ECON ch. 7

If a price floor of $12 is imposed in this market, the quantity bought and sold (exchanged) will be equal to: (graph 7.1) a. 600, and there will be a market shortage. b. 600, and there will be a market surplus. c. 1,200, and there will be a market shortage. d. 1,200, and there will be a market surplus.

b

If the price-elasticity of demand and the price-elasticity of supply coefficients for soda are both equal to 0.67, consumers will bear ____% of a per-unit tax imposed on soda. a. 33 b. 50 c. 67 d. 100

b

The deadweight loss due to the $6 per-unit tax is equal to: (graph 7.3) a. $300 b. $600 c. $900 d. $1,200

b

After the tax, the price paid by consumers is _, but the price producers actually keep is___. (graph 7.3) a. $16; $10 b. $16; $14 c. $10; $14 d. $10; $16

a

All of the following are true regarding an effective (binding) price floor for a good except: a. a shortage of the good is likely to occur. b. a deadweight loss results. c. the quantity bought and sold is smaller than at free-market equilibrium. d. consumer surplus is reduced because the price has increased.

a

If a price ceiling of $4 is imposed in this market, deadweight loss will be equal to: (graph 7.1) a. $2,400 b. $4,800 c. $7,200 d. $9,600

a

If a price ceiling of $4 is imposed in this market, the quantity bought and sold (exchanged) will be equal to: (graph 7.1) a. 600, and there will be a market shortage. b. 600, and there will be a market surplus. c. 1,200, and there will be a market shortage. d. 1,200, and there will be a market surplus.

a

If a price floor of $12 is imposed in this market, deadweight loss will be equal to: (graph 7.1) a. $2,400 b. $4,800 c. $7,200 d. $9,600

a

The economic burden (economic incidence) of a tax is borne by: a. buyers if demand is highly inelastic and supply is elastic. b. buyers if demand is highly elastic and supply is inelastic. c. buyers in all cases. d. sellers in all cases.

a

The economic burden of a tax: a. is always shifted to consumers through higher prices. b. is partially shifted to consumers through higher prices in most cases. c. is rarely shifted to consumers through higher prices. d. falls on sellers if the statutory burden of the tax is on sellers.

b

The total tax revenue collected by the government as a result of this $6 per-unit tax is equal to: (graph 7.3) a. $1,200 b. $2,400 c. $3,600 d. $4,800

b

As a result of a $6 per-unit tax imposed on this product, consumer surplus changes from: (graph 7.3) a. $800 to $1,800. b. $1,600 to $3,600. c. $1,800 to $800. d. $3,600 to $1,600.

c

Ceteris paribus, the more elastic the demand for a taxed commodity, the _ it is for sellers to shift the economic burden of the tax to consumers by _ the product price. a. easier; raising b. easier; lowering c. harder; raising d. harder; lowering

c

If a price ceiling of $4 is imposed in this market, consumer surplus plus producer surplus will be equal to: (graph 7.1) a. $2,400 b. $4,800 c. $7,200 d. $9,600

c

If a price floor of $12 is imposed in this market, consumer surplus plus producer surplus will be equal to: (graph 7.1) a. $2,400 b. $4,800 c. $7,200 d. $9,600

c

If the market depicted by the graph achieves equilibrium, the quantity bought and sold (exchanged) will be equal to: (graph 7.1) a. 600, and there will be a market shortage. b. 600, and there will be a market surplus. c. 1,200, and the price will be $8. d. 1,200, and the price will be less than $8.

c

If the price of a cup of coffee is $2.40 in the absence of any tax, and a per-unit tax of $0.80 per cup is imposed as shown in the graph, then (ceteris paribus): (graph 7.2) a. the statutory burden of this tax is equally divided between buyers and sellers. b. coffee drinkers will have to pay a new price of $3.20 per cup. c. the economic burden of this tax is equally divided between buyers and sellers. d. there will be a large surplus of unsold coffee.

c

All of the following are true regarding an effective (binding) price ceiling for a good except: a. a shortage of the good is likely to occur. b. a deadweight loss results. c. the quantity bought and sold is smaller than at free-market equilibrium. d. the quantity bought and sold increases because the price has decreased.

d

If the market depicted by the graph achieves equilibrium, consumer surplus plus producer surplus will be equal to: (graph 7.1) a. $2,400. b. $4,800. c. $7,200. d. $9,600.

d

The statutory incidence (burden) of a tax refers to: a. the legal limit on how much sellers can raise price in an attempt to shift burdens to consumers. b. how much revenue the tax is able to generate. c. what percentage of the tax burden falls on buyers and what percentage of the tax burden falls on sellers. d. which party has the legal obligation to send the tax dollars to the government.

d