Question 1

Figure 6-3
 
-Refer to Figure 6-3. In panel (b) , there will be

Accepted Answer

A)  a shortage of wheat.
B)  equilibrium in the market.
C)  a surplus of wheat.
D)  lines of people waiting to buy wheat.E) B) and C)
F) None of the above

Question 2

The Earned Income Tax Credit is an example of a

Accepted Answer

A)  minimum-wage law.
B)  price ceiling.
C)  wage subsidy.
D)  rent subsidy.E) B) and D)
F) None of the above

Question 3

When a tax is imposed on the sellers of a good, the supply curve shifts

Accepted Answer

A)  upward by the amount of the tax.
B)  downward by the amount of the tax.
C)  upward by less than the amount of the tax.
D)  downward by less than the amount of the tax.E) C) and D)
F) B) and D)

Question 4

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Accepted Answer

A)  the actual tax incidence is unaffected by the legislated tax incidence.
B)  the employer now is required by law to pay more than 50 percent of the tax.
C)  the employee now is required by law to pay more than 50 percent of the tax.
D)  employers are no longer required by law to pay any portion of the tax.E) C) and D)
F) B) and D)

Question 5

In the housing market, supply and demand are

Accepted Answer

A)  more elastic in the short run than in the long run, and so rent control leads to a larger shortage of apartments in the short run than in the long run.
B)  more elastic in the short run than in the long run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.
C)  more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the short run than in the long run.
D)  more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.E) B) and C)
F) A) and D)

Question 6

Which of the following is correct?

Accepted Answer

A)  Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage raises the average wage of teenagers by 10 percent.
B)  The drop in teenage employment caused by a 10 percent increase in the minimum wage is not significant.
C)  The minimum wage is more often binding for teenagers than for other members of the labor force.
D)  All firms consistently enforce minimum-wage laws.E) A) and C)
F) A) and B)

Question 7

The burden of a luxury tax falls

Accepted Answer

A)  more on the rich than on the middle class.
B)  more on the poor than on the rich.
C)  more on the middle class than on the rich.
D)  equally on the rich, the middle class, and the poor.E) C) and D)
F) A) and B)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

If a binding price floor is imposed on the video game market, then

Accepted Answer

A)  the demand for video games will decrease.
B)  the supply of video games will increase.
C)  a surplus of video games will develop.
D)  All of the above are correct.E) All of the above
F) B) and C)

Question 10

Table 6-3
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $2 above the equilibrium price in this market.   price  Quantity  Denanded  Quantity  Suppplied $0150$1133$2116$399$4712$5515$6318\begin{array} { | c | c | c } \hline 	ext { price } & \begin{array} { c } 	ext { Quantity } \	ext { Denanded }\end{array} & \begin{array} { c } 	ext { Quantity } \	ext { Suppplied }\end{array} \\hline \$ 0 & 15 & 0 \\hline \$ 1 & 13 & 3 \\hline \$ 2 & 11 & 6 \\hline \$ 3 & 9 & 9 \\hline \$ 4 & 7 & 12 \\hline \$ 5 & 5 & 15 \\hline \$ 6 & 3 & 18 \\hline\end{array} price $0$1$2$3$4$5$6​ Quantity  Denanded ​1513119753​ Quantity  Suppplied ​0369121518​​ 
-Refer to Table 6-3. Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is

Accepted Answer

A)  $2.
B)  $3.
C)  $4.
D)  $5. E) All of the above
F) C) and D)

Question 11

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Accepted Answer

A)  both taxes would fall more heavily on the buyers than on the sellers.
B)  the macaroni tax would fall more heavily on the sellers than on the buyers, and the burden of the cigarette tax would fall more heavily on the buyers than on the sellers.
C)  the macaroni tax would fall more heavily on the buyers than on the sellers, and the burden of the cigarette tax would fall more heavily on the sellers than on the buyers.
D)  both taxes would fall more heavily on the sellers than on the buyers.E) A) and B)
F) A) and C)

Question 12

To be binding, a price ceiling must be set above the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 13

A price ceiling set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-7 
-Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?

Accepted Answer

A)  a price ceiling set at $4
B)  a price ceiling set at $5
C)  a price floor set at $7
D)  a price floor set at $8E) B) and C)
F) All of the above

Question 15

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

Accepted Answer

A) True 
 B)False

Question 16

If a price ceiling is not binding, then

Accepted Answer

A)  the equilibrium price is above the price ceiling.
B)  the equilibrium price is below the price ceiling.
C)  it has no legal enforcement mechanism.
D)  None of the above is correct because all price ceilings must be binding.E) All of the above
F) B) and C)

Question 17

Figure 6-21 
-Refer to Figure 6-21. The price that buyers pay after the tax is imposed is

Accepted Answer

A)  $5.
B)  $6.
C)  $7.
D)  $8.E) B) and C)
F) A) and B)

Question 18

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 19

Figure 6-2 
-Refer to Figure 6-2. The price ceiling causes a

Accepted Answer

A)  surplus of 40 units.
B)  surplus of 85 units.
C)  shortage of 45 units.
D)  shortage of 85 units.E) All of the above
F) A) and C)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

To be binding, a price ceiling must be set above the equilibrium price.

Correct Answer
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Correct Answer
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The Earned Income Tax Credit is an example of a

Correct Answer
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Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Correct Answer
verified

A price ceiling set above the equilibrium price is not binding.

Correct Answer
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Which of the following is correct?

Correct Answer
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Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

Correct Answer
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Figure 6-3 -Refer to Figure 6-3. In panel (b) , there will be

Correct Answer
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Figure 6-2 -Refer to Figure 6-2. The price ceiling causes a

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

Correct Answer
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Figure 6-21 -Refer to Figure 6-21. The price that buyers pay after the tax is imposed is

Correct Answer
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Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Correct Answer
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The burden of a luxury tax falls

Correct Answer
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Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?

Correct Answer
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If a price ceiling is not binding, then

Correct Answer
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When a tax is imposed on the sellers of a good, the supply curve shifts

Correct Answer
verified

If a binding price floor is imposed on the video game market, then

Correct Answer
verified

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Correct Answer
verified

In the housing market, supply and demand are

Correct Answer
verified

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

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

To be binding, a price ceiling must be set above the equilibrium price.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Earned Income Tax Credit is an example of a

Correct AnswerverifiedShow Answer

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Correct AnswerverifiedShow Answer

A price ceiling set above the equilibrium price is not binding.

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

Correct AnswerverifiedShow Answer

Figure 6-3 -Refer to Figure 6-3. In panel (b) , there will be

Correct AnswerverifiedShow Answer

Figure 6-2 -Refer to Figure 6-2. The price ceiling causes a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-21 -Refer to Figure 6-21. The price that buyers pay after the tax is imposed is

Correct AnswerverifiedShow Answer

Although lawmakers legislated a fifty-fifty division of the payment of the FICA tax,

Correct AnswerverifiedShow Answer

The burden of a luxury tax falls

Correct AnswerverifiedShow Answer

Figure 6-7 -Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?

Correct AnswerverifiedShow Answer

If a price ceiling is not binding, then

Correct AnswerverifiedShow Answer

When a tax is imposed on the sellers of a good, the supply curve shifts

Correct AnswerverifiedShow Answer

If a binding price floor is imposed on the video game market, then

Correct AnswerverifiedShow Answer

Suppose the demand for macaroni is inelastic, the supply of macaroni is elastic, the demand for cigarettes is inelastic, and the supply of cigarettes is elastic. If a tax were levied on the sellers of both of these commodities, we would expect that the burden of

Correct AnswerverifiedShow Answer

In the housing market, supply and demand are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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