Question 1

A tax on buyers shifts the demand curve and the supply curve.

Accepted Answer

A) True 
 B)False

Question 2

A tax on the sellers of coffee mugs

Accepted Answer

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

Question 3

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.
 
-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 shortage is

Accepted Answer

A)   0 units.
B)   2 units.
C)   5 units.
D)   7 units.E) C) and D)
F) A) and D)

Question 4

Which of the following is not correct? In a 2006 survey of Ph.D. economists,

Accepted Answer

A)   47 percent favored eliminating the minimum wage.
B)   14 percent would maintain the minimum wage at its current level.
C)   38 percent would increase the minimum wage.
D)   10 percent would decrease the minimum wage.E) B) and D)
F) B) and C)

Question 5

Taxes levied on sellers and taxes levied on buyers are equivalent.

Accepted Answer

A) True 
 B)False

Question 6

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 moped 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 C)
F) All of the above

Question 7

If a nonbinding price ceiling is imposed on a market, then the

Accepted Answer

A)   quantity sold in the market will decrease.
B)   quantity sold in the market will stay the same.
C)   price in the market will increase.
D)   price in the market will decrease.E) A) and D)
F) A) and C)

Question 8

A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would

Accepted Answer

A)   shift the demand curve downward by 25 cents.
B)   lower the equilibrium price by 25 cents.
C)   reduce the equilibrium quantity.
D)   discourage market activity.E) A) and B)
F) None of the above

Question 11

Figure 6-26 
-Refer to Figure 6-26. How much tax revenue does this tax produce for the government?

Accepted Answer

A)   $480
B)   $640
C)   $360
D)   $120E) C) and D)
F) B) and D)

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

Accepted Answer

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

Question 14

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Accepted Answer

A) True 
 B)False

Question 15

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Accepted Answer

A) True 
 B)False

Question 16

When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market

Accepted Answer

A)   and the price paid by buyers both decrease.
B)   decreases, but the price paid by buyers increases.
C)   increases, but the price paid by buyers decreases.
D)   and the price paid by buyers both increase.E) A) and B)
F) A) and C)

Question 17

When a tax is levied on sellers of tea,

Accepted Answer

A)   the well-being of both sellers and buyers of tea is unaffected.
B)   sellers of tea are made worse off, and the well-being of buyers is unaffected.
C)   sellers of tea are made worse off, and buyers of tea are made better off.
D)   both sellers and buyers of tea are made worse off.E) None of the above
F) C) and D)

Question 18

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

Accepted Answer

A)   upward shift of the demand curve.
B)   downward shift of the demand curve.
C)   movement up and to the left along the demand curve.
D)   movement down and to the right along the demand curve.E) B) and D)
F) C) and D)

Question 19

There are several criticisms of the minimum wage. Which of the following is not one of those criticisms? The minimum wage

Accepted Answer

A)   often hurts those people who it is intended to help.
B)   results in an excess supply of low-skilled labor.
C)   prevents some unskilled workers from getting needed on-the-job training.
D)   fails to raise the wage of any employed person.E) B) and C)
F) A) and C)

Question 20

A price ceiling caused the gasoline shortage of 1973 in the United States.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Correct Answer
verified

A price ceiling caused the gasoline shortage of 1973 in the United States.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

If a nonbinding price ceiling is imposed on a market, then the

Correct Answer
verified

When a tax is levied on sellers of tea,

Correct Answer
verified

Correct Answer
verified

There are several criticisms of the minimum wage. Which of the following is not one of those criticisms? The minimum wage

Correct Answer
verified

When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market

Correct Answer
verified

Taxes levied on sellers and taxes levied on buyers are equivalent.

Correct Answer
verified

A tax on the sellers of coffee mugs

Correct Answer
verified

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

Correct Answer
verified

A tax on buyers shifts the demand curve and the supply curve.

Correct Answer
verified

Figure 6-26 -Refer to Figure 6-26. How much tax revenue does this tax produce for the government?

Correct Answer
verified

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

Correct Answer
verified

A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

Correct Answer
verified

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Correct Answer
verified

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

Correct Answer
verified

Which of the following is not correct? In a 2006 survey of Ph.D. economists,

Correct Answer
verified

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Correct AnswerverifiedShow Answer

A price ceiling caused the gasoline shortage of 1973 in the United States.

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

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

Correct AnswerverifiedShow Answer

If a nonbinding price ceiling is imposed on a market, then the

Correct AnswerverifiedShow Answer

When a tax is levied on sellers of tea,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

There are several criticisms of the minimum wage. Which of the following is not one of those criticisms? The minimum wage

Correct AnswerverifiedShow Answer

When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market

Correct AnswerverifiedShow Answer

Taxes levied on sellers and taxes levied on buyers are equivalent.

Correct AnswerverifiedShow Answer

A tax on the sellers of coffee mugs

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A tax on buyers shifts the demand curve and the supply curve.

Correct AnswerverifiedShow Answer

Figure 6-26 -Refer to Figure 6-26. How much tax revenue does this tax produce for the government?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

Correct AnswerverifiedShow Answer

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Correct AnswerverifiedShow Answer

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

Correct AnswerverifiedShow Answer

Which of the following is not correct? In a 2006 survey of Ph.D. economists,

Correct AnswerverifiedShow Answer

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would

Correct AnswerverifiedShow Answer

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