Question 1

A tax on the sellers of coffee mugs

Accepted Answer

A)   increases the size of the coffee mug market.
B)   decreases the size of the coffee mug market.
C)   has no effect on the size of the coffee mug market.
D)   may increase, decrease, or have no effect on the size of the coffee mug market.E) All of the above
F) A) and C)

Question 2

Minimum-wage laws benefit society by creating a surplus of labor.

Accepted Answer

A) True 
 B)False

Question 3

Figure 6-9 
-Refer to Figure 6-9. At which price would a price ceiling be nonbinding?

Accepted Answer

A)   $4
B)   $5
C)   $3
D)   $7E) All of the above
F) B) and C)

Question 4

Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-19 
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)   One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers.
B)   One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers.
C)   One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers.
D)   Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers.E) All of the above
F) None of the above

Question 6

When a tax is imposed on a good, the result is always a shortage of the good.

Accepted Answer

A) True 
 B)False

Question 7

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would

Accepted Answer

A)   shift the demand curve downward by 25 cents.
B)   lower the equilibrium price by 25 cents.
C)   reduce the equilibrium quantity.
D)   discourage market activity.E) B) and C)
F) A) and C)

Question 8

Price is the rationing mechanism in a free, competitive market.

Accepted Answer

A) True 
 B)False

Question 9

A tax on the buyers of sofas

Accepted Answer

A)   increases the size of the sofa market.
B)   decreases the size of the sofa market.
C)   has no effect on the size of the sofa market.
D)   may increase, decrease, or have no effect on the size of the sofa market.E) A) and C)
F) A) and D)

Question 10

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

Accepted Answer

A)   increase by less than $5.
B)   increase by exactly $5.
C)   increase by more than $5.
D)   decrease by an indeterminate amount.E) B) and C)
F) A) and D)

Question 11

Figure 6-26 
-Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

Accepted Answer

A)   $8.
B)   $16.
C)   $14.
D)   $12.E) None of the above
F) A) and D)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

A tax on buyers decreases the quantity of the good sold in the market.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-24 
-Refer to Figure 6-24. The price paid by buyers after the tax is imposed is

Accepted Answer

A)   $24.
B)   21.
C)   $18.
D)   $16.E) None of the above
F) A) and B)

Question 15

A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied.

Accepted Answer

A) True 
 B)False

Question 16

A tax on buyers increases the size of a market.

Accepted Answer

A) True 
 B)False

Question 17

Renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments.

Accepted Answer

A) True 
 B)False

Question 18

A nonbinding price ceiling

Accepted Answer

A)   (i)  only
B)   (iii)  only
C)   (i)  and (iii)  only
D)   (ii)  and (iv)  onlyE) C) and D)
F) B) and D)

Question 19

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

Question 20

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

Accepted Answer

A)   (i)  only
B)   (ii)  only
C)   (i)  and (iv)  only
D)   (ii)  and (iii)  onlyE) C) and D)
F) A) and B)

Exam 6: Supply, Demand, and Government Policies

Minimum-wage laws benefit society by creating a surplus of labor.

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

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When a tax is imposed on a good, the result is always a shortage of the good.

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A tax on the buyers of sofas

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Figure 6-9 -Refer to Figure 6-9. At which price would a price ceiling be nonbinding?

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A tax on buyers increases the size of a market.

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

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Renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments.

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A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied.

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Lawmakers can decide whether the buyers or the sellers must send a tax to the government, but they cannot legislate the true burden of a tax.

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A tax on the sellers of coffee mugs

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Price is the rationing mechanism in a free, competitive market.

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Figure 6-26 -Refer to Figure 6-26. The effective price received by sellers after the tax is imposed is

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Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?

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A tax on buyers decreases the quantity of the good sold in the market.

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Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would

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Minimum-wage laws dictate the

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A nonbinding price ceiling

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Figure 6-24 -Refer to Figure 6-24. The price paid by buyers after the tax is imposed is

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If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

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