Question 1

One disadvantage of government subsidies over price controls is that subsidies

Accepted Answer

A)  prevent the attainment of equilibrium in the markets in which they are imposed.
B)  make higher taxes necessary.
C)  are always unfair to those with low incomes.
D)  cause unemployment.E) C) and D)
F) A) and D)

Question 2

Figure 6-6 
-Refer to Figure 6-6. If the government imposes a price ceiling of $12 on this market, then there will be

Accepted Answer

A)  no shortage.
B)  a shortage of 10 units.
C)  a shortage of 20 units.
D)  a shortage of 40 units.E) A) and D)
F) A) and C)

Question 3

A tax on the sellers of coffee will increase the price of coffee paid by buyers,

Accepted Answer

A)  increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.
B)  increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.
C)  decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.
D)  decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.E) C) and D)
F) None of the above

Question 4

If the government removes a tax on a good, 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 decrease.
C)  decrease, and the price received by sellers will increase.
D)  decrease, and the price received by sellers will decrease.E) All of the above
F) B) and D)

Question 5

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Accepted Answer

A)  the demand for treadmills will increase.
B)  the supply of treadmills will decrease.
C)  a shortage of treadmills will develop.
D)  All of the above are correct.E) A) and B)
F) None of the above

Question 6

A minimum wage that is set below a market's equilibrium wage will result in an excess

Accepted Answer

A)  demand for labor, that is, unemployment.
B)  demand for labor, that is, a shortage of workers.
C)  supply of labor, that is, unemployment.
D)  None of the above is correct.E) B) and D)
F) B) and C)

Question 7

The tax incidence depends on whether the tax is levied on buyers or sellers.

Accepted Answer

A) True 
 B)False

Question 8

The Federal Insurance Contribution Act (FICA)  tax is an example of a(n)

Accepted Answer

A)  payroll tax.
B)  sales tax.
C)  farm subsidy.
D)  income subsidy.E) None of the above
F) A) and B)

Question 9

Figure 6-27 
-Refer to Figure 6-27. If the government places a $2 tax in the market, the buyer pays $4.

Accepted Answer

A) True 
 B)False

Question 10

Tax incidence

Accepted Answer

A)  depends on the legislated burden.
B)  is entirely random.
C)  depends on the elasticities of supply and demand.
D)  falls entirely on buyers or entirely on sellers.E) A) and B)
F) B) and D)

Question 11

Figure 6-7 
-Refer to Figure 6-7. Which of the following price controls would cause a surplus 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 D)
F) B) and C)

Question 12

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) A) and D)
F) B) and D)

Question 13

Figure 6-1
 
-Refer to Figure 6-1. In which panel(s)  of the figure would there be a shortage of the good at the price ceiling?

Accepted Answer

A)  panel (a)  only
B)  panel (b)  only
C)  both panel (a)  and panel (b) 
D)  neither panel (a)  nor panel (b) E) B) and C)
F) A) and D)

Question 14

When a binding price floor is imposed on a market for a good, some people who want to sell the good cannot do so.

Accepted Answer

A) True 
 B)False

Question 15

Figure 6-17 
-Refer to Figure 6-17. 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) A) and B)
F) B) and D)

Question 16

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

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

One disadvantage of government subsidies over price controls is that subsidies

Correct Answer
verified

The tax incidence depends on whether the tax is levied on buyers or sellers.

Correct Answer
verified

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

Correct Answer
verified

Figure 6-1 -Refer to Figure 6-1. In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

Correct Answer
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Figure 6-27 -Refer to Figure 6-27. If the government places a $2 tax in the market, the buyer pays $4.

Correct Answer
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When a binding price floor is imposed on a market for a good, some people who want to sell the good cannot do so.

Correct Answer
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Figure 6-6 -Refer to Figure 6-6. If the government imposes a price ceiling of $12 on this market, then there will be

Correct Answer
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Tax incidence

Correct Answer
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If the government removes a tax on a good, then the price paid by buyers will

Correct Answer
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A minimum wage that is set below a market's equilibrium wage will result in an excess

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
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A tax on the sellers of coffee will increase the price of coffee paid by buyers,

Correct Answer
verified

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Correct Answer
verified

Figure 6-17 -Refer to Figure 6-17. 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 Answer
verified

The Federal Insurance Contribution Act (FICA) tax is an example of a(n)

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

One disadvantage of government subsidies over price controls is that subsidies

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The tax incidence depends on whether the tax is levied on buyers or sellers.

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

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Figure 6-1 -Refer to Figure 6-1. In which panel(s) of the figure would there be a shortage of the good at the price ceiling?

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Figure 6-27 -Refer to Figure 6-27. If the government places a $2 tax in the market, the buyer pays $4.

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When a binding price floor is imposed on a market for a good, some people who want to sell the good cannot do so.

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Figure 6-6 -Refer to Figure 6-6. If the government imposes a price ceiling of $12 on this market, then there will be

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Tax incidence

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If the government removes a tax on a good, then the price paid by buyers will

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A minimum wage that is set below a market's equilibrium wage will result in an excess

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

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

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A tax on the sellers of coffee will increase the price of coffee paid by buyers,

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Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

Correct AnswerverifiedShow Answer

Figure 6-17 -Refer to Figure 6-17. 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

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The Federal Insurance Contribution Act (FICA) tax is an example of a(n)

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