Question 1

A price floor set below the equilibrium price causes a surplus in the market.

Accepted Answer

A) True 
 B)False

Question 2

A payroll tax is a

Accepted Answer

A)  fixed number of dollars that every firm must pay to the government for each worker that the firm hires.
B)  tax that each firm must pay to the government before the firm can hire workers and operate its business.
C)  tax on the wages that firms pay their workers.
D)  tax on all wages above the minimum wage.E) All of the above
F) None of the above

Question 3

The long-run effects of rent controls are a good illustration of the principle that

Accepted Answer

A)  society faces a short-run tradeoff between unemployment and inflation.
B)  the cost of something is what you give up to get it.
C)  people respond to incentives.
D)  government can sometimes improve on market outcomes.E) All of the above
F) B) and C)

Question 4

A price ceiling set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-18

-Refer to Figure 6-18.As the figure is drawn,who sends the tax payment to the government?

Accepted Answer

A)  The buyers send the tax payment.
B)  The sellers send the tax payment.
C)  A portion of the tax payment is sent by the buyers,and the remaining portion is sent by the sellers.
D)  The question of who sends the tax payment cannot be determined from the graph.E) A) and C)
F) A) and D)

Question 6

Figure 6-26 
-Refer to Figure 6-26.A price ceiling set at 30 would create a shortage of 20 units.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-2 
-Refer to Figure 6-2.The price ceiling causes quantity

Accepted Answer

A)  supplied to exceed quantity demanded by 45 units.
B)  supplied to exceed quantity demanded by 85 units.
C)  demanded to exceed quantity supplied by 45 units.
D)  demanded to exceed quantity supplied by 85 units.E) A) and B)
F) All of the above

Question 8

One common example of a price ceiling is rent control.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

A nonbinding price ceiling
(i) causes a surplus.
(ii) causes a shortage.
(iii) is set at a price above the equilibrium price.
(iv) is set at a price below the equilibrium price.

Accepted Answer

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

Question 11

When OPEC raised the price of crude oil in the 1970s,it caused the

Accepted Answer

A)  demand for gasoline to increase.
B)  demand for gasoline to decrease.
C)  supply of gasoline to increase.
D)  supply of gasoline to decrease.E) C) and D)
F) None of the above

Question 12

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

Accepted Answer

A) True 
 B)False  True

Question 13

Workers,rather than firms,bear most of the burden of the payroll tax.

Accepted Answer

A) True 
 B)False

Question 14

The burden of a luxury tax falls

Accepted Answer

A)  more on the rich than on the middle class.
B)  more on the poor than on the rich.
C)  more on the middle class than on the rich.
D)  equally on the rich,the middle class,and the poor.E) B) and C)
F) A) and D)

Question 15

The price paid by buyers in a market will decrease if the government

Accepted Answer

A)  increases a binding price floor in that market.
B)  increases a binding price ceiling in that market.
C)  decreases a tax on the good sold in that market.
D)  All of the above are correct.E) A) and C)
F) B) and C)

Question 16

Economists generally believe that rent control is

Accepted Answer

A)  an efficient and fair way to help the poor.
B)  inefficient but the best available means of solving a serious social problem.
C)  a highly inefficient way to help the poor raise their standard of living.
D)  an efficient way to allocate housing,but not a good way to help the poor.E) A) and B)
F) A) and C)

Question 17

The price paid by buyers in a market will increase if the government
(i) increases a binding price floor in that market.
(ii) increases a binding price ceiling in that market.
(iii) decreases a tax on the good sold in that market.

Accepted Answer

A)  (ii) only
B)  (iii) only
C)  (i) and (ii) only
D)  (i) ,(ii) ,and (iii) E) B) and D)
F) C) and D) C

Question 18

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) None of the above
F) A) and B)

Question 19

Which of the following causes a surplus of a good?

Accepted Answer

A)  a binding price floor
B)  a binding price ceiling
C)  a tax on the good
D)  More than one of the above is correct.E) None of the above
F) A) and B) A

Question 20

If a binding price floor is imposed on the video game market,then

Accepted Answer

A)  the quantity of video games demanded will decrease.
B)  the quantity of video games supplied will increase.
C)  a surplus of video games will develop.
D)  All of the above are correct.E) A) and D)
F) B) and C)

Exam 6: Supply,demand,and Government Policies

A price floor set below the equilibrium price causes a surplus in the market.

Correct AnswerverifiedShow Answer

A payroll tax is a

Correct AnswerverifiedShow Answer

The long-run effects of rent controls are a good illustration of the principle that

Correct AnswerverifiedShow Answer

A price ceiling set above the equilibrium price is not binding.

Correct AnswerverifiedShow Answer

Figure 6-18 -Refer to Figure 6-18.As the figure is drawn,who sends the tax payment to the government?

Correct AnswerverifiedShow Answer

Figure 6-26 -Refer to Figure 6-26.A price ceiling set at 30 would create a shortage of 20 units.

Correct AnswerverifiedShow Answer

Figure 6-2 -Refer to Figure 6-2.The price ceiling causes quantity

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One common example of a price ceiling is rent control.

Correct AnswerverifiedShow Answer

Tax incidence

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A nonbinding price ceiling (i) causes a surplus. (ii) causes a shortage. (iii) is set at a price above the equilibrium price. (iv) is set at a price below the equilibrium price.

Correct AnswerverifiedShow Answer

When OPEC raised the price of crude oil in the 1970s,it caused the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedTrue

Workers,rather than firms,bear most of the burden of the payroll tax.

Correct AnswerverifiedShow Answer

The burden of a luxury tax falls

Correct AnswerverifiedShow Answer

The price paid by buyers in a market will decrease if the government

Correct AnswerverifiedShow Answer

Economists generally believe that rent control is

Correct AnswerverifiedShow Answer

The price paid by buyers in a market will increase if the government (i) increases a binding price floor in that market. (ii) increases a binding price ceiling in that market. (iii) decreases a tax on the good sold in that market.

Correct AnswerverifiedC

The term tax incidence refers to

Correct AnswerverifiedShow Answer

Which of the following causes a surplus of a good?

Correct AnswerverifiedA

If a binding price floor is imposed on the video game market,then

Correct AnswerverifiedShow Answer

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True

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C

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A

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