Question 1

Assume the demand for cigarettes is relatively inelastic,and the supply of cigarettes is relatively elastic.When cigarettes are taxed,we would expect

Accepted Answer

A)   most of the burden of the tax to fall on sellers of cigarettes,regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government.
B)   most of the burden of the tax to fall on buyers of cigarettes,regardless of whether buyers or sellers of cigarettes are required to pay the tax to the government.
C)   the distribution of the tax burden between buyers and sellers of cigarettes to depend on whether buyers or sellers of cigarettes are required to pay the tax to the government.
D)   a large percentage of smokers to quit smoking in response to the tax.E) A) and D)
F) A) and B)

Question 2

Which of the following is correct? A tax burden

Accepted Answer

A)   falls more heavily on the side of the market that is more elastic.
B)   falls more heavily on the side of the market that is less elastic.
C)   falls more heavily on the side of the market that is closest to unit elastic.
D)   is distributed independently of the relative elasticities of supply and demand.E) A) and B)
F) A) and C)

Question 3

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is correct?

Accepted Answer

A)   A tax levied on buyers will never be partially paid by sellers.
B)   Who actually pays a tax depends on the price elasticities of supply and demand.
C)   Government can decide who actually pays a tax.
D)   A tax levied on sellers always will be passed on completely to buyers.E) A) and B)
F) B) and C)

Question 5

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) All of the above

Question 6

Figure 6-4 
-Refer to Figure 6-4.A government-imposed price of $6 in this market is an example of a

Accepted Answer

A)   binding price ceiling that creates a shortage.
B)   non-binding price ceiling that creates a shortage.
C)   binding price floor that creates a surplus.
D)   non-binding price floor that creates a surplus.E) C) and D)
F) A) and C)

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

Question 8

Figure 6-11 
-Refer to Figure 6-11.Which of the following statements is not correct?

Accepted Answer

A)   A government-imposed price of $9 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B.
B)   A government-imposed price of $15 would be a binding price ceiling if market demand is either Demand A or Demand B.
C)   A government-imposed price of $3 would be a binding price ceiling if market demand is either Demand A or Demand B.
D)   A government-imposed price of $12 would be a binding price floor if market demand is Demand A and a non-binding price ceiling if market demand is Demand B.E) None of the above
F) A) and D)

Question 9

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

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

Question 11

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

Accepted Answer

A)   an accumulation of dirt in the interior of rental cars
B)   poor engine maintenance in rental 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) None of the above
F) A) and C)

Question 12

The goal of rent control is to help the poor by making housing more affordable.

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-23 
-Refer to Figure 6-23.The price paid by buyers after the tax is imposed is

Accepted Answer

A)   $8.
B)   $10.
C)   $14.
D)   $18.E) B) and D)
F) None of the above

Question 14

Figure 6-4 
-Refer to Figure 6-4.A government-imposed price of $16 in this market could be an example of a (i) binding price ceiling.
(ii) non-binding price ceiling.
(iii) binding price floor.
(iv) 
Non-binding price floor.

Accepted Answer

A)   (i) only
B)   (ii) only
C)   (i) and (iv) only
D)   (ii) and (iii) onlyE) A) and D)
F) B) and C)

Question 15

Under rent control,bribery is a mechanism to

Accepted Answer

A)   bring the total price of an apartment (including the bribe) closer to the equilibrium price.
B)   allocate housing to the poorest individuals in the market.
C)   force the total price of an apartment (including the bribe) to be less than the market price.
D)   allocate housing to the most deserving tenants.E) A) and B)
F) A) and C)

Question 16

Minimum-wage laws dictate the

Accepted Answer

A)   average price employers must pay for labor.
B)   highest price employers may pay for labor.
C)   lowest price employers may pay for labor.
D)   the highest and lowest prices employers may pay for labor.E) B) and D)
F) All of the above

Question 17

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 18

When a binding price ceiling is imposed on a market to benefit buyers,

Accepted Answer

A)   no buyers actually benefit.
B)   some buyers benefit,but no buyers are harmed.
C)   some buyers benefit,and some buyers are harmed.
D)   all buyers benefit.E) C) and D)
F) A) and C)

Question 19

Figure 6-17 
-Refer to Figure 6-17.What is the amount of the tax per unit?

Accepted Answer

A)   $1
B)   $2
C)   $3
D)   $4E) B) and D)
F) All of the above

Question 20

A surplus results when a

Accepted Answer

A)   nonbinding price floor is imposed on a market.
B)   nonbinding price floor is removed from a market.
C)   binding price floor is imposed on a market.
D)   binding price floor is removed from a market.E) None of the above
F) A) and D)

Exam 6: Supply,demand,and Government Policies

Which of the following statements is correct?

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

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When a binding price ceiling is imposed on a market to benefit buyers,

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Which of the following is correct? A tax burden

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A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

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Under rent control,bribery is a mechanism to

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

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Figure 6-17 -Refer to Figure 6-17.What is the amount of the tax per unit?

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

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Assume the demand for cigarettes is relatively inelastic,and the supply of cigarettes is relatively elastic.When cigarettes are taxed,we would expect

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Figure 6-23 -Refer to Figure 6-23.The price paid by buyers after the tax is imposed is

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The goal of rent control is to help the poor by making housing more affordable.

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Minimum-wage laws dictate the

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Figure 6-4 -Refer to Figure 6-4.A government-imposed price of $6 in this market is an example of a

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Minimum-wage laws dictate the lowest wage that firms may pay workers.

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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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A surplus results when a

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Figure 6-4 -Refer to Figure 6-4.A government-imposed price of $16 in this market could be an example of a (i) binding price ceiling. (ii) non-binding price ceiling. (iii) binding price floor. (iv) Non-binding price floor.

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Figure 6-11 -Refer to Figure 6-11.Which of the following statements is not correct?

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