Question 1

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Accepted Answer

A) True 
 B)False

Question 2

Figure 6-25 
-Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

Accepted Answer

A)   $150
B)   $180
C)   $250
D)   $300E) All of the above
F) A) and B)

Question 3

Economic policies often have effects that their architects did not intend or anticipate.

Accepted Answer

A) True 
 B)False

Question 4

If a tax is imposed on a market with inelastic supply and elastic demand, 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) B) and C)
F) A) and D)

Question 5

Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?

Accepted Answer

A)   an accumulation of dirt in the interior of rental cars
B)   poor engine maintenance in rental cars
C)   free gasoline given to people as an incentive to a rent a car
D)   slow replacement of old rental cars with newer onesE) A) and D)
F) B) and D)

Question 6

To say that a price ceiling is binding is to say that the price ceiling

Accepted Answer

A)   results in a shortage.
B)   is set below the equilibrium price.
C)   causes quantity demanded to exceed quantity supplied.
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 7

Figure 6-24 
-Refer to Figure 6-24. The per-unit burden of the tax on buyers of the good is

Accepted Answer

A)   $2.
B)   $4.
C)   $6.
D)   $8.E) A) and B)
F) A) and C)

Question 8

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The tax burden fall...

Question 9

Figure 6-30
Panel a)  Panel b) 
   Panel c)  
-Refer to Figure 6-30. In which market will the majority of the tax burden fall on sellers?

Accepted Answer

A)   the market shown in panel a) .
B)   the market shown in panel b) .
C)   the market shown in panel c) .
D)   All of the above are correct.E) A) and C)
F) B) and C)

Question 10

Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

Accepted Answer

A)   1 to 3 percent.
B)   5 to 7 percent.
C)   10 percent.
D)   None of the above is correct because studies show no decrease in teenage employment.E) B) and C)
F) All of the above

Question 11

In a competitive market free of government regulation,

Accepted Answer

A)   price adjusts until quantity demanded is greater than quantity supplied.
B)   price adjusts until quantity demanded is less than quantity supplied.
C)   price adjusts until quantity demanded equals quantity supplied.
D)   supply adjusts to meet demand at every price.E) B) and D)
F) A) and B)

Question 12

Figure 6-36 
-Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $6.

Accepted Answer

A) True 
 B)False

Question 13

How is the burden of a tax divided? 
i)  When the tax is levied on the sellers, the sellers bear a higher proportion of the tax burden.
Ii)  When the tax is levied on the buyers, the buyers bear a higher proportion of the tax burden.
Iii)  Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear an equal proportion of the tax burden.
Iv)  Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear some proportion of the tax burden.

Accepted Answer

A)   i)  and ii)  only
B)   iv)  only
C)   i) , ii) , and iii)  only
D)   i) , ii) , and iv)  onlyE) B) and C)
F) A) and D)

Question 14

A price ceiling is a legal minimum on the price at which a good or service can be sold.

Accepted Answer

A) True 
 B)False

Question 15

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un...

Question 16

When a tax is placed on the sellers of a product, the

Accepted Answer

A)   size of the market decreases.
B)   effective price received by sellers decreases, and the price paid by buyers increases.
C)   supply of the product decreases.
D)   All of the above are correct.E) C) and D)
F) A) and B)

Question 17

Figure 6-8 
-Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be

Accepted Answer

A)   no shortage of the good.
B)   a shortage of 10 units of the good.
C)   a shortage of 20 units of the good.
D)   a shortage of 30 units of the good.E) A) and C)
F) None of the above

Question 18

Figure 6-25 
-Refer to Figure 6-25. The equilibrium price in the market before the tax is imposed is

Accepted Answer

A)   $1.
B)   $2.
C)   $5.
D)   $6.E) A) and C)
F) B) and C)

Question 19

Figure 6-7 
-Refer to Figure 6-7. Suppose a price floor of $8 is imposed on this market. As a result,

Accepted Answer

A)   buyers' total expenditure on the good decreases by $20.
B)   the supply curve shifts to the left; quantity sold is now 30 units and the price is $8.
C)   the quantity of the good demanded decreases by 10 units.
D)   the price of the good continues to serve as the rationing mechanism.E) A) and D)
F) B) and C)

Question 20

All buyers benefit from a binding price ceiling.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $6.

Correct Answer
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How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Correct Answer
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The tax burden fall...
View Answer

In a competitive market free of government regulation,

Correct Answer
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Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

Correct Answer
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Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Correct Answer
verified
With a $6 tax per un...
View Answer

Economic policies often have effects that their architects did not intend or anticipate.

Correct Answer
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All buyers benefit from a binding price ceiling.

Correct Answer
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Figure 6-7 -Refer to Figure 6-7. Suppose a price floor of $8 is imposed on this market. As a result,

Correct Answer
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Figure 6-24 -Refer to Figure 6-24. The per-unit burden of the tax on buyers of the good is

Correct Answer
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If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Correct Answer
verified

Figure 6-25 -Refer to Figure 6-25. The equilibrium price in the market before the tax is imposed is

Correct Answer
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Figure 6-25 -Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

Correct Answer
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A price ceiling is a legal minimum on the price at which a good or service can be sold.

Correct Answer
verified

Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?

Correct Answer
verified

Figure 6-30 Panel a) Panel b) Panel c) -Refer to Figure 6-30. In which market will the majority of the tax burden fall on sellers?

Correct Answer
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Figure 6-8 -Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be

Correct Answer
verified

To say that a price ceiling is binding is to say that the price ceiling

Correct Answer
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Correct Answer
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When a tax is placed on the sellers of a product, the

Correct Answer
verified

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

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer pays $6.

Correct AnswerverifiedShow Answer

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Correct Answerverified The tax burden fall...View AnswerShow Answer

In a competitive market free of government regulation,

Correct AnswerverifiedShow Answer

Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

Correct AnswerverifiedShow Answer

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Correct AnswerverifiedWith a $6 tax per un...View AnswerShow Answer

Economic policies often have effects that their architects did not intend or anticipate.

Correct AnswerverifiedShow Answer

All buyers benefit from a binding price ceiling.

Correct AnswerverifiedShow Answer

Figure 6-7 -Refer to Figure 6-7. Suppose a price floor of $8 is imposed on this market. As a result,

Correct AnswerverifiedShow Answer

Figure 6-24 -Refer to Figure 6-24. The per-unit burden of the tax on buyers of the good is

Correct AnswerverifiedShow Answer

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

Correct AnswerverifiedShow Answer

Figure 6-25 -Refer to Figure 6-25. The equilibrium price in the market before the tax is imposed is

Correct AnswerverifiedShow Answer

Figure 6-25 -Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

Correct AnswerverifiedShow Answer

A price ceiling is a legal minimum on the price at which a good or service can be sold.

Correct AnswerverifiedShow Answer

Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?

Correct AnswerverifiedShow Answer

Figure 6-30 Panel a) Panel b) Panel c) -Refer to Figure 6-30. In which market will the majority of the tax burden fall on sellers?

Correct AnswerverifiedShow Answer

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be

Correct AnswerverifiedShow Answer

To say that a price ceiling is binding is to say that the price ceiling

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a tax is placed on the sellers of a product, the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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The tax burden fall...
View Answer

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With a $6 tax per un...
View Answer

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