Question 1

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Figure 6-21 
-Refer to Figure 6-21. 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 C)

Question 4

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) A) and C)

Question 5

A tax on sellers increases supply.

Accepted Answer

A) True 
 B)False

Question 6

One common example of a price floor is the minimum wage.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-33 
-Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

Accepted Answer

The burden...

Question 8

The following table shows the demand and supply schedules in a particular market.  
If the government sets a price floor $2 above the equilibrium price, how many units will be sold in this market?

Accepted Answer

The equilibrium price is $3, so the pric...

Question 9

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Accepted Answer

A)  less than one-third.
B)  between one-third and one-half.
C)  between one-half and two-thirds.
D)  greater than two-thirds.E) C) and D)
F) B) and D)

Question 10

Using a supply and demand diagram, show a labor market with a binding minimum wage. Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

Accepted Answer

a.For this example, a $300 price ceiling...

Question 11

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

Accepted Answer

A)  increase by less than $5.
B)  increase by exactly $5.
C)  increase by more than $5.
D)  decrease by an indeterminate amount.E) All of the above
F) C) and D)

Question 12

The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not an example of a public policy?

Accepted Answer

A)  rent-control laws
B)  minimum-wage laws
C)  taxes
D)  equilibrium lawsE) B) and D)
F) B) and C)

Question 14

Figure 6-13
This figure shows the market demand and market supply curves for good X. 
-Refer to Figure 6-13. Which of the following statements is correct?

Accepted Answer

A)  A price ceiling set at $6 would be binding, but a price ceiling set at $4 would not be binding.
B)  A price floor set at $4 would be binding, but a price ceiling set at $4 would not be binding.
C)  A price ceiling set at $3.50 would result in a surplus.
D)  A price floor set at $6.50 would result in a surplus.E) A) and B)
F) A) and D)

Question 15

Consider the market for gasoline. Buyers

Accepted Answer

A)  and sellers would lobby for a price ceiling.
B)  and sellers would lobby for a price floor.
C)  would lobby for a price ceiling, whereas sellers would lobby for a price floor.
D)  would lobby for a price floor, whereas sellers would lobby for a price ceiling.E) A) and C)
F) A) and B)

Question 16

Figure 6-35 
-Refer to Figure 6-35. A price floor set at $40 would create a surplus of 20 units.

Accepted Answer

A) True 
 B)False

Question 17

Unlike minimum wage laws, wage subsidies

Accepted Answer

A)  discourage firms from hiring the working poor.
B)  cause unemployment.
C)  help only wealthy workers.
D)  raise the living standards of the working poor without creating unemployment.E) A) and B)
F) A) and C)

Question 18

Price is the rationing mechanism in a free, competitive market.

Accepted Answer

A) True 
 B)False

Question 19

The minimum wage, if it is binding, raises the incomes of

Accepted Answer

A)  no workers.
B)  only those workers who cannot find jobs.
C)  only those workers whose jobs would pay less than the minimum wage if it didn't exist.
D)  all workers.E) B) and C)
F) None of the above

Question 20

If a price floor is a binding constraint on a market, then

Accepted Answer

A)  the equilibrium price must be above the price floor.
B)  the quantity demanded must exceed the quantity supplied.
C)  sellers cannot sell all they want to sell at the price floor.
D)  buyers cannot buy all they want to buy at the price floor.E) All of the above
F) None of the above

Exam 6: Supply, Demand, and Government Policies

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following is not an example of a public policy?

Correct AnswerverifiedShow Answer

The minimum wage, if it is binding, raises the incomes of

Correct AnswerverifiedShow Answer

The following table shows the demand and supply schedules in a particular market. If the government sets a price floor $2 above the equilibrium price, how many units will be sold in this market?

Correct AnswerverifiedThe equilibrium price is $3, so the pric...View AnswerShow Answer

Consider the market for gasoline. Buyers

Correct AnswerverifiedShow Answer

Using a supply and demand diagram, show a labor market with a binding minimum wage. Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

Correct Answerverifieda.For this example, a $300 price ceiling...View AnswerShow Answer

Figure 6-35 -Refer to Figure 6-35. A price floor set at $40 would create a surplus of 20 units.

Correct AnswerverifiedShow Answer

The proportion of minimum-wage earners who are in families with incomes below the poverty line is

Correct AnswerverifiedShow Answer

If a price floor is a binding constraint on a market, then

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A tax on sellers increases supply.

Correct AnswerverifiedShow Answer

Price is the rationing mechanism in a free, competitive market.

Correct AnswerverifiedShow Answer

The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy.

Correct AnswerverifiedShow Answer

Unlike minimum wage laws, wage subsidies

Correct AnswerverifiedShow Answer

The quantity sold in a market will decrease if the government

Correct AnswerverifiedShow Answer

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Correct AnswerverifiedShow Answer

One common example of a price floor is the minimum wage.

Correct AnswerverifiedShow Answer

Figure 6-21 -Refer to Figure 6-21. 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

If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would

Correct AnswerverifiedShow Answer

Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

Correct AnswerverifiedThe burden...View AnswerShow Answer

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The equilibrium price is $3, so the pric...
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a.For this example, a $300 price ceiling...
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The burden...
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