Question 1

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A)   no sellers actually benefit.
B)   some sellers benefit, but no sellers are harmed.
C)   some sellers benefit, and some sellers are harmed.
D)   all sellers benefit.E) B) and D)
F) B) and C)

Question 2

Table 6-1
 
-Refer to Table 6-1. Which of the following price ceilings would be binding in this market?

Accepted Answer

A)   $80
B)   $70
C)   $60
D)   $50E) C) and D)
F) All of the above

Question 3

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

Accepted Answer

A)   shift up.
B)   shift down.
C)   become flatter.
D)   not shift.E) B) and C)
F) A) and D)

Question 4

Suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the

Accepted Answer

A)   demand is more inelastic than the supply.
B)   supply is more inelastic than the demand.
C)   government has required that buyers remit the tax payments.
D)   government has required that sellers remit the tax payments.E) C) and D)
F) None of the above

Question 5

The price received by sellers in a market will increase if the government decreases a

Accepted Answer

A)   binding price floor in that market.
B)   binding price ceiling in that market.
C)   tax on the good sold in that market.
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 6

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Accepted Answer

A)   a sharp increase in the demand for gasoline that was brought on by the Vietnam War.
B)   the government's policy of maintaining a price ceiling on gasoline.
C)   an indifference among U.S. consumers toward conservation.
D)   the lack of substitutes for crude oil.E) None of the above
F) B) and C)

Question 7

Minimum wage laws

Accepted Answer

A)   may encourage some teenagers to drop out and take jobs.
B)   create labor shortages.
C)   have the greatest impact in the market for skilled labor.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 8

In "Venezuela Versus the Market," the long lines and shortages are caused by

Accepted Answer

A)   declining world energy prices.
B)   unfettered capitalism.
C)   price floors that are intended to make food more affordable for the poor.
D)   price ceilings that are intended to make food more affordable for the poor.E) A) and D)
F) A) and C)

Question 9

Figure 6-31 
-Refer to Figure 6-31. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at...

Question 10

Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

Accepted Answer

A)   lawmakers may have actually achieved their goal because statistics show that the tax burden is currently equally divided.
B)   the tax raises too little revenue for the government, so it should be eliminated.
C)   firms bear most of the burden of the tax.
D)   workers bear most of the burden of the tax.E) A) and B)
F) B) and D)

Question 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

When free markets ration goods with prices, it is both efficient and impersonal.

Accepted Answer

A) True 
 B)False

Question 14

Tax incidence

Accepted Answer

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

Question 15

Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor.

Accepted Answer

A) True 
 B)False

Question 16

The tax incidence

Accepted Answer

A)   is the manner in which the burden of a tax is shared among participants in a market.
B)   can be shifted to the buyer by imposing the tax on the buyers of a product in a market.
C)   can be shifted to the seller by imposing the tax on the sellers of a product in a market.
D)   All of the above are correct.E) All of the above
F) None of the above

Question 17

Figure 6-6 
-Refer to Figure 6-6. If the government imposes a price ceiling of $8 on this market, then there will be

Accepted Answer

A)   no shortage.
B)   a shortage of 10 units.
C)   a shortage of 20 units.
D)   a shortage of 40 units.E) B) and C)
F) A) and D)

Question 18

A price floor set above the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 19

A payroll tax is a

Accepted Answer

A)   fixed number of dollars that every firm must pay to the government for each worker that the firm hires.
B)   tax that each firm must pay to the government before the firm can hire workers and operate its business.
C)   tax on the wages that firms pay their workers.
D)   tax on all wages above the minimum wage.E) B) and C)
F) A) and B)

Question 20

Figure 6-25 
-Refer to Figure 6-25. The amount of the tax per unit is

Accepted Answer

A)   $1.
B)   $1.50.
C)   $2.
D)   $3.E) A) and C)
F) None of the above

Exam 6: Supply, Demand, and Government Policies

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

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Table 6-1 -Refer to Table 6-1. Which of the following price ceilings would be binding in this market?

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Minimum wage laws

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A payroll tax is a

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Discrimination is an example of a rationing mechanism that may naturally develop in response to a binding price floor.

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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

In "Venezuela Versus the Market," the long lines and shortages are caused by

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Figure 6-25 -Refer to Figure 6-25. The amount of the tax per unit is

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The tax incidence

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When free markets ration goods with prices, it is both efficient and impersonal.

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The price received by sellers in a market will increase if the government decreases a

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Figure 6-6 -Refer to Figure 6-6. If the government imposes a price ceiling of $8 on this market, then there will be

Correct AnswerverifiedShow Answer

Other than OPEC, the shortage of gasoline in the U.S. in the 1970s could also be blamed on

Correct AnswerverifiedShow Answer

Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

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

Tax incidence

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

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Suppose that a tax is placed on books. If the sellers pay the majority of the tax, then we know that the

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A price floor set above the equilibrium price causes a surplus in the market.

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Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor economists believe that

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When a binding price floor is imposed on a market to benefit sellers,

Correct AnswerverifiedShow Answer

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A price floor set at...
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A price floor set at...
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