Question 1

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, 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 burden of

Accepted Answer

A)   both taxes would fall more heavily on the buyers than on the sellers.
B)   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)   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)   both taxes would fall more heavily on the sellers than on the buyers.E) C) and D)
F) A) and B)

Question 2

Scenario 6-2
Suppose demand for a product is given by the equation  and supply for the product is given by the equation 
-Refer to Scenario 6-2. Suppose the government sets a price ceiling at $17 for this product. Is this price ceiling binding, and what will be the size of the shortage/surplus in this market?

Accepted Answer

The price ceiling will not be ...

Question 3

Not all sellers benefit from a binding price floor.

Accepted Answer

A) True 
 B)False

Question 4

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Accepted Answer

A) True 
 B)False

Question 5

Rent control

Accepted Answer

A)   serves as an example of how a social problem can be alleviated or even solved by government policies.
B)   serves as an example of a price ceiling.
C)   is regarded by most economists as an efficient way of helping the poor.
D)   is the most efficient way to allocate scarce housing resources.E) A) and B)
F) B) and C)

Question 6

Scenario 6-2
Suppose demand for a product is given by the equation  and supply for the product is given by the equation 
-Refer to Scenario 6-2. Suppose the government sets a price floor at $13 for this product. Is this price floor binding, and what will be the size of the shortage/surplus in this market?

Accepted Answer

The price floor will not be bi...

Question 7

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

Accepted Answer

A)   binding price ceiling that creates a shortage.
B)   non-binding price ceiling that creates a shortage.
C)   binding price floor that creates a surplus.
D)   non-binding price floor that creates a surplus.E) B) and D)
F) A) and D)

Question 8

Using the graph shown, answer the following questions.
a. What was the equilibrium price 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. $5
b. $3
c. $2
d. $1
e. $7
...

Question 9

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

Accepted Answer

A)   binding and creates a labor shortage.
B)   binding and creates unemployment.
C)   nonbinding and creates a labor shortage.
D)   nonbinding and creates neither a labor shortage nor unemployment.E) A) and D)
F) A) and C)

Question 10

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) A) and C)

Question 11

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 12

If the government removes a binding price floor from a market, then the price received by sellers will

Accepted Answer

A)   decrease, and the quantity sold in the market will decrease.
B)   decrease, and the quantity sold in the market will increase.
C)   increase, and the quantity sold in the market will decrease.
D)   increase, and the quantity sold in the market will increase.E) B) and D)
F) B) and C)

Question 13

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

Accepted Answer

A)   not shift.
B)   shift up.
C)   shift down.
D)   become flatter.E) B) and D)
F) All of the above

Question 14

Figure 6-33 
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

Accepted Answer

The burden...

Question 15

A price floor set above the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 16

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Accepted Answer

A)   the actual tax incidence is unaffected by the legislated tax incidence.
B)   the employer now is required by law to pay more than 50 percent of the tax.
C)   the employee now is required by law to pay more than 50 percent of the tax.
D)   employers are no longer required by law to pay any portion of the tax.E) None of the above
F) A) and B)

Question 17

Table 6-5
 
-Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus or shortage)  in this market?

Accepted Answer

A)   0 units
B)   30 units
C)   45 units
D)   75 unitsE) B) and C)
F) None of the above

Question 18

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a 
i)  binding price ceiling.
Ii)  non-binding price ceiling.
Iii)  binding price floor.
Iv)  non-binding price floor.

Accepted Answer

A)   i)  only
B)   ii)  only
C)   i)  and iv)  only
D)   ii)  and iii)  onlyE) B) and D)
F) None of the above

Question 19

Price controls

Accepted Answer

A)   always produce a fair outcome.
B)   always produce an efficient outcome.
C)   can generate inequities of their own.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 20

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

Exam 6: Supply, Demand, and Government Policies

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

Correct Answer
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Correct Answer
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The price floor will not be bi...
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Not all sellers benefit from a binding price floor.

Correct Answer
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Correct Answer
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a. $5
b. $3
c. $2
d. $1
e. $7
...
View Answer

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

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

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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A price floor set above the equilibrium price is binding.

Correct Answer
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Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a i) binding price ceiling. Ii) non-binding price ceiling. Iii) binding price floor. Iv) non-binding price floor.

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Price controls

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The price ceiling will not be ...
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Table 6-5 -Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus or shortage) in this market?

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

Correct Answer
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Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, 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 burden of

Correct Answer
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Rent control

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Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

Correct Answer
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The burden...
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Rent-control laws dictate a minimum rent that landlords may charge tenants.

Correct Answer
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When a binding price ceiling is imposed on a market,

Correct Answer
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Correct Answer
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If the government removes a binding price floor from a market, then the price received by sellers will

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

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $6 in this market is an example of a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe price floor will not be bi...View AnswerShow Answer

Not all sellers benefit from a binding price floor.

Correct AnswerverifiedShow Answer

Correct Answerverifieda. $5b. $3c. $2d. $1e. $7...View AnswerShow Answer

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Correct AnswerverifiedShow Answer

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

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

A price floor set above the equilibrium price is binding.

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Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a i) binding price ceiling. Ii) non-binding price ceiling. Iii) binding price floor. Iv) non-binding price floor.

Correct AnswerverifiedShow Answer

Price controls

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Correct AnswerverifiedThe price ceiling will not be ...View AnswerShow Answer

Table 6-5 -Refer to Table 6-5. Suppose the government imposes a price floor of $3 on this market. What will be the size of the surplus or shortage) in this market?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, 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 burden of

Correct AnswerverifiedShow Answer

Rent control

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Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

Correct AnswerverifiedThe burden...View AnswerShow Answer

Rent-control laws dictate a minimum rent that landlords may charge tenants.

Correct AnswerverifiedShow Answer

When a binding price ceiling is imposed on a market,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the government removes a binding price floor from a market, then the price received by sellers will

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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The price floor will not be bi...
View Answer

Correct Answer
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Correct Answer
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a. $5
b. $3
c. $2
d. $1
e. $7
...
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Correct Answer
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The price ceiling will not be ...
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The burden...
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