Question 1

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) B) and C)
F) A) and C)

Question 2

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D)  The tax was never repealed or even modified.E) A) and B)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 3

Figure 6-25 
-Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

Accepted Answer

A)  $150
B)  $180
C)  $250
D)  $300E) A) and B)
F) B) and C)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)  the equilibrium price must be below the price ceiling.
B)  the quantity supplied must exceed the quantity demanded.
C)  sellers cannot sell all they want to sell at the price ceiling.
D)  buyers cannot buy all they want to buy at the price ceiling.E) B) and D)
F) All of the above

Question 6

Figure 6-5 
-Refer to Figure 6-5. If the solid horizontal line on the graph represents a price floor, then the price floor is

Accepted Answer

A)  binding and creates a surplus of 60 units of the good.
B)  binding and creates a surplus of 20 units of the good.
C)  binding and creates a surplus of 40 units of the good.
D)  not binding, and there will be no surplus or shortage of the good.E) All of the above
F) A) and B)

Question 7

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,

Accepted Answer

A)  quantity demanded decreases.
B)  quantity supplied increases.
C)  there is a surplus.
D)  All of the above are correct.E) None of the above
F) A) and C)

Question 8

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

Accepted Answer

A)  Policymakers have studied the effects of the price floor carefully, and they recognize that the price floor is advantageous for society as a whole.
B)  Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into imposing the price floor.
C)  Buyers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor.
D)  Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor.E) B) and C)
F) All of the above

Question 9

To say that a price ceiling is binding is to say that the price ceiling

Accepted Answer

A)  results in a surplus.
B)  is set above the equilibrium price.
C)  causes quantity demanded to exceed quantity supplied.
D)  All of the above are correct.E) A) and B)
F) B) and D)

Question 10

The minimum wage was instituted to ensure workers

Accepted Answer

A)  a middle-class standard of living.
B)  employment.
C)  a minimally adequate standard of living.
D)  unemployment compensation.E) B) and C)
F) All of the above

Question 11

A binding price ceiling causes a shortage in the market.

Accepted Answer

A) True 
 B)False

Question 12

The U.S. Congress first instituted a minimum wage in

Accepted Answer

A)  1776.
B)  1812.
C)  1938.
D)  1975.E) B) and C)
F) C) and D)

Question 13

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-4 
-Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

Accepted Answer

A)  a surplus of 2 units.
B)  a surplus of 4 units.
C)  12 units sold.
D)  10 units sold.E) A) and B)
F) A) and C)

Question 15

Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

Accepted Answer

A)  1 to 3 percent.
B)  5 to 7 percent.
C)  10 percent.
D)  None of the above is correct because studies show no decrease in teenage employment.E) B) and C)
F) A) and D)

Question 16

A tax on buyers 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 D)
F) A) and C)

Question 17

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

Accepted Answer

A)  This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor.
B)  The effective price received by sellers is $5.00 per bottle less than it was before the tax.
C)  Forty percent of the burden of the tax falls on buyers.
D)  All of the above are correct.E) None of the above
F) A) and C)

Question 18

When a binding price floor is imposed on a market,

Accepted Answer

A)  price no longer serves as a rationing device.
B)  the quantity demanded at the price floor exceeds the quantity that would have been demanded without the price floor.
C)  all sellers benefit.
D)  All of the above are correct.E) B) and C)
F) None of the above

Question 19

Minimum-wage laws dictate

Accepted Answer

A)  the exact wage that firms must pay workers.
B)  a maximum wage that firms may pay workers.
C)  a minimum wage that firms may pay workers.
D)  both a minimum wage and a maximum wage that firms may pay workers.E) All of the above
F) A) and C)

Question 20

Figure 6-29
Suppose the government imposes a $2 on this market. 
-Refer to Figure 6-29. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2, the price paid by buyers will be

Accepted Answer

A)  higher in the long run than in the short run.
B)  higher in the short run than in the long run.
C)  equivalent in the short run and the long run.
D)  unable to be determined without additional information.E) B) and D)
F) A) and B)

Exam 6: Supply, Demand, and Government Policies

The U.S. Congress first instituted a minimum wage in

Correct Answer
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To say that a price ceiling is binding is to say that the price ceiling

Correct Answer
verified

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

Correct Answer
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If a price ceiling is a binding constraint on a market, then

Correct Answer
verified

Figure 6-5 -Refer to Figure 6-5. If the solid horizontal line on the graph represents a price floor, then the price floor is

Correct Answer
verified

Figure 6-4 -Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

Correct Answer
verified

The tax incidence

Correct Answer
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Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

Correct Answer
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When a binding price floor is imposed on a market,

Correct Answer
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Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,

Correct Answer
verified

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

Correct Answer
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Correct Answer
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A binding price ceiling causes a shortage in the market.

Correct Answer
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Figure 6-25 -Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

Correct Answer
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Minimum-wage laws dictate

Correct Answer
verified

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

Correct Answer
verified

The minimum wage was instituted to ensure workers

Correct Answer
verified

A tax on buyers will shift the

Correct Answer
verified

Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

Correct Answer
verified

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

The U.S. Congress first instituted a minimum wage in

Correct AnswerverifiedShow Answer

To say that a price ceiling is binding is to say that the price ceiling

Correct AnswerverifiedShow Answer

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-5 -Refer to Figure 6-5. If the solid horizontal line on the graph represents a price floor, then the price floor is

Correct AnswerverifiedShow Answer

Figure 6-4 -Refer to Figure 6-4. A government-imposed price floor of $12 in this market results in

Correct AnswerverifiedShow Answer

The tax incidence

Correct AnswerverifiedShow Answer

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

Correct AnswerverifiedShow Answer

When a binding price floor is imposed on a market,

Correct AnswerverifiedShow Answer

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A binding price ceiling causes a shortage in the market.

Correct AnswerverifiedShow Answer

Figure 6-25 -Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

Correct AnswerverifiedShow Answer

Minimum-wage laws dictate

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The minimum wage was instituted to ensure workers

Correct AnswerverifiedShow Answer

A tax on buyers will shift the

Correct AnswerverifiedShow Answer

Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

Correct AnswerverifiedShow Answer

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

Correct AnswerverifiedShow Answer

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