Question 1

Suppose the government imposes a $40 tax on the buyers of refrigerators. The tax would

Accepted Answer

A)  shift the demand curve downward by less than $40.
B)  raise the equilibrium price by $40.
C)  create a $20 tax burden each for buyers and sellers.
D)  discourage market activity.

Question 2

A binding price floor will reduce a firm's total revenue

Accepted Answer

A)  always.
B)  when demand is elastic.
C)  when demand is inelastic.
D)  never.

Question 3

A tax burden falls more heavily on the side of the market that

Accepted Answer

A)  has a fewer number of participants.
B)  is more inelastic.
C)  is closer to unit elastic.
D)  is less inelastic.

Question 4

Price floors are typically imposed to benefit sellers.

Accepted Answer

A) True 
 B)False

Question 5

A tax imposed on the buyers of a good will

Accepted Answer

A)  raise both the price buyers pay and the effective price sellers receive.
B)  raise the price buyers pay and lower the effective price sellers receive.
C)  lower the price buyers pay and raise the effective price sellers receive.
D)  lower both the price buyers pay and the effective price sellers receive.

Question 6

Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

Accepted Answer

A)  less than $10.
B)  $10.
C)  between $10 and $20.
D)  $20.

Question 7

Figure 6-26 
-Refer to Figure 6-26. A price floor set at $40 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 8

If a price floor is a binding constraint on a market, then

Accepted Answer

A)  the equilibrium price must be above the price floor.
B)  the quantity demanded must exceed the quantity supplied.
C)  sellers cannot sell all they want to sell at the price floor.
D)  buyers cannot buy all they want to buy at the price floor.

Question 9

Figure 6-12 1 to S2, A) the market price will increase to P3. B) a surplus will occur at the new market price of P2. C) the market price will stay at P1. D) a shortage will occur at the new market price of P2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 6-12. When the price ceiling applies in this market, and the supply curve for gasoline shifts from S1 to S2,

Accepted Answer

A)  the market price will increase to P3.
B)  a surplus will occur at the new market price of P2.
C)  the market price will stay at P1.
D)  a shortage will occur at the new market price of P2.

Question 10

When policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

When a tax is placed on the buyers of lemonade, the

Accepted Answer

A)  sellers bear the entire burden of the tax.
B)  buyers bear the entire burden of the tax.
C)  burden of the tax will be always be equally divided between the buyers and the sellers.
D)  burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

Question 13

If the minimum wage exceeds the equilibrium wage, then

Accepted Answer

A)  the quantity demanded of labor will exceed the quantity supplied.
B)  the quantity supplied of labor will exceed the quantity demanded.
C)  the minimum wage will not be binding.
D)  there will be no unemployment.

Question 14

If a price ceiling is not binding, then it will have no effect on the market.

Accepted Answer

A) True 
 B)False

Question 15

Figure 6-27 
-Refer to Figure 6-27. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Accepted Answer

A) True 
 B)False

Question 16

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.   price  Quantity  Denanded  Quantity  Suppplied $0150$1133$2116$399$4712$5515$6318\begin{array} { | c | c | c } \hline 	ext { price } & \begin{array} { c } 	ext { Quantity } \	ext { Denanded }\end{array} & \begin{array} { c } 	ext { Quantity } \	ext { Suppplied }\end{array} \\hline \$ 0 & 15 & 0 \\hline \$ 1 & 13 & 3 \\hline \$ 2 & 11 & 6 \\hline \$ 3 & 9 & 9 \\hline \$ 4 & 7 & 12 \\hline \$ 5 & 5 & 15 \\hline \$ 6 & 3 & 18 \\hline\end{array} price $0$1$2$3$4$5$6​ Quantity  Denanded ​1513119753​ Quantity  Suppplied ​0369121518​​ 
-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 shortage is

Accepted Answer

A)  0 units.
B)  2 units.
C)  5 units.
D)  7 units.

Question 17

The tax burden will fall most heavily on buyers of the good when the demand curve

Accepted Answer

A)  is relatively steep, and the supply curve is relatively flat.
B)  is relatively flat, and the supply curve is relatively steep.
C)  and the supply curve are both relatively flat.
D)  and the supply curve are both relatively steep.

Question 18

When OPEC raised the price of crude oil in the 1970s, it caused the

Accepted Answer

A)  demand for gasoline to increase.
B)  demand for gasoline to decrease.
C)  supply of gasoline to increase.
D)  supply of gasoline to decrease.

Question 19

The quantity sold in a market will decrease if the government

Accepted Answer

A)  decreases a binding price floor in that market.
B)  increases a binding price ceiling in that market.
C)  increases a tax on the good sold in that market.
D)  All of the above are correct.

Question 20

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

Accepted Answer

A)  buyers of gasoline.
B)  sellers of gasoline.
C)  either buyers or sellers of gasoline.
D)  whichever side of the market is less elastic.

Exam 6: Supply, Demand, and Government Policies

Price floors are typically imposed to benefit sellers.

Correct Answer
verified

Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

Correct Answer
verified

Figure 6-27 -Refer to Figure 6-27. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Correct Answer
verified

A tax imposed on the buyers of a good will

Correct Answer
verified

When policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources.

Correct Answer
verified

Figure 6-26 -Refer to Figure 6-26. A price floor set at $40 would create a surplus of 20 units.

Correct Answer
verified

When a tax is placed on the buyers of lemonade, the

Correct Answer
verified

A binding price floor will reduce a firm's total revenue

Correct Answer
verified

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

Correct Answer
verified

If a price ceiling is not binding, then it will have no effect on the market.

Correct Answer
verified

If a price floor is a binding constraint on a market, then

Correct Answer
verified

Suppose the government imposes a $40 tax on the buyers of refrigerators. The tax would

Correct Answer
verified

Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market, and the supply curve for gasoline shifts from S₁ to S₂,

Correct Answer
verified

The tax burden will fall most heavily on buyers of the good when the demand curve

Correct Answer
verified

Correct Answer
verified

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

Correct Answer
verified

If the minimum wage exceeds the equilibrium wage, then

Correct Answer
verified

When OPEC raised the price of crude oil in the 1970s, it caused the

Correct Answer
verified

A tax burden falls more heavily on the side of the market that

Correct Answer
verified

The quantity sold in a market will decrease if the government

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

Price floors are typically imposed to benefit sellers.

Correct AnswerverifiedShow Answer

Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

Correct AnswerverifiedShow Answer

Figure 6-27 -Refer to Figure 6-27. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

Correct AnswerverifiedShow Answer

A tax imposed on the buyers of a good will

Correct AnswerverifiedShow Answer

When policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources.

Correct AnswerverifiedShow Answer

Figure 6-26 -Refer to Figure 6-26. A price floor set at $40 would create a surplus of 20 units.

Correct AnswerverifiedShow Answer

When a tax is placed on the buyers of lemonade, the

Correct AnswerverifiedShow Answer

A binding price floor will reduce a firm's total revenue

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a price ceiling is not binding, then it will have no effect on the market.

Correct AnswerverifiedShow Answer

If a price floor is a binding constraint on a market, then

Correct AnswerverifiedShow Answer

Suppose the government imposes a $40 tax on the buyers of refrigerators. The tax would

Correct AnswerverifiedShow Answer

Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market, and the supply curve for gasoline shifts from S1 to S2,

Correct AnswerverifiedShow Answer

The tax burden will fall most heavily on buyers of the good when the demand curve

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

Correct AnswerverifiedShow Answer

If the minimum wage exceeds the equilibrium wage, then

Correct AnswerverifiedShow Answer

When OPEC raised the price of crude oil in the 1970s, it caused the

Correct AnswerverifiedShow Answer

A tax burden falls more heavily on the side of the market that

Correct AnswerverifiedShow Answer

The quantity sold in a market will decrease if the government

Correct AnswerverifiedShow Answer

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Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market, and the supply curve for gasoline shifts from S₁ to S₂,

Correct Answer
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