Question 1

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 2

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.E) A) and D)
F) All of the above

Question 3

A binding minimum wage may not help all workers, but it does not hurt any workers.

Accepted Answer

A) True 
 B)False

Question 4

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Accepted Answer

A) True 
 B)False

Question 5

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act)  tax to pay for

Accepted Answer

A)   unemployment compensation.
B)   the salaries of members of Congress.
C)   Social Security and Medicare.
D)   housing subsidies for low-income people.E) A) and D)
F) All of the above

Question 6

Figure 6-21 
-Refer to Figure 6-21. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. Acme is left with how much money?

Accepted Answer

A)   $8.00
B)   $9.00
C)   $10.50
D)   $12.00E) B) and C)
F) A) and D)

Question 7

Which of the following was not a result of the luxury tax imposed by Congress in 1990?

Accepted Answer

A)   The larger part of the tax burden fell on sellers.
B)   A larger part of the tax burden fell on the middle class than on the rich.
C)   Even the wealthy demanded fewer luxury goods.
D)   The tax was never repealed or even modified.E) A) and B)
F) B) and C)

Question 8

If a price floor is not binding, then

Accepted Answer

A)   there will be a surplus in the market.
B)   there will be a shortage in the market.
C)   there will be no effect on the market price or quantity sold.
D)   the market will be less efficient than it would be without the price floor.E) A) and C)
F) None of the above

Question 9

A tax imposed on the buyers of a good will raise the

Accepted Answer

A)   price paid by buyers and lower the equilibrium quantity.
B)   price paid by buyers and raise the equilibrium quantity.
C)   effective price received by sellers and lower the equilibrium quantity.
D)   effective price received by sellers and raise the equilibrium quantity.E) B) and C)
F) All of the above

Question 10

Scenario 6-2
Suppose demand for a product is given by the equation  and supply for the product is given by the equation 
-Refer to Scenario 6-2. Suppose the government sets a price floor at $13 for this product. Initially, is this price floor binding? Suppose that for some reason demand were to decrease to  Would the $13 price floor be binding after the shift in the demand curve? If so, what is the size of the resulting shortage/surplus?

Accepted Answer

Initially the price floor is not binding...

Question 11

Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

Accepted Answer

A) True 
 B)False

Question 12

Figure 6-22 
-Refer to Figure 6-22. 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 graph.E) All of the above
F) B) and D)

Question 13

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Accepted Answer

A)   OPEC raised the price of crude oil in world markets.
B)   U.S. gasoline producers raised the price of gasoline.
C)   the U.S. government maintained a price ceiling on gasoline.
D)   Americans typically commuted long distances.E) A) and C)
F) A) and B)

Question 14

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

Accepted Answer

A)   A price ceiling set at $12 would be binding, but a price ceiling set at $8 would not be binding.
B)   A price floor set at $8 would be binding, but a price ceiling set at $8 would not be binding.
C)   A price ceiling set at $9 would result in a surplus.
D)   A price floor set at $11 would result in a surplus.E) B) and C)
F) A) and C)

Question 15

Figure 6-21 
-Refer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit as shown in the graph) . Relative to the tax on sellers, the tax on buyers would result in

Accepted Answer

A)   buyers bearing a larger share of the tax burden.
B)   sellers bearing a smaller share of the tax burden.
C)   the same amount of tax revenue for the government.
D)   Both a)  and b)  are correct.E) All of the above
F) B) and D)

Question 16

A tax on sellers will shift the

Accepted Answer

A)   demand curve upward by the amount of the tax.
B)   demand curve downward by the amount of the tax.
C)   supply curve upward by the amount of the tax.
D)   supply curve downward by the amount of the tax.E) A) and C)
F) A) and B)

Question 17

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

Accepted Answer

A) True 
 B)False

Question 18

If the government passes a law requiring buyers of college textbooks to send $5 to the government for every textbook they buy, then

Accepted Answer

A)   the demand curve for textbooks shifts downward by $5.
B)   buyers of textbooks pay $5 more per textbook than they were paying before the tax.
C)   sellers of textbooks are unaffected by the tax.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 19

A binding price floor causes quantity supplied to be less than quantity demanded.

Accepted Answer

A) True 
 B)False

Question 20

Figure 6-6 
-Refer to Figure 6-6. Which of the following statements is not correct?

Accepted Answer

A)   A price ceiling set at $6 would be binding, but a price ceiling set at $12 would not be binding.
B)   A price floor set at $14 would be binding, but a price floor set at $8 would not be binding.
C)   A price ceiling set at $9 would result in a shortage.
D)   A price floor set at $6 would result in a shortage.E) None of the above
F) All of the above

Exam 6: Supply, Demand, and Government Policies

A tax on sellers will shift the

Correct Answer
verified

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

Correct Answer
verified

A tax imposed on the buyers of a good will raise the

Correct Answer
verified

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

Correct Answer
verified

Figure 6-22 -Refer to Figure 6-22. As the figure is drawn, who sends the tax payment to the government?

Correct Answer
verified

If the government passes a law requiring buyers of college textbooks to send $5 to the government for every textbook they buy, then

Correct Answer
verified

Figure 6-6 -Refer to Figure 6-6. Which of the following statements is not correct?

Correct Answer
verified

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

Correct Answer
verified

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

Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

Correct Answer
verified

Figure 6-21 -Refer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit as shown in the graph) . Relative to the tax on sellers, the tax on buyers would result in

Correct Answer
verified

Which of the following was not a result of the luxury tax imposed by Congress in 1990?

Correct Answer
verified

A binding minimum wage may not help all workers, but it does not hurt any workers.

Correct Answer
verified

If a price floor is not binding, then

Correct Answer
verified

A binding price floor causes quantity supplied to be less than quantity demanded.

Correct Answer
verified

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for

Correct Answer
verified

Correct Answer
verified
Initially the price floor is not binding...
View Answer

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Correct Answer
verified

Figure 6-21 -Refer to Figure 6-21. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. Acme is left with how much money?

Correct Answer
verified

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

A tax on sellers will shift the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A tax imposed on the buyers of a good will raise the

Correct AnswerverifiedShow Answer

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

Correct AnswerverifiedShow Answer

Figure 6-22 -Refer to Figure 6-22. As the figure is drawn, who sends the tax payment to the government?

Correct AnswerverifiedShow Answer

If the government passes a law requiring buyers of college textbooks to send $5 to the government for every textbook they buy, then

Correct AnswerverifiedShow Answer

Figure 6-6 -Refer to Figure 6-6. Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

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

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

Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

Correct AnswerverifiedShow Answer

Figure 6-21 -Refer to Figure 6-21. Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit as shown in the graph) . Relative to the tax on sellers, the tax on buyers would result in

Correct AnswerverifiedShow Answer

Which of the following was not a result of the luxury tax imposed by Congress in 1990?

Correct AnswerverifiedShow Answer

A binding minimum wage may not help all workers, but it does not hurt any workers.

Correct AnswerverifiedShow Answer

If a price floor is not binding, then

Correct AnswerverifiedShow Answer

A binding price floor causes quantity supplied to be less than quantity demanded.

Correct AnswerverifiedShow Answer

The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for

Correct AnswerverifiedShow Answer

Correct AnswerverifiedInitially the price floor is not binding...View AnswerShow Answer

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Correct AnswerverifiedShow Answer

Figure 6-21 -Refer to Figure 6-21. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. Acme is left with how much money?

Correct AnswerverifiedShow Answer

At the equilibrium price, the quantity that buyers want to buy exactly equals the quantity that sellers want to sell.

Correct AnswerverifiedShow Answer

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Initially the price floor is not binding...
View Answer

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