Question 1

Figure 6-12 1 to S2, A) the market price will increase to P3. B) a surplus will occur at the new market price of P2. C) the market price will stay at P1. D) a shortage will occur at the new market price of P2." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 6-12.When the price ceiling applies in this market,and the supply curve for gasoline shifts from S1 to S2,

Accepted Answer

A)  the market price will increase to P3.
B)  a surplus will occur at the new market price of P2.
C)  the market price will stay at P1.
D)  a shortage will occur at the new market price of P2.E) None of the above
F) B) and C)

Question 2

When a tax is imposed on a good,the result is always a shortage of the good.

Accepted Answer

A) True 
 B)False

Question 3

As a rationing mechanism,discrimination according to seller bias is

Accepted Answer

A)  efficient and fair.
B)  efficient,but potentially unfair.
C)  inefficient,but fair.
D)  inefficient and potentially unfair.E) None of the above
F) All of the above

Question 4

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Accepted Answer

A) True 
 B)False

Question 5

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

Question 6

A binding minimum wage tends to

Accepted Answer

A)  cause a labor surplus.
B)  cause unemployment.
C)  have the greatest impact in the market for teenage labor.
D)  All of the above are correct.E) None of the above
F) A) and D)

Question 7

In a free market,the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Using a supply and demand diagram,show a labor market with a binding minimum wage.Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

Accepted Answer

a.
For this example,a 300 pound price c...

Question 10

If the government wants to reduce the burning of fossil fuels,it should impose a tax on

Accepted Answer

A)  buyers of gasoline.
B)  sellers of gasoline.
C)  either buyers or sellers of gasoline.
D)  whichever side of the market is less elastic.E) A) and B)
F) B) and D)

Question 11

Figure 6-20 
-Refer to Figure 6-20.Suppose sellers,rather than buyers,were required to pay this tax (in the same amount per unit as shown in the graph) .Relative to the tax on buyers,the tax on sellers would result in

Accepted Answer

A)  buyers bearing the same share of the tax burden.
B)  sellers bearing the same share of the tax burden.
C)  the same amount of tax revenue for the government.
D)  All of the above are correct.E) None of the above
F) A) and D)

Question 12

Suppose the government has imposed a price floor on the market for soybeans.Which of the following events could transform the price floor from one that is not binding into one that is binding?

Accepted Answer

A)  Farmers use improved,draught-resistant seeds,which lowers the cost of growing soybeans.
B)  The number of farmers selling soybeans decreases.
C)  Consumers' income increases,and soybeans are a normal good.
D)  The number of consumers buying soybeans increases.E) None of the above
F) A) and B)

Question 13

When a binding price ceiling is imposed on a market to benefit buyers,

Accepted Answer

A)  no buyers actually benefit.
B)  some buyers benefit,but no buyers are harmed.
C)  some buyers benefit,and some buyers are harmed.
D)  all buyers benefit.E) A) and D)
F) A) and C)

Question 14

If the minimum wage exceeds the equilibrium wage,then

Accepted Answer

A)  the quantity demanded of labor will exceed the quantity supplied.
B)  the quantity supplied of labor will exceed the quantity demanded.
C)  the minimum wage will not be binding.
D)  there will be no unemployment.E) A) and C)
F) A) and D)

Question 15

How does elasticity affect the burden of a tax?
 Justify your answer using supply and demand diagrams.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The tax burden fall...

Question 16

Price controls are usually enacted

Accepted Answer

A)  as a means of raising revenue for public purposes.
B)  when policymakers believe that the market price of a good or service is unfair to buyers or sellers.
C)  when policymakers detect inefficiencies in a market.
D)  All of the above are correct.E) C) and D)
F) A) and B)

Question 17

Most labor economists believe that the supply of labor is

Accepted Answer

A)  less elastic than the demand,and,therefore,firms bear most of the burden of the payroll tax.
B)  less elastic than the demand,and,therefore,workers bear most of the burden of the payroll tax.
C)  more elastic than the demand,and,therefore,workers bear most of the burden of the payroll tax.
D)  more elastic than the demand,and,therefore,firms bear most of the burden of the payroll tax.E) A) and B)
F) C) and D)

Question 18

In an unregulated labor market,the wage adjusts to balance labor supply and labor demand.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market?
After the price ceiling becomes effective,

Accepted Answer

A)  a smaller quantity of the good is bought and sold.
B)  a smaller quantity of the good is demanded.
C)  a larger quantity of the good is supplied.
D)  the price rises above the previous equilibrium.E) A) and B)
F) B) and D)

Question 20

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) All of the above
F) C) and D)

Exam 6: Supply,demand,and Government Policies

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

If the government wants to reduce the burning of fossil fuels,it should impose a tax on

Correct AnswerverifiedShow Answer

When a binding price ceiling is imposed on a market to benefit buyers,

Correct AnswerverifiedShow Answer

A tax on sellers and an increase in input prices affect the supply curve in the same way.

Correct AnswerverifiedShow Answer

Suppose the government has imposed a price floor on the market for soybeans.Which of the following events could transform the price floor from one that is not binding into one that is binding?

Correct AnswerverifiedShow Answer

If the minimum wage exceeds the equilibrium wage,then

Correct AnswerverifiedShow Answer

Price controls are usually enacted

Correct AnswerverifiedShow Answer

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Correct Answerverified The tax burden fall...View AnswerShow Answer

As a rationing mechanism,discrimination according to seller bias is

Correct AnswerverifiedShow Answer

Figure 6-12 -Refer to Figure 6-12.When the price ceiling applies in this market,and the supply curve for gasoline shifts from S1 to S2,

Correct AnswerverifiedShow Answer

When a tax is imposed on a good,the result is always a shortage of the good.

Correct AnswerverifiedShow Answer

In a free market,the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.

Correct AnswerverifiedShow Answer

Using a supply and demand diagram,show a labor market with a binding minimum wage.Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

Correct Answerverifieda. For this example,a 300 pound price c...View AnswerShow Answer

Most labor economists believe that the supply of labor is

Correct AnswerverifiedShow Answer

A binding minimum wage tends to

Correct AnswerverifiedShow Answer

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

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

Figure 6-20 -Refer to Figure 6-20.Suppose sellers,rather than buyers,were required to pay this tax (in the same amount per unit as shown in the graph) .Relative to the tax on buyers,the tax on sellers would result in

Correct AnswerverifiedShow Answer

In an unregulated labor market,the wage adjusts to balance labor supply and labor demand.

Correct AnswerverifiedShow Answer

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,

Correct AnswerverifiedShow Answer

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The tax burden fall...
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Figure 6-12 -Refer to Figure 6-12.When the price ceiling applies in this market,and the supply curve for gasoline shifts from S₁ to S₂,

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a.
For this example,a 300 pound price c...
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