Question 1

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

Question 2

Figure 6-28 
-Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

Accepted Answer

A)   Buyers and sellers will share the burden of the tax equally.
B)   Buyers will bear more of the burden of the tax than sellers.
C)   Sellers will bear more of the burden of the tax than buyers.
D)   Any of the above is possible in this market.E) B) and D)
F) B) and C)

Question 3

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by

Accepted Answer

A)   less than $0.50.
B)   $0.50.
C)   between $0.50 and $1.
D)   $1.E) B) and D)
F) A) and C)

Question 4

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 B)
F) A) and C)

Question 5

Figure 6-22 
-Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

Accepted Answer

A)   $80.
B)   $60.
C)   $15.
D)   $45.E) C) and D)
F) A) and B)

Question 6

When a binding price floor is imposed on a market to benefit sellers,

Accepted Answer

A)   every seller in the market benefits.
B)   all buyers and sellers benefit.
C)   every seller who wants to sell the good will be able to do so, but only if he appeals to the personal biases of the buyers.
D)   some sellers will not be able to sell any amount of the good.E) None of the above
F) A) and B)

Question 7

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

Accepted Answer

A)   decreases 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)   imposes a binding price ceiling in that market.E) A) and C)
F) B) and C)

Question 8

One common example of a price ceiling is rent control.

Accepted Answer

A) True 
 B)False

Question 9

A binding price floor may not help all sellers, but it does not hurt any sellers.

Accepted Answer

A) True 
 B)False

Question 10

Figure 6-18
The vertical distance between points A and B represents the tax in the market. 
-Refer to Figure 6-18. The per-unit burden of the tax on buyers is

Accepted Answer

A)   $6.
B)   $8.
C)   $14.
D)   $24.E) A) and C)
F) A) and B)

Question 11

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 12

Figure 6-10 
-Refer to Figure 6-10. A price floor set at

Accepted Answer

A)   $6 will be binding and will result in a surplus of 10 units.
B)   $6 will be binding and will result in a surplus of 6 units.
C)   $16 will be binding and will result in a surplus of 10 units.
D)   $16 will be binding and will result in a surplus of 4 units.E) A) and D)
F) A) and B)

Question 13

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 14

If a tax is levied on the sellers of a product, then there will be a(n)

Accepted Answer

A)   downward shift of the demand curve.
B)   upward shift of the demand curve.
C)   decrease in quantity demanded.
D)   increase in quantity demanded.E) A) and D)
F) A) and C)

Question 15

Figure 6-3
Panel (a)  Panel (b)   
-Refer to Figure 6-3. A binding price floor is shown in

Accepted Answer

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

Question 16

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

Question 17

Figure 6-31 
-Refer to Figure 6-31. If the government set a price ceiling at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

There woul...

Question 18

Figure 6-13
This figure shows the market demand and market supply curves for good X. 
-Refer to Figure 6-13. If the government imposes a price floor of $3 on this market, then there will be

Accepted Answer

A)   no surplus.
B)   a surplus of 10 units.
C)   a surplus of 15 units.
D)   a surplus of 20 units.E) None of the above
F) A) and B)

Question 19

Figure 6-22 
-Refer to Figure 6-22. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the buyers of the good, rather than the sellers, are required to pay the tax to the government. After the buyers pay the tax, relative to the case depicted in the figure, the burden on buyers will be

Accepted Answer

A)   larger, and the burden on sellers will be smaller.
B)   smaller, and the burden on sellers will be larger.
C)   the same, and the burden on sellers will be the same.
D)   The relative burdens in the two cases cannot be determined without further information.E) A) and B)
F) A) and C)

Question 20

Figure 6-25 
-Refer to Figure 6-25. The burden of the tax on sellers is

Accepted Answer

A)   $1 per unit.
B)   $1.50 per unit.
C)   $2 per unit.
D)   $3 per unit.E) None of the above
F) B) and C)

Exam 6: Supply, Demand, and Government Policies

Figure 6-22 -Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

Correct Answer
verified

A binding price floor may not help all sellers, but it does not hurt any sellers.

Correct Answer
verified

Economists generally believe that rent control is

Correct Answer
verified

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

Correct Answer
verified

Figure 6-25 -Refer to Figure 6-25. The burden of the tax on sellers is

Correct Answer
verified

If a tax is levied on the sellers of a product, then there will be a(n)

Correct Answer
verified

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct Answer
verified
There woul...
View Answer

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

Correct Answer
verified

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The per-unit burden of the tax on buyers is

Correct Answer
verified

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by

Correct Answer
verified

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

Correct Answer
verified

When a tax is levied on sellers of tea,

Correct Answer
verified

Figure 6-10 -Refer to Figure 6-10. A price floor set at

Correct Answer
verified

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

Correct Answer
verified

Figure 6-3 Panel (a) Panel (b) -Refer to Figure 6-3. A binding price floor is shown in

Correct Answer
verified

Correct Answer
verified

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 Answer
verified
The equilibrium price is $3, so the pric...
View Answer

One common example of a price ceiling is rent control.

Correct Answer
verified

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price floor of $3 on this market, then there will be

Correct Answer
verified

When a binding price floor is imposed on a market to benefit sellers,

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

Figure 6-22 -Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

Correct AnswerverifiedShow Answer

A binding price floor may not help all sellers, but it does not hurt any sellers.

Correct AnswerverifiedShow Answer

Economists generally believe that rent control is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-25 -Refer to Figure 6-25. The burden of the tax on sellers is

Correct AnswerverifiedShow Answer

If a tax is levied on the sellers of a product, then there will be a(n)

Correct AnswerverifiedShow Answer

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedThere woul...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The per-unit burden of the tax on buyers is

Correct AnswerverifiedShow Answer

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by

Correct AnswerverifiedShow Answer

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?

Correct AnswerverifiedShow Answer

When a tax is levied on sellers of tea,

Correct AnswerverifiedShow Answer

Figure 6-10 -Refer to Figure 6-10. A price floor set at

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

Figure 6-3 Panel (a) Panel (b) -Refer to Figure 6-3. A binding price floor is shown in

Correct AnswerverifiedShow Answer

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

One common example of a price ceiling is rent control.

Correct AnswerverifiedShow Answer

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price floor of $3 on this market, then there will be

Correct AnswerverifiedShow Answer

When a binding price floor is imposed on a market to benefit sellers,

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
There woul...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The equilibrium price is $3, so the pric...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified