the relative elasticities of supply and demand.E) None of the above
F) All of the above

Question 19

Figure 6-2 
-Refer to Figure 6-2. The price ceiling

Accepted Answer

A)   causes a shortage of 45 units of the good.
B)   makes it necessary for sellers to ration the good.
C)   is not binding because it is set below the equilibrium price.
D)   causes a shortage of 40 units of the good.E) A) and D)
F) B) and D)

Question 20

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Accepted Answer

A)   less than $0.50
B)   $0.50.
C)   between $0.50 and $1.
D)   $1.E) B) and C)
F) A) and D)

Exam 6: Supply, Demand, and Government Policies

A tax on the sellers of coffee will increase the price of coffee paid by buyers,

Correct Answer
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A price floor set above the equilibrium price is binding.

Correct Answer
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When a tax is placed on the sellers of energy drinks, the

Correct Answer
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Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct Answer
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There woul...
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Figure 6-2 -Refer to Figure 6-2. The price ceiling

Correct Answer
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Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $2.75 creates a labor

Correct Answer
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Price floors are typically imposed to benefit buyers.

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

Correct Answer
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Figure 6-2 -Refer to Figure 6-2. The price ceiling

Correct Answer
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Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The per-unit burden of the tax on sellers is

Correct Answer
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Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.

Correct Answer
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Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Correct Answer
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Which of the following is correct? A tax burden

Correct Answer
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Correct Answer
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Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Correct Answer
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Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct Answer
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A price floor set at...
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A price ceiling will be binding only if it is set

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

Correct Answer
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A tax on buyers will shift the

Correct Answer
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Exam 6: Supply, Demand, and Government Policies

A tax on the sellers of coffee will increase the price of coffee paid by buyers,

Correct AnswerverifiedShow Answer

A price floor set above the equilibrium price is binding.

Correct AnswerverifiedShow Answer

When a tax is placed on the sellers of energy drinks, the

Correct AnswerverifiedShow Answer

Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedThere woul...View AnswerShow Answer

Figure 6-2 -Refer to Figure 6-2. The price ceiling

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Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $2.75 creates a labor

Correct AnswerverifiedShow Answer

Price floors are typically imposed to benefit buyers.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-2 -Refer to Figure 6-2. The price ceiling

Correct AnswerverifiedShow Answer

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The per-unit burden of the tax on sellers is

Correct AnswerverifiedShow Answer

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Correct AnswerverifiedShow Answer

Which of the following is correct? A tax burden

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

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Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

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

A price ceiling will be binding only if it is set

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A tax on buyers will shift the

Correct AnswerverifiedShow Answer

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There woul...
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A price floor set at...
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