Question 1

The economy contains many labor markets for different types of workers.

Accepted Answer

A) True 
 B)False

Question 2

Whether a tax is levied on sellers or buyers,taxes discourage market activity.

Accepted Answer

A) True 
 B)False

Question 3

A tax of $1 on sellers always increases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 4

When a tax is levied on sellers of tea,

Accepted Answer

A)   the well-being of both sellers and buyers of tea is unaffected.
B)   sellers of tea are made worse off and the well-being of buyers is unaffected.
C)   sellers of tea are made worse off and buyers of tea are made better off.
D)   sellers and buyers of tea both are made worse off.

Question 5

The United States is the only country in the world with minimum-wage laws.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not correct?

Accepted Answer

A)   Taxes levied on sellers and taxes levied on buyers are not equivalent.
B)   A tax places a wedge between the price that buyers pay and the price that sellers receive.
C)   The wedge between the buyers' price and the sellers' price is the same,regardless of whether the tax is levied on buyers or sellers.
D)   In the new after-tax equilibrium,buyers and sellers share the burden of the tax.

Question 7

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A)   a surplus in the market.
B)   a shortage in the market.
C)   a nonbinding price control.
D)   long lines of frustrated buyers.

Question 8

The imposition of a binding price floor on a market causes quantity demanded to be

Accepted Answer

A)   greater than quantity supplied.
B)   less than quantity supplied.
C)   equal to quantity supplied.
D)   Both (a) and (b) are possible.

Question 9

If the government removes a tax on a good,then the quantity of the good sold will

Accepted Answer

A)   increase.
B)   decrease.
C)   not change.
D)   All of the above are possible.

Question 10

Suppose that the demand for picture frames is elastic and the supply of picture frames is inelastic.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.

Question 11

Table 6-3
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 $2 above the equilibrium price in this market.
 
-Refer to Table 6-3.Following the imposition of a price floor $2 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 market price is

Accepted Answer

A)   $2.
B)   $3.
C)   $4.
D)   $5.

Question 12

When a tax is placed on the buyers of cell phones,

Accepted Answer

A)   the size of the cell phone market and the price paid by buyers both decrease.
B)   the size of the cell phone market decreases,but the price paid by buyers increases.
C)   the size of the cell phone market increases,but the price paid by buyers decreases.
D)   the size of the cell phone market and the price paid by buyers both increase.

Question 13

Prices are inefficient rationing devices.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-12 
-Refer to Figure 6-12.Which of the following is correct?

Accepted Answer

A)   One-fourth of the burden of the tax falls on buyers and three-fourths of the burden of the tax falls on sellers.
B)   One-third of the burden of the tax falls on buyers and two-thirds of the burden of the tax falls on sellers.
C)   One-half of the burden of the tax falls on buyers and one-half of the burden of the tax falls on sellers.
D)   Two-thirds of the burden of the tax falls on buyers and one-third of the burden of the tax falls on sellers.

Question 15

Buyers of a good bear the larger share of the tax burden when a tax is placed on a product for which

Accepted Answer

A)   the supply is more elastic than the demand.
B)   the demand in more elastic than the supply.
C)   the tax is placed on the sellers of the product.
D)   the tax is placed on the buyers of the product.

Question 16

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

Accepted Answer

A) True 
 B)False

Question 17

Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then

Accepted Answer

A)   the demand curve will shift upward by $20,and the price paid by buyers will decrease by less than $20.
B)   the demand curve will shift upward by $20,and the price paid by buyers will decrease by $20.
C)   the supply curve will shift downward by $20,and the effective price received by sellers will increase by less than $20.
D)   the supply curve will shift downward by $20,and the effective price received by sellers will increase by $20.

Question 18

A large majority of economists favor eliminating the minimum wage.

Accepted Answer

A) True 
 B)False

Question 19

Figure 6-13
The vertical distance between points A and B represents the tax in the market. 
-Refer to Figure 6-13.The per-unit burden of the tax on buyers is

Accepted Answer

A)   $6.
B)   $8.
C)   $14.
D)   $24.

Question 20

A tax on sellers will

Accepted Answer

A)   shift the demand curve upwards by the amount of the tax.
B)   shift the demand curve downwards by the amount of the tax.
C)   shift the supply curve upwards by the amount of the tax.
D)   shift the supply curve downwards by the amount of the tax.

Exam 6: Supply, Demand, and Government Policies

Which of the following is not correct?

Correct Answer
verified

If the government removes a tax on a good,then the quantity of the good sold will

Correct Answer
verified

Figure 6-13 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-13.The per-unit burden of the tax on buyers is

Correct Answer
verified

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

Correct Answer
verified

Prices are inefficient rationing devices.

Correct Answer
verified

Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then

Correct Answer
verified

A tax on sellers will

Correct Answer
verified

When a tax is placed on the buyers of cell phones,

Correct Answer
verified

An outcome that can result from either a price ceiling or a price floor is

Correct Answer
verified

Correct Answer
verified

Figure 6-12 -Refer to Figure 6-12.Which of the following is correct?

Correct Answer
verified

The economy contains many labor markets for different types of workers.

Correct Answer
verified

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

Correct Answer
verified

The imposition of a binding price floor on a market causes quantity demanded to be

Correct Answer
verified

A large majority of economists favor eliminating the minimum wage.

Correct Answer
verified

A tax of $1 on sellers always increases the equilibrium price by $1.

Correct Answer
verified

Whether a tax is levied on sellers or buyers,taxes discourage market activity.

Correct Answer
verified

When a tax is levied on sellers of tea,

Correct Answer
verified

The United States is the only country in the world with minimum-wage laws.

Correct Answer
verified

Buyers of a good bear the larger share of the tax burden when a tax is placed on a product for which

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

Which of the following is not correct?

Correct AnswerverifiedShow Answer

If the government removes a tax on a good,then the quantity of the good sold will

Correct AnswerverifiedShow Answer

Figure 6-13 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-13.The per-unit burden of the tax on buyers is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Prices are inefficient rationing devices.

Correct AnswerverifiedShow Answer

Suppose there is currently a tax of $50 per ticket on airline tickets.Buyers of airline tickets are required to pay the tax to the government.If the tax is reduced from $50 per ticket to $30 per ticket,then

Correct AnswerverifiedShow Answer

A tax on sellers will

Correct AnswerverifiedShow Answer

When a tax is placed on the buyers of cell phones,

Correct AnswerverifiedShow Answer

An outcome that can result from either a price ceiling or a price floor is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Figure 6-12 -Refer to Figure 6-12.Which of the following is correct?

Correct AnswerverifiedShow Answer

The economy contains many labor markets for different types of workers.

Correct AnswerverifiedShow Answer

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

Correct AnswerverifiedShow Answer

The imposition of a binding price floor on a market causes quantity demanded to be

Correct AnswerverifiedShow Answer

A large majority of economists favor eliminating the minimum wage.

Correct AnswerverifiedShow Answer

A tax of $1 on sellers always increases the equilibrium price by $1.

Correct AnswerverifiedShow Answer

Whether a tax is levied on sellers or buyers,taxes discourage market activity.

Correct AnswerverifiedShow Answer

When a tax is levied on sellers of tea,

Correct AnswerverifiedShow Answer

The United States is the only country in the world with minimum-wage laws.

Correct AnswerverifiedShow Answer

Buyers of a good bear the larger share of the tax burden when a tax is placed on a product for which

Correct AnswerverifiedShow Answer

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