Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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

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) None of the above
F) All of the above

Question 3

The price paid by buyers in a market will decrease if the government

Accepted Answer

A)  imposes 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)  decreases a binding price floor in that market.E) A) and B)
F) All of the above

Question 4

When a payroll tax is enacted, the wage received by workers

Accepted Answer

A)  falls, and the wage paid by firms rises.
B)  falls, and the wage paid by firms falls.
C)  rises, and the wage paid by firms falls.
D)  rises, and the wage paid by firms rises.E) B) and C)
F) All of the above

Question 5

A price floor set above the equilibrium price is binding.

Accepted Answer

A) True 
 B)False

Question 6

Prices are inefficient rationing devices.

Accepted Answer

A) True 
 B)False

Question 7

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

Accepted Answer

A)  increase, and the price received by sellers will increase.
B)  increase, and the price received by sellers will not change.
C)  not change, and the price received by sellers will increase.
D)  not change, and the price received by sellers will not change.E) None of the above
F) A) and B)

Question 8

Figure 6-22 
-Refer to Figure 6-22. The equilibrium price in the market before the tax is imposed is

Accepted Answer

A)  $3.50.
B)  $5.00.
C)  $2.00.
D)  $1.50.E) C) and D)
F) B) and C)

Question 9

A tax on the buyers of sofas

Accepted Answer

A)  increases the size of the sofa market.
B)  decreases the size of the sofa market.
C)  has no effect on the size of the sofa market.
D)  may increase, decrease, or have no effect on the size of the sofa market.E) B) and C)
F) All of the above

Question 10

Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

Accepted Answer

A) True 
 B)False

Question 11

Price controls are usually enacted

Accepted Answer

A)  as a means of raising revenue for public purposes.
B)  when policymakers believe that the market price of a good or service is unfair to buyers or sellers.
C)  when policymakers tax a good.
D)  All of the above are correct.E) All of the above
F) A) and D)

Question 12

Buyers of a good bear the larger share of the tax burden when the
(i) supply is more elastic than the demand for the product.
(ii) demand in more elastic than the supply for the product.
(iii) tax is placed on the sellers of the product.
(iv) tax is placed on the buyers of the product.

Accepted Answer

A)  (i)  only
B)  (ii)  only
C)  (i)  and (iii)  only
D)  (i)  and (iv)  onlyE) C) and D)
F) All of the above

Question 13

Figure 6-27
This figure shows the market demand and market supply curves for good Z. 
-Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)  $16
B)  between $16 and $20
C)  between $20 and $22
D)  $22E) A) and B)
F) A) and C)

Question 14

The United States is the only country in the world with minimum-wage laws.

Accepted Answer

A) True 
 B)False

Question 15

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un...

Question 16

In a free, competitive market, what is the rationing mechanism?

Accepted Answer

A)  seller bias
B)  buyer bias
C)  government law
D)  priceE) B) and C)
F) A) and B)

Question 17

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

Accepted Answer

A) True 
 B)False

Question 18

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Accepted Answer

A)  demand for labor is more elastic than the supply of labor.
B)  supply of labor is more elastic than the demand for labor.
C)  demand for labor and supply of labor are equally elastic.
D)  It is not possible for the tax burden to fall equally on firms and workers.E) A) and B)
F) C) and D)

Question 19

Figure 6-5 
-Refer to Figure 6-5. If government imposes a price floor at $9, then the price floor causes

Accepted Answer

A)  quantity demanded to decrease by 40 units.
B)  quantity supplied to increase by 20 units.
C)  a surplus of 60 units.
D)  All of the above are correct.E) None of the above
F) C) and D)

Question 20

Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

When a payroll tax is enacted, the wage received by workers

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The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

Correct AnswerverifiedShow Answer

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Correct AnswerverifiedWith a $6 tax per un...View AnswerShow Answer

Price controls are usually enacted

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Figure 6-5 -Refer to Figure 6-5. If government imposes a price floor at $9, then the price floor causes

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Figure 6-22 -Refer to Figure 6-22. The equilibrium price in the market before the tax is imposed is

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Since half of the FICA tax is paid by firms and the other half is paid by workers, the burden of the tax must fall equally on firms and workers.

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A price floor set above the equilibrium price is binding.

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

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In a free, competitive market, what is the rationing mechanism?

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Buyers of a good bear the larger share of the tax burden when the (i) supply is more elastic than the demand for the product. (ii) demand in more elastic than the supply for the product. (iii) tax is placed on the sellers of the product. (iv) tax is placed on the buyers of the product.

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A tax on the buyers of sofas

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The United States is the only country in the world with minimum-wage laws.

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If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

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Prices are inefficient rationing devices.

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

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Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

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The price paid by buyers in a market will decrease if the government

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Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.

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Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

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With a $6 tax per un...
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