Question 1

Table 6-6 
-Refer to Table 6-6. If the government set a price floor at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at $2 would ...

Question 2

Table 6-3
The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $2 above the equilibrium price in this market. 
-Refer to Table 6-3. Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is

Accepted Answer

A)  $2.
B)  $3.
C)  $4.
D)  $5.

Question 3

Figure 6-15 
-Refer to Figure 6-15. Suppose a price ceiling of $2 is imposed on this market. As a result,

Accepted Answer

A)  the quantity of the good supplied decreases by 30 units.
B)  the demand curve shifts to the left so as to now pass through the point (quantity = 30, price = $2) .
C)  buyers' total expenditure on the good decreases by $75.
D)  buyers' total expenditure on the good falls by $15.

Question 4

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) .

Question 5

Buyers of a good bear the larger share of the tax burden when the (i) 
Supply is more elastic than the demand for the product.
(ii) 
Demand in more elastic than the supply for the product.
(iii) 
Tax is placed on the sellers of the product.
(iv) 
Tax is placed on the buyers of the product.

Accepted Answer

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

Question 6

An outcome that can result from either a price ceiling or a price floor is

Accepted Answer

A)  a surplus in the market.
B)  a shortage in the market.
C)  a nonbinding price control.
D)  long lines of frustrated buyers.

Question 7

Does a binding price ceiling result in a shortage or a surplus in the market?

Accepted Answer

A binding price ceil...

Question 8

The Earned Income Tax Credit is an example of a

Accepted Answer

A)  minimum-wage law.
B)  price ceiling.
C)  wage subsidy.
D)  rent subsidy.

Question 9

Figure 6-27
This figure shows the market demand and market supply curves for good Z. 
-Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Accepted Answer

A)  $16
B)  between $16 and $20
C)  between $20 and $22
D)  $22

Question 10

When a binding price floor is imposed on a market,

Accepted Answer

A)  price no longer serves as a rationing device.
B)  the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor.
C)  only some sellers benefit.
D)  All of the above are correct.

Question 11

Figure 6-31 
-Refer to Figure 6-31. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at...

Question 12

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 ceiling of $6 on this market, then there will be

Accepted Answer

A)  no shortage.
B)  a shortage of 5 units.
C)  a shortage of 10 units.
D)  a shortage of 20 units.

Question 13

A tax imposed on the buyers of a good will lower the

Accepted Answer

A)  price paid by buyers and lower the equilibrium quantity.
B)  price paid by buyers and raise the equilibrium quantity.
C)  effective price received by sellers and lower the equilibrium quantity.
D)  effective price received by sellers and raise the equilibrium quantity.

Question 14

Table 6-2 
-Refer to Table 6-2. A price ceiling set at $5 results in

Accepted Answer

A)  50 units sold.
B)  250 units sold.
C)  300 units sold.
D)  350 units sold.

Question 15

​Figure 6-33
The diagram shows the effect of a tax as measured by the distance between J and K. 
-Refer to Figure 6-33. Based upon the diagram,​

Accepted Answer

A)  ​more of the incidence of the tax is on buyers, since the demand curve is more elastic than the supply curve.
B)  ​more of the incidence of the tax is on sellers, since the demand curve is less elastic than is the supply curve .
C)  more of the incidence of the tax is on sellers, since supply is more inelastic than demand.​
D)  ​more of the incidence of the tax is on buyers, since supply is more inelastic than demand.

Question 16

If a tax is imposed on the buyers of a product, then the tax burden will fall entirely on the buyers.

Accepted Answer

A) True 
 B)False

Question 17

Buyers and sellers rarely share the burden of a tax equally.

Accepted Answer

A) True 
 B)False

Question 18

Figure 6-29
Suppose the government imposes a $2 on this market. 
-Refer to Figure 6-29. The buyers and sellers will bear an equal share of the tax burden if the demand is

Accepted Answer

A)  D1, and the supply is S1.
B)  D2, and the supply is S1.
C)  D1, and the supply is S2.
D)  D2, and the supply is S2.

Question 19

Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

Accepted Answer

A)  The effective price received by sellers is $0.40 per bottle less than it was before the tax.
B)  Sixty percent of the burden of the tax falls on sellers.
C)  This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume.
D)  All of the above are correct.

Question 20

If a tax is levied on the sellers of a product, then the demand curve will

Accepted Answer

A)  shift down.
B)  shift up.
C)  become flatter.
D)  not shift.

Exam 6: Supply, Demand, and Government Policies

Figure 6-33 The diagram shows the effect of a tax as measured by the distance between J and K. -Refer to Figure 6-33. Based upon the diagram,

Correct Answer
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Buyers of a good bear the larger share of the tax burden when the (i) Supply is more elastic than the demand for the product. (ii) Demand in more elastic than the supply for the product. (iii) Tax is placed on the sellers of the product. (iv) Tax is placed on the buyers of the product.

Correct Answer
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The Earned Income Tax Credit is an example of a

Correct Answer
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Figure 6-29 Suppose the government imposes a $2 on this market. -Refer to Figure 6-29. The buyers and sellers will bear an equal share of the tax burden if the demand is

Correct Answer
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A tax imposed on the buyers of a good will lower the

Correct Answer
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If a tax is levied on the sellers of a product, then the demand curve will

Correct Answer
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Correct Answer
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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 ceiling of $6 on this market, then there will be

Correct Answer
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If a tax is imposed on the buyers of a product, then the tax burden will fall entirely on the buyers.

Correct Answer
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When a binding price floor is imposed on a market,

Correct Answer
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Buyers and sellers rarely share the burden of a tax equally.

Correct Answer
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Figure 6-15 -Refer to Figure 6-15. Suppose a price ceiling of $2 is imposed on this market. As a result,

Correct Answer
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Does a binding price ceiling result in a shortage or a surplus in the market?

Correct Answer
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A binding price ceil...
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Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

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Table 6-6 -Refer to Table 6-6. If the government set a price floor at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

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A price floor set at $2 would ...
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Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

Correct Answer
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Table 6-2 -Refer to Table 6-2. A price ceiling set at $5 results in

Correct Answer
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Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

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

Correct Answer
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An outcome that can result from either a price ceiling or a price floor is

Correct Answer
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Exam 6: Supply, Demand, and Government Policies

​Figure 6-33 The diagram shows the effect of a tax as measured by the distance between J and K. -Refer to Figure 6-33. Based upon the diagram,​

Correct AnswerverifiedShow Answer

Buyers of a good bear the larger share of the tax burden when the (i) Supply is more elastic than the demand for the product. (ii) Demand in more elastic than the supply for the product. (iii) Tax is placed on the sellers of the product. (iv) Tax is placed on the buyers of the product.

Correct AnswerverifiedShow Answer

The Earned Income Tax Credit is an example of a

Correct AnswerverifiedShow Answer

Figure 6-29 Suppose the government imposes a $2 on this market. -Refer to Figure 6-29. The buyers and sellers will bear an equal share of the tax burden if the demand is

Correct AnswerverifiedShow Answer

A tax imposed on the buyers of a good will lower the

Correct AnswerverifiedShow Answer

If a tax is levied on the sellers of a product, then the demand curve will

Correct AnswerverifiedShow Answer

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 ceiling of $6 on this market, then there will be

Correct AnswerverifiedShow Answer

If a tax is imposed on the buyers of a product, then the tax burden will fall entirely on the buyers.

Correct AnswerverifiedShow Answer

When a binding price floor is imposed on a market,

Correct AnswerverifiedShow Answer

Buyers and sellers rarely share the burden of a tax equally.

Correct AnswerverifiedShow Answer

Figure 6-15 -Refer to Figure 6-15. Suppose a price ceiling of $2 is imposed on this market. As a result,

Correct AnswerverifiedShow Answer

Does a binding price ceiling result in a shortage or a surplus in the market?

Correct AnswerverifiedA binding price ceil...View AnswerShow Answer

Figure 6-27 This figure shows the market demand and market supply curves for good Z. -Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?

Correct AnswerverifiedShow Answer

Table 6-6 -Refer to Table 6-6. If the government set a price floor at $2, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price floor set at $2 would ...View AnswerShow Answer

Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Table 6-2 -Refer to Table 6-2. A price ceiling set at $5 results in

Correct AnswerverifiedShow Answer

Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price floor set at...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

An outcome that can result from either a price ceiling or a price floor is

Correct AnswerverifiedShow Answer

Figure 6-33 The diagram shows the effect of a tax as measured by the distance between J and K. -Refer to Figure 6-33. Based upon the diagram,

Correct Answer
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A binding price ceil...
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A price floor set at $2 would ...
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A price floor set at...
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