Question 1

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Accepted Answer

A)  Binding price floor
B)  Binding price ceiling
C)  Tax on the good
D)  Nonbinding price controlE) A) and C)
F) None of the above

Question 2

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 3

Figure 6-17
  ​
-Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $6.

Accepted Answer

A) True 
 B)False

Question 4

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Accepted Answer

A) True 
 B)False

Question 5

Figure 6-21
  ​
-Refer to Figure 6-21. 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 6

Figure 6-17
  ​
-Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $4.

Accepted Answer

A) True 
 B)False

Question 7

A tax on buyers decreases demand.

Accepted Answer

A) True 
 B)False

Question 8

A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

Accepted Answer

A) True 
 B)False

Question 9

A price ceiling is

Accepted Answer

A)  often imposed on markets in which "cutthroat competition" would prevail without a price ceiling.
B)  a legal maximum on the price at which a good can be sold.
C)  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 ceiling.
D)  imposed to make sure everyone can earn a fair wage.E) A) and B)
F) C) and D)

Question 10

Suppose the equilibrium price of a stick of deodorant is $4, and the government imposes a price floor of $5 per stick. As a result of the price floor, the

Accepted Answer

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

Question 11

A price ceiling set above the equilibrium price causes quantity demanded to exceed quantity supplied.

Accepted Answer

A) True 
 B)False

Question 12

The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Will a binding price floor result in a shortage or a surplus in the market?

Accepted Answer

A binding price floo...

Question 15

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

Accepted Answer

A binding price ceil...

Question 16

A tax of $1 on buyers always decreases the equilibrium price by $1.

Accepted Answer

A) True 
 B)False

Question 17

Scenario 6-2
Suppose demand for a product is given by the equation
QS1U1P1D S1S1P0= 120 - 4P
and supply for the product is given by the equation
QS1U1P1S S1S1P0= 4P
-Refer to Scenario 6-2. Suppose the government sets a price ceiling at $17 for this product. Is this price ceiling binding, and what will be the size of the shortage/surplus in this market?

Accepted Answer

The price ceiling will not be ...

Question 18

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

Accepted Answer

A) True 
 B)False

Question 19

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Accepted Answer

A)  buyers will bear a greater burden of the tax than the sellers.
B)  sellers will bear a greater burden of the tax than the buyers.
C)  buyers and sellers are likely to share the burden of the tax equally.
D)  buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.E) C) and D)
F) None of the above

Question 20

Price ceilings are typically imposed to benefit buyers.

Accepted Answer

A) True 
 B)False

Exam 6: Supply, Demand, and Government Policies

Figure 6-21 -Refer to Figure 6-21. 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

A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

Correct Answer
verified

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

Correct Answer
verified
A binding price ceil...
View Answer

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Correct Answer
verified

The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy.

Correct Answer
verified

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Correct Answer
verified

Suppose the equilibrium price of a stick of deodorant is $4, and the government imposes a price floor of $5 per stick. As a result of the price floor, the

Correct Answer
verified

Will a binding price floor result in a shortage or a surplus in the market?

Correct Answer
verified
A binding price floo...
View Answer

Correct Answer
verified
The price ceiling will not be ...
View Answer

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

Correct Answer
verified

A tax of $1 on buyers always decreases the equilibrium price by $1.

Correct Answer
verified

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

Correct Answer
verified

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Correct Answer
verified

A price ceiling set above the equilibrium price causes quantity demanded to exceed quantity supplied.

Correct Answer
verified

A tax on buyers decreases demand.

Correct Answer
verified

Price ceilings are typically imposed to benefit buyers.

Correct Answer
verified

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 Answer
verified

Figure 6-17 -Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $6.

Correct Answer
verified

Figure 6-17 -Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $4.

Correct Answer
verified

A price ceiling is

Correct Answer
verified

Exam 6: Supply, Demand, and Government Policies

Figure 6-21 ​ -Refer to Figure 6-21. 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

A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

Correct AnswerverifiedShow Answer

When a price ceiling is binding, is the price ceiling set above or below the market equilibrium price?

Correct AnswerverifiedA binding price ceil...View AnswerShow Answer

Which of the following causes the price paid by buyers to be different than the price received by sellers?

Correct AnswerverifiedShow Answer

The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy.

Correct AnswerverifiedShow Answer

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Correct AnswerverifiedShow Answer

Suppose the equilibrium price of a stick of deodorant is $4, and the government imposes a price floor of $5 per stick. As a result of the price floor, the

Correct AnswerverifiedShow Answer

Will a binding price floor result in a shortage or a surplus in the market?

Correct AnswerverifiedA binding price floo...View AnswerShow Answer

Correct AnswerverifiedThe price ceiling will not be ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

A tax of $1 on buyers always decreases the equilibrium price by $1.

Correct AnswerverifiedShow Answer

If a price ceiling of $2 per gallon is imposed on gasoline, and the market equilibrium price is $1.50, then the price ceiling is a binding constraint on the market.

Correct AnswerverifiedShow Answer

If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.

Correct AnswerverifiedShow Answer

A price ceiling set above the equilibrium price causes quantity demanded to exceed quantity supplied.

Correct AnswerverifiedShow Answer

A tax on buyers decreases demand.

Correct AnswerverifiedShow Answer

Price ceilings are typically imposed to benefit buyers.

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

Figure 6-17 ​ -Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $6.

Correct AnswerverifiedShow Answer

Figure 6-17 ​ -Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $4.

Correct AnswerverifiedShow Answer

A price ceiling is

Correct AnswerverifiedShow Answer

Figure 6-21 -Refer to Figure 6-21. 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

Correct Answer
verified

Correct Answer
verified
A binding price ceil...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A binding price floo...
View Answer

Correct Answer
verified
The price ceiling will not be ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Figure 6-17 -Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $6.

Correct Answer
verified

Figure 6-17 -Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $4.

Correct Answer
verified

Correct Answer
verified