Question 1

Suppose the equilibrium price of a tube of toothpaste is $2,and the government imposes a price floor of $3 per tube.As a result of the price floor,the

Accepted Answer

A)   demand curve for toothpaste shifts to the left.
B)   supply curve for toothpaste shifts to the right.
C)   quantity demanded of toothpaste decreases,and the quantity of toothpaste that firms want to supply increases.
D)   quantity supplied of toothpaste stays the same.E) A) and B)
F) None of the above

Question 2

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 mopeds than they were receiving before the tax.
C)   buyers of mopeds are unaffected by the tax.
D)   None of the above is correct.E) C) and D)
F) None of the above

Question 3

Under rent control,tenants can expect

Accepted Answer

A)   lower rent and higher quality housing.
B)   lower rent and lower quality housing.
C)   higher rent and a shortage of rental housing.
D)   higher rent and a surplus of rental housing.E) B) and C)
F) A) and B)

Question 4

As a rationing mechanism,discrimination according to seller bias is

Accepted Answer

A)   efficient and fair.
B)   efficient,but potentially unfair.
C)   inefficient,but fair.
D)   inefficient and potentially unfair.E) A) and B)
F) All of the above

Question 5

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

Question 6

Advocates of the minimum wage admit that it has some adverse effects,but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-21 
-Refer to Figure 6-22.The amount of the tax per unit is

Accepted Answer

A)   $1.
B)   $1.50.
C)   $2.
D)   $3.E) A) and B)
F) A) and C)

Question 8

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city.The mayor proposes to collect half the tax from workers and half the tax from firms.Workers will bear

Accepted Answer

A)   an equal share of the tax in comparison to firms.
B)   a greater share of the tax in comparison to firms.
C)   a smaller share of the tax in comparison to firms.
D)   All of the above are possible.E) C) and D)
F) A) and B)

Question 9

The term tax incidence refers to

Accepted Answer

A)   whether buyers or sellers of a good are required to send tax payments to the government.
B)   whether the demand curve or the supply curve shifts when the tax is imposed.
C)   the distribution of the tax burden between buyers and sellers.
D)   widespread view that taxes (and death) are the only certainties in life.E) All of the above
F) A) and C)

Question 10

The rationing mechanisms that develop under binding price floors are usually efficient.

Accepted Answer

A) True 
 B)False

Question 11

The minimum wage has its greatest impact on the market for

Accepted Answer

A)   female labor.
B)   older labor.
C)   black labor.
D)   teenage labor.E) None of the above
F) B) and C)

Question 12

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

Accepted Answer

A) True 
 B)False

Question 13

Figure 6-18 
-Refer to Figure 6-18.Sellers pay how much of the tax per unit?

Accepted Answer

A)   $1.00.
B)   $1.50.
C)   $2.50.
D)   $3.50.E) B) and C)
F) A) and C)

Question 14

Most economists are in favor of price controls as a way of allocating resources in the economy.

Accepted Answer

A) True 
 B)False

Question 15

A key lesson from the payroll tax is that the

Accepted Answer

A)   tax is a tax solely on workers.
B)   tax is a tax solely on firms that hire workers.
C)   tax eliminates any wedge that might exist between the wage that firms pay and the wage that workers receive.
D)   true burden of a tax cannot be legislated.E) A) and B)
F) All of the above

Question 16

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Accepted Answer

A) True 
 B)False

Question 17

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) A) and D)
F) A) and C)

Question 18

If a tax is imposed on a market with inelastic demand and elastic supply,then

Accepted Answer

A)   buyers will bear most of the burden of the tax.
B)   sellers will bear most of the burden of the tax.
C)   the burden of the tax will be shared equally between buyers and sellers.
D)   it is impossible to determine how the burden of the tax will be shared.E) A) and D)
F) None of the above

Question 19

A price floor is

Accepted Answer

A)   a legal minimum on the price at which a good can be sold.
B)   often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor.
C)   a source of inefficiency in a market.
D)   All of the above are correct.E) All of the above
F) None of the above

Question 20

The primary effect of rent control in the short run is to reduce rents.

Accepted Answer

A) True 
 B)False

Exam 6: Supply,demand,and Government Policies

The term tax incidence refers to

Correct AnswerverifiedShow Answer

As a rationing mechanism,discrimination according to seller bias is

Correct AnswerverifiedShow Answer

Figure 6-18 -Refer to Figure 6-18.Sellers pay how much of the tax per unit?

Correct AnswerverifiedShow Answer

Advocates of the minimum wage admit that it has some adverse effects,but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Correct AnswerverifiedShow Answer

The minimum wage has its greatest impact on the market for

Correct AnswerverifiedShow Answer

The primary effect of rent control in the short run is to reduce rents.

Correct AnswerverifiedShow Answer

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

Correct AnswerverifiedShow Answer

A key lesson from the payroll tax is that the

Correct AnswerverifiedShow Answer

The rationing mechanisms that develop under binding price floors are usually efficient.

Correct AnswerverifiedShow Answer

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

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

Figure 6-21 -Refer to Figure 6-22.The amount of the tax per unit is

Correct AnswerverifiedShow Answer

Under rent control,tenants can expect

Correct AnswerverifiedShow Answer

A price floor is

Correct AnswerverifiedShow Answer

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city.The mayor proposes to collect half the tax from workers and half the tax from firms.Workers will bear

Correct AnswerverifiedShow Answer

If a tax is imposed on a market with inelastic demand and elastic supply,then

Correct AnswerverifiedShow Answer

Most economists are in favor of price controls as a way of allocating resources in the economy.

Correct AnswerverifiedShow Answer

When a tax is levied on sellers of tea,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Suppose the equilibrium price of a tube of toothpaste is $2,and the government imposes a price floor of $3 per tube.As a result of the price floor,the

Correct AnswerverifiedShow Answer

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