Question 1

Figure 6-26 
-Refer to Figure 6-26. The per-unit burden of the tax is

Accepted Answer

A)   $2 for buyers and $6 for sellers.
B)   $4 for buyers and $4 for sellers.
C)   $6 for buyers and $2 for sellers.
D)   $8 for buyers and $0 for sellers.E) A) and B)
F) None of the above

Question 2

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.E) B) and C)
F) A) and D)

Question 3

Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars?

Accepted Answer

A)   frequent rental programs such as "Rent nine times and the tenth rental is free!"
B)   enhanced maintenance programs to promote the high quality of the cars
C)   free gasoline given to people as an incentive to a rent a car
D)   slow replacement of old rental cars with newer onesE) C) and D)
F) A) and B)

Question 4

Table 6-2
 
-Refer to Table 6-2. A price floor set at $20 results in

Accepted Answer

A)   75 units sold.
B)   125 units sold.
C)   200 units sold.
D)   275 units sold.E) B) and D)
F) B) and C)

Question 5

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

Question 6

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 B)

Question 7

One common example of a price ceiling is rent control.

Accepted Answer

A) True 
 B)False

Question 8

Workers determine the supply of labor, and firms determine the demand for labor.

Accepted Answer

A) True 
 B)False

Question 9

Congress intended that

Accepted Answer

A)   the entire FICA tax be paid by workers.
B)   the entire FICA tax be paid by firms.
C)   one-quarter of the FICA tax be paid by workers, and three-quarters be paid by firms.
D)   half the FICA tax be paid by workers, and half be paid by firms.E) B) and C)
F) A) and B)

Question 10

The price paid by buyers in a market will increase if the government 
i)  increases a binding price floor in that market.
Ii)  increases a binding price ceiling in that market.
Iii)  decreases a tax on the good sold in that market.

Accepted Answer

A)   ii)  only
B)   iii)  only
C)   i)  and ii)  only
D)   i) , ii) , and iii) E) A) and B)
F) C) and D)

Question 11

A tax on buyers shifts the demand curve and the supply curve.

Accepted Answer

A) True 
 B)False

Question 12

The Federal Insurance Contribution Act (FICA)  tax is an example of a(n)

Accepted Answer

A)   payroll tax.
B)   sales tax.
C)   farm subsidy.
D)   income subsidy.E) A) and D)
F) A) and B)

Question 13

In a free market, the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

Accepted Answer

A) True 
 B)False

Question 14

If the supply curve is more price elastic than the demand curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

Accepted Answer

The buyers will bear...

Question 15

If a tax is levied on the buyers of a product, then there will be an)

Accepted Answer

A)   downward shift of the supply curve.
B)   upward shift of the supply curve.
C)   movement up and to the right along the supply curve.
D)   movement down and to the left along the supply curve.E) B) and C)
F) A) and D)

Question 16

Table 6-2
 
-Refer to Table 6-2. A price ceiling set at $5 results in

Accepted Answer

A)   50 units sold.
B)   250 units sold.
C)   300 units sold.
D)   350 units sold.E) None of the above
F) A) and B)

Question 17

Figure 6-13
This figure shows the market demand and market supply curves for good X. 
-Refer to Figure 6-13. If the government imposes a price ceiling of $4 on this market, then there will be

Accepted Answer

A)   no shortage.
B)   a shortage of 5 units.
C)   a shortage of 10 units.
D)   a shortage of 20 units.E) A) and C)
F) C) and D)

Question 18

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, the resulting quantity of gasoline that is bought and sold is

Accepted Answer

A)   less than Q3.
B)   Q3.
C)   between Q1 and Q3.
D)   at least Q1.E) A) and B)
F) A) and C)

Question 19

Scenario 6-1
Suppose that demand in the market for good X is given by the equation  and that supply in the market for good X is given by the equation 
-Refer to Scenario 6-1. If the government set a price floor at $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at...

Question 20

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $4.

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A tax on buyers shifts the demand curve and the supply curve.

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Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. If the government set a price floor at $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

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

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price ceiling of $4 on this market, then there will be

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Table 6-2 -Refer to Table 6-2. A price ceiling set at $5 results in

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Workers determine the supply of labor, and firms determine the demand for labor.

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If a tax is levied on the buyers of a product, then there will be an)

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Table 6-2 -Refer to Table 6-2. A price floor set at $20 results in

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

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The price paid by buyers in a market will increase if the government i) increases a binding price floor in that market. Ii) increases a binding price ceiling in that market. Iii) decreases a tax on the good sold in that market.

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One common example of a price ceiling is rent control.

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In a free market, the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

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

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Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars?

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Figure 6-26 -Refer to Figure 6-26. The per-unit burden of the tax is

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Congress intended that

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If the supply curve is more price elastic than the demand curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

Correct AnswerverifiedThe buyers will bear...View AnswerShow Answer

The Federal Insurance Contribution Act (FICA) tax is an example of a(n)

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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, the resulting quantity of gasoline that is bought and sold 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

Correct AnswerverifiedShow Answer

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A price floor set at...
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The buyers will bear...
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