Question 1

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 2

Buyers and sellers rarely share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 3

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 ...

Question 4

Table 6-5
 
-Refer to Table 6-5. Which of the following price floors would be binding in this market?

Accepted Answer

A)   $3
B)   $6
C)   $9
D)   None of the above price floors would be binding.E) B) and C)
F) All of the above

Question 5

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

Question 6

Figure 6-15 
-Refer to Figure 6-15. For a price ceiling to be binding in this market, it would have to be set at

Accepted Answer

A)   any price below $3.
B)   a price between $2 and $3.
C)   a price between $3 and $4.
D)   any price above $3.E) A) and B)
F) None of the above

Question 7

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 C)
F) All of the above

Question 8

Figure 6-15 
-Refer to Figure 6-15. Suppose a price floor of $4 is imposed on this market. As a result,

Accepted Answer

A)   buyers' total expenditure on the good decreases by $15.
B)   the supply curve shifts to the left so as to now pass through the point quantity = 30, price = $4) .
C)   the quantity demanded of the good decreases by 30 units.
D)   the number of units sold in the market will increase by 15 units.E) C) and D)
F) A) and B)

Question 9

Figure 6-14 
-Refer to Figure 6-14. If the horizontal line on the graph represents a price floor, then the price floor is

Accepted Answer

A)   binding and creates a shortage of 20 units of the good.
B)   binding and creates a shortage of 40 units of the good.
C)   not binding but creates a shortage of 40 units of the good.
D)   not binding, and there will be no surplus or shortage of the good.E) A) and C)
F) All of the above

Question 10

Figure 6-32 
-Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at $55 would...

Question 11

Figure 6-25 
-Refer to Figure 6-25. As the figure is drawn, who sends the tax payment to the government?

Accepted Answer

A)   The buyers send the tax payment.
B)   The sellers send the tax payment.
C)   A portion of the tax payment is sent by the buyers, and the remaining portion is sent by the sellers.
D)   The question of who sends the tax payment cannot be determined from the figure.E) A) and C)
F) None of the above

Question 12

A tax on sellers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Accepted Answer

A) True 
 B)False

Question 13

To say that a price ceiling is nonbinding is to say that the price ceiling

Accepted Answer

A)   results in a surplus.
B)   is set above the equilibrium price.
C)   causes quantity demanded to exceed quantity supplied.
D)   All of the above are correct.E) All of the above
F) None of the above

Question 14

Suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

Accepted Answer

A)   less than $1.
B)   $1.
C)   between $1 and $2.
D)   $2.E) A) and D)
F) C) and D)

Question 15

Figure 6-9 
-Refer to Figure 6-9. A price floor set at

Accepted Answer

A)   $4 will be binding and will result in a shortage of 8 units.
B)   $4 will be binding and will result in a shortage of 16 units.
C)   $7 will be binding and will result in a surplus of 4 units.
D)   $7 will be binding and will result in a surplus of 8 units.E) All of the above
F) B) and C)

Question 16

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 D)
F) B) and C)

Question 17

Which of the following causes a surplus of a good?

Accepted Answer

A)   a binding price floor
B)   a binding price ceiling
C)   a tax on the good
D)   More than one of the above is correct.E) All of the above
F) A) and B)

Question 18

Table 6-4
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market.
 
-Refer to Table 6-4. Following the imposition of a price floor $3 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting shortage is

Accepted Answer

A)   0 units.
B)   4 units.
C)   5 units.
D)   10 units.E) A) and D)
F) C) and D)

Question 19

Does a binding price ceiling result in a shortage or a surplus in the market?

Accepted Answer

A binding price ceil...

Question 20

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

Accepted Answer

A)   decrease by less than $500.
B)   decrease by exactly $500.
C)   decrease by more than $500.
D)   increase by an indeterminate amount.E) A) and D)
F) All of the above

Exam 6: Supply, Demand, and Government Policies

Figure 6-14 -Refer to Figure 6-14. If the horizontal line on the graph represents a price floor, then the price floor is

Correct Answer
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To say that a price ceiling is nonbinding is to say that the price ceiling

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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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?

Correct Answer
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A price ceiling set ...
View Answer

Table 6-5 -Refer to Table 6-5. Which of the following price floors would be binding in this market?

Correct Answer
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Buyers and sellers rarely share the burden of a tax equally.

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 light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

Correct Answer
verified

Figure 6-32 -Refer to Figure 6-32. If the government set a price floor at $55, 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 $55 would...
View Answer

Figure 6-25 -Refer to Figure 6-25. As the figure is drawn, who sends the tax payment to the government?

Correct Answer
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Correct Answer
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Which of the following causes a surplus of a good?

Correct Answer
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If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

Correct Answer
verified

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 Answer
verified

Correct Answer
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Does a binding price ceiling result in a shortage or a surplus in the market?

Correct Answer
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A binding price ceil...
View Answer

Figure 6-15 -Refer to Figure 6-15. For a price ceiling to be binding in this market, it would have to be set at

Correct Answer
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A tax on sellers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Correct Answer
verified

Figure 6-15 -Refer to Figure 6-15. Suppose a price floor of $4 is imposed on this market. As a result,

Correct Answer
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Figure 6-9 -Refer to Figure 6-9. A price floor set at

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

Figure 6-14 -Refer to Figure 6-14. If the horizontal line on the graph represents a price floor, then the price floor is

Correct AnswerverifiedShow Answer

To say that a price ceiling is nonbinding is to say that the price ceiling

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 price ceiling set ...View AnswerShow Answer

Table 6-5 -Refer to Table 6-5. Which of the following price floors would be binding in this market?

Correct AnswerverifiedShow Answer

Buyers and sellers rarely share the burden of a tax equally.

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

Suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

Correct AnswerverifiedShow Answer

Figure 6-32 -Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price floor set at $55 would...View AnswerShow Answer

Figure 6-25 -Refer to Figure 6-25. As the figure is drawn, who sends the tax payment to the government?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following causes a surplus of a good?

Correct AnswerverifiedShow Answer

If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

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

Correct AnswerverifiedShow Answer

Does a binding price ceiling result in a shortage or a surplus in the market?

Correct AnswerverifiedA binding price ceil...View AnswerShow Answer

Figure 6-15 -Refer to Figure 6-15. For a price ceiling to be binding in this market, it would have to be set at

Correct AnswerverifiedShow Answer

A tax on sellers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Correct AnswerverifiedShow Answer

Figure 6-15 -Refer to Figure 6-15. Suppose a price floor of $4 is imposed on this market. As a result,

Correct AnswerverifiedShow Answer

Figure 6-9 -Refer to Figure 6-9. A price floor set at

Correct AnswerverifiedShow Answer

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A price ceiling set ...
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A price floor set at $55 would...
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A binding price ceil...
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