Question 1

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Accepted Answer

A) True 
 B)False

Question 2

The imposition of a binding price ceiling 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.E) All of the above
F) None of the above A

Question 3

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Accepted Answer

The tax burden falls more heavily on the side of the market that is more inelastic.

Question 4

You receive a paycheck from your employer,and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax.Which of the following statements is correct?

Accepted Answer

A)   The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee.
B)   Your employer is required by law to pay $300 to match the $300 deducted from your check.
C)   This type of tax is an example of a payroll tax.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 5

Figure 6-27
 
-Refer to Figure 6-27.If the government places a $2 tax in the market,the buyer pays $4.

Accepted Answer

A) True 
 B)False

Question 6

A price floor will be binding only if it is set

Accepted Answer

A)   equal to the equilibrium price.
B)   above the equilibrium price.
C)   below the equilibrium price.
D)   either above or below the equilibrium price.E) B) and C)
F) B) and D) B

Question 7

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Accepted Answer

A) True 
 B)False

Question 8

Figure 6-8
 
-Refer to Figure 6-8.The price of the good would continue to serve as the rationing mechanism if

Accepted Answer

A)   a price ceiling of $4 is imposed.
B)   a price ceiling of $5 is imposed.
C)   a price floor of $3 is imposed.
D)   All of the above are correct.E) A) and D)
F) B) and D)

Question 9

Which of the following is not a function of prices in a market system?

Accepted Answer

A)   Prices have the crucial job of balancing supply and demand.
B)   Prices send signals to buyers and sellers to help them make rational economic decisions.
C)   Prices coordinate economic activity.
D)   Prices ensure an equal distribution of goods and services among consumers.E) All of the above
F) A) and D)

Question 10

Price controls often hurt those they are trying to help.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not a short-run effect of rent control on the housing market?

Accepted Answer

A)   reduced rents
B)   a large shortage
C)   a small increase in quantity demanded
D)   a small decrease in quantity suppliedE) A) and C)
F) B) and C)

Question 12

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

Question 13

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell,then

Accepted Answer

A)   the supply curve for mopeds shifts downward by $200.
B)   sellers of mopeds receive $200 less per mopeds than they were receiving before the tax.
C)   buyers of mopeds are unaffected by the tax.
D)   None of the above is correct.E) B) and D)
F) A) and D)

Question 14

A tax on buyers 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 15

Figure 6-14
The vertical distance between points A and B represents the tax in the market.
 
-Refer to Figure 6-14.The price that buyers pay after the tax is imposed is

Accepted Answer

A)   $8.
B)   $10.
C)   $16.
D)   $24.E) A) and B)
F) A) and C)

Question 16

Suppose the government has imposed a price floor on cellular phones.Which of the following events could transform the price floor from one that is binding to one that is not binding?

Accepted Answer

A)   Cellular phones become less popular.
B)   Traditional land line phones become more expensive.
C)   The components used to produce cellular phones become less expensive.
D)   Firms expect the price of cellular phones to fall in the future.E) All of the above
F) A) and B)

Question 17

Figure 6-17
 
-Refer to Figure 6-17.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 18

The tax burden will fall most heavily on sellers 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) C) and D)
F) B) and C)

Question 19

A tax on sellers shifts the supply curve but not the demand curve.

Accepted Answer

A) True 
 B)False

Question 20

Workers with high skills and much experience are not typically affected by the minimum wage.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, And Government Policies.

Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Correct Answerverified11ea33e9_3806_af5b_ac7d_7d2f2b47fbc0_TB2185_00 The tax burden falls more heavily on the side of the market that is more inelastic.

You receive a paycheck from your employer,and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Figure 6-27 -Refer to Figure 6-27.If the government places a $2 tax in the market,the buyer pays $4.

Correct AnswerverifiedShow Answer

A price floor will be binding only if it is set

Correct AnswerverifiedB

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Correct AnswerverifiedShow Answer

Figure 6-8 -Refer to Figure 6-8.The price of the good would continue to serve as the rationing mechanism if

Correct AnswerverifiedShow Answer

Which of the following is not a function of prices in a market system?

Correct AnswerverifiedShow Answer

Price controls often hurt those they are trying to help.

Correct AnswerverifiedShow Answer

Which of the following is not a short-run effect of rent control on the housing market?

Correct AnswerverifiedShow Answer

The quantity sold in a market will decrease if the government

Correct AnswerverifiedShow Answer

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell,then

Correct AnswerverifiedShow Answer

A tax on buyers 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

Figure 6-14 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-14.The price that buyers pay after the tax is imposed is

Correct AnswerverifiedShow Answer

Suppose the government has imposed a price floor on cellular phones.Which of the following events could transform the price floor from one that is binding to one that is not binding?

Correct AnswerverifiedShow Answer

Figure 6-17 -Refer to Figure 6-17.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

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

Correct AnswerverifiedShow Answer

A tax on sellers shifts the supply curve but not the demand curve.

Correct AnswerverifiedShow Answer

Workers with high skills and much experience are not typically affected by the minimum wage.

Correct AnswerverifiedShow Answer

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A

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11ea33e9_3806_af5b_ac7d_7d2f2b47fbc0_TB2185_00 The tax burden falls more heavily on the side of the market that is more inelastic.

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B

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