Chapter 6 Reading Quiz

A $1 per unit tax levied on consumers of a good is equivalent to A) a $1 per unit tax levied on producers of the good. B) a $1 per unit subsidy paid to producers of the good. C) a price floor that raises the good's price by $1 per unit. D) a price ceiling that raises the good's price by $1 per unit.

A

Which of the following would increase quantity supplied, decrease quantity demanded, and increase the price that consumers pay? A) The imposition of a binding price floor B) The removal of a binding price floor C) The passage of a tax levied on producers D) The repeal of a tax levied on producers

A

In a market with a binding price ceiling, an increase in the ceiling will ________ the quantity supplied, ________ the quantity demanded, and reduce the ________. A) increase, decrease, surplus B) decrease, increase, surplus C) increase, decrease, shortage D) decrease, increase, shortage

C

When a good is taxed, the burden of the tax falls mainly on consumers if A) the tax is levied on consumers. B) the tax is levied on producers. C) supply is inelastic, and demand is elastic. D) supply is elastic, and demand is inelastic.

D

When the government imposes a binding price floor, it causes A) the supply curve to shift to the left. B) the demand curve to shift to the right. C) a shortage of the good to develop. D) a surplus of the good to develop.

D

Which of the following would increase quantity supplied, increase quantity demanded, and decrease the price that consumers pay? A) The imposition of a binding price floor B) The removal of a binding price floor C) The passage of a tax levied on producers D) The repeal of a tax levied on producers

D