Question 1

You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare)  tax. Which of the following statements is correct?

Accepted Answer

A)   The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee.
B)   Your employer is required by law to pay $300 to match the $300 deducted from your check.
C)   This type of tax is an example of a payroll tax.
D)   All of the above are correct.

Question 2

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

Accepted Answer

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

Question 3

Figure 6-28 
-Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Accepted Answer

A)   less than 20 units
B)   20 units
C)   between 20 units and 35 units
D)   greater than 35 units

Question 4

Figure 6-19 
-Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Accepted Answer

A)   $3
B)   between $3 and $5
C)   between $5 and $7
D)   $7

Question 5

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

Accepted Answer

A)   OPEC raised the price of crude oil in world markets.
B)   U.S. gasoline producers raised the price of gasoline.
C)   the U.S. government maintained a price ceiling on gasoline.
D)   Americans typically commuted long distances.

Question 6

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 7

Figure 6-32 
-Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Accepted Answer

A price floor set at $55 would...

Question 8

Figure 6-17
This figure shows the market demand and market supply curves for good Y 
-Refer to Figure 6-17. A government-imposed price of $12 in this market is an example of a

Accepted Answer

A)   binding price ceiling that creates a shortage.
B)   non-binding price ceiling that creates a shortage.
C)   binding price floor that creates a surplus.
D)   non-binding price floor that creates a surplus.

Question 9

When a tax is placed on the buyers of cell phones, the size of the cell phone market

Accepted Answer

A)   and the effective price received by sellers both decrease.
B)   decreases, but the effective price received by sellers increases.
C)   increases, but the effective price received by sellers decreases.
D)   and the effective price received by sellers both increase.

Question 10

If the government wants to reduce smoking, it should impose a tax on

Accepted Answer

A)   buyers of cigarettes.
B)   sellers of cigarettes.
C)   either buyers or sellers of cigarettes.
D)   whichever side of the market is less elastic.

Question 11

Which of the following is not a result of rent control?

Accepted Answer

A)   fewer new apartments offered for rent
B)   less maintenance provided by landlords
C)   bribery
D)   higher quality housing

Question 12

A tax on sellers will shift the

Accepted Answer

A)   demand curve upward by the amount of the tax.
B)   demand curve downward by the amount of the tax.
C)   supply curve upward by the amount of the tax.
D)   supply curve downward by the amount of the tax.

Question 13

Price ceilings and price floors that are binding

Accepted Answer

A)   are desirable because they make markets more efficient and more fair.
B)   cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price.
C)   can have the effect of restoring a market to equilibrium.
D)   are imposed because they can make the poor in the economy better off without causing adverse effects.

Question 14

Figure 6-21 
-Refer to Figure 6-21. What is the amount of the tax per unit?

Accepted Answer

A)   $1
B)   $2
C)   $3
D)   $4

Question 15

Figure 6-23  
-Refer to Figure 6-23. For every unit of the good that is sold, sellers are required to send

Accepted Answer

A)   one dollar to the government, and buyers are required to send two dollars to the government.
B)   two dollars to the government, and buyers are required to send one dollar to the government.
C)   three dollars to the government, and buyers are required to send nothing to the government.
D)   nothing to the government, and buyers are required to send two dollars to the government.

Question 16

Suppose the equilibrium price of a physical examination ("physical")  by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

Accepted Answer

A)   demand curve for physicals shifts to the right.
B)   supply curve for physicals shifts to the left.
C)   quantity demanded of physicals increases, and the quantity supplied of physicals decreases.
D)   number of physicals performed stays the same.

Question 17

When a tax is placed on the sellers of cell phones, the size of the cell phone market

Accepted Answer

A)   and the effective price received by sellers both increase.
B)   increases, but the effective price received by sellers decreases.
C)   decreases, but the effective price received by sellers increases.
D)   and the effective price received by sellers both decrease.

Question 18

Figure 6-6 
-Refer to Figure 6-6. Which of the following statements is not correct?

Accepted Answer

A)   A price ceiling set at $6 would be binding, but a price ceiling set at $12 would not be binding.
B)   A price floor set at $14 would be binding, but a price floor set at $8 would not be binding.
C)   A price ceiling set at $9 would result in a shortage.
D)   A price floor set at $6 would result in a shortage.

Question 19

Figure 6-9 
-Refer to Figure 6-9. A price ceiling set at

Accepted Answer

A)   $4 will be binding and will result in a shortage of 8 units.
B)   $4 will be binding and will result in a shortage of 16 units.
C)   $7 will be binding and will result in a surplus of 4 units.
D)   $7 will be binding and will result in a surplus of 8 units.

Question 20

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.

Exam 6: Supply, Demand, and Government Policies

When a tax is placed on the buyers of cell phones, the size of the cell phone market

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Figure 6-6 -Refer to Figure 6-6. Which of the following statements is not correct?

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When a tax is placed on the sellers of cell phones, the size of the cell phone market

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Figure 6-23 -Refer to Figure 6-23. For every unit of the good that is sold, sellers are required to send

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A tax on sellers will shift the

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Figure 6-32 -Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Correct AnswerverifiedA price floor set at $55 would...View AnswerShow Answer

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

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Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

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In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

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If the government wants to reduce smoking, it should impose a tax on

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You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct?

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When a binding price floor is imposed on a market,

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Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

Correct AnswerverifiedShow Answer

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

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Figure 6-9 -Refer to Figure 6-9. A price ceiling set at

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Which of the following is not a result of rent control?

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Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

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Price ceilings and price floors that are binding

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Figure 6-21 -Refer to Figure 6-21. What is the amount of the tax per unit?

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Figure 6-17 This figure shows the market demand and market supply curves for good Y -Refer to Figure 6-17. A government-imposed price of $12 in this market is an example of a

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A price floor set at $55 would...
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