Question 1

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 D)
F) B) and C)

Question 2

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

Accepted Answer

A) True 
 B)False

Question 3

When a tax is imposed on the sellers of a good, the supply curve shifts

Accepted Answer

A)   upward by the amount of the tax.
B)   downward by the amount of the tax.
C)   upward by less than the amount of the tax.
D)   downward by less than the amount of the tax.E) B) and C)
F) All of the above

Question 4

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 increase the price paid by buyers of picture frames by

Accepted Answer

A)   less than $0.50
B)   $0.50.
C)   between $0.50 and $1.
D)   $1.E) None of the above
F) A) and B)

Question 5

A tax imposed on the buyers of a good will raise 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.E) B) and C)
F) C) and D)

Question 6

Figure 6-34 
-Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, what price will buyers pay per unit after the tax is imposed?

Accepted Answer

With a $6 tax per un...

Question 7

When OPEC raised the price of crude oil in the 1970s, it caused the United States'

Accepted Answer

A)   nonbinding price floor on gasoline to become binding.
B)   binding price floor on gasoline to become nonbinding.
C)   nonbinding price ceiling on gasoline to become binding.
D)   binding price ceiling on gasoline to become nonbinding.E) All of the above
F) A) and B)

Question 8

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

Accepted Answer

A)   This tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor.
B)   The effective price received by sellers is $5.00 per bottle less than it was before the tax.
C)   Forty percent of the burden of the tax falls on buyers.
D)   All of the above are correct.E) A) and B)
F) B) and C)

Question 9

You receive a paycheck from your employer, and your pay stub indicates that $400 was deducted to pay the FICA Social Security/Medicare)  tax. Which of the following statements is correct?

Accepted Answer

A)   This type of tax is an example of a payback tax.
B)   Your employer is required by law to pay $400 to match the $400 deducted from your check.
C)   The $400 that you paid is the true burden of the tax that falls on you, the employee.
D)   All of the above are correct.E) B) and D)
F) A) and D)

Question 10

Figure 6-26 
-Refer to Figure 6-26. The price paid by buyers after the tax is imposed is

Accepted Answer

A)   $8.
B)   $16.
C)   $14.
D)   $12.E) B) and C)
F) B) and D)

Question 11

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, the resulting quantity of gasoline that is bought and sold is

Accepted Answer

A)   less than Q3.
B)   Q3.
C)   between Q1 and Q3.
D)   at least Q1.E) C) and D)
F) None of the above

Question 12

As rationing mechanisms, prices

Accepted Answer

A)   and long lines are efficient.
B)   are efficient, but long lines are inefficient.
C)   are inefficient, but long lines are efficient.
D)   and long lines are inefficient.E) B) and D)
F) A) and B)

Question 13

Workers, rather than firms, bear most of the burden of the payroll tax.

Accepted Answer

A) True 
 B)False

Question 14

A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied.

Accepted Answer

A) True 
 B)False

Question 15

A surplus results when a

Accepted Answer

A)   nonbinding price floor is imposed on a market.
B)   nonbinding price floor is removed from a market.
C)   binding price floor is imposed on a market.
D)   binding price floor is removed from a market.E) A) and B)
F) A) and C)

Question 16

States in the U.S. may mandate minimum wages above the federal level.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A legal maximum on the price at which a good can be sold is called a price

Accepted Answer

A)   floor.
B)   subsidy.
C)   support.
D)   ceiling.E) B) and C)
F) A) and D)

Question 19

A tax on sellers shifts the supply curve to the left.

Accepted Answer

A) True 
 B)False

Question 20

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.E) All of the above
F) None of the above

Exam 6: Supply, Demand, and Government Policies

A legal maximum on the price at which a good can be sold is called a price

Correct AnswerverifiedShow Answer

You receive a paycheck from your employer, and your pay stub indicates that $400 was deducted to pay the FICA Social Security/Medicare) tax. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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

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 increase the price paid by buyers of picture frames by

Correct AnswerverifiedShow Answer

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, what price will buyers pay per unit after the tax is imposed?

Correct AnswerverifiedWith a $6 tax per un...View AnswerShow Answer

States in the U.S. may mandate minimum wages above the federal level.

Correct AnswerverifiedShow Answer

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

Correct AnswerverifiedShow Answer

When a tax is imposed on the sellers of a good, the supply curve shifts

Correct AnswerverifiedShow Answer

The Earned Income Tax Credit is an example of a

Correct AnswerverifiedShow Answer

Most labor economists believe that the supply of labor is

Correct AnswerverifiedShow Answer

A tax on sellers shifts the supply curve to the left.

Correct AnswerverifiedShow Answer

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Figure 6-26 -Refer to Figure 6-26. The price paid by buyers after the tax is imposed is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A surplus results when a

Correct AnswerverifiedShow Answer

When OPEC raised the price of crude oil in the 1970s, it caused the United States'

Correct AnswerverifiedShow Answer

Workers, rather than firms, bear most of the burden of the payroll tax.

Correct AnswerverifiedShow Answer

A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied.

Correct AnswerverifiedShow Answer

As rationing mechanisms, prices

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, the resulting quantity of gasoline that is bought and sold is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
With a $6 tax per un...
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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified