Micro Exam 2 - Ch 6

Refer to Figure 6-14. The per-unit burden of the tax on sellers is a. $6. b. $8. c. $10. d. $14.

a. $6.

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? 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.

a. Farmers use improved, draught-resistant seeds, which lowers the cost of growing soybeans.

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

a. and the effective price received by sellers both decrease.

A tax on the buyers of cereal will increase the price of cereal paid by buyers, a. decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. b. decrease the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal. c. increase the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal. d. increase the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal.

a. decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal.

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve a. upward by exactly $2.00. b. upward by less than $2.00. c. downward by exactly $2.00. d. downward by less than $2.00.

a. upward by exactly $2.00.

Refer to Figure 6-14. The effective price that sellers receive after the tax is imposed is a. $6. b. $10. c. $16. d. $24.

b. $10.

Refer to Figure 6-14. The per-unit burden of the tax on buyers is a. $6. b. $8. c. $14. d. $24.

b. $8.

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding? a. Improvements in production technology reduce the costs of producing laptop computers. b. The number of firms selling laptop computers decreases. c. Consumers' income decreases, and laptop computers are a normal good. d. The number of consumers buying laptop computers decreases.

b. The number of firms selling laptop computers decreases.

When a tax is placed on the buyers of a product, buyers pay a. more and sellers receive more than they did before the tax. b. more and sellers receive less than they did before the tax. c. less and sellers receive more than they did before the tax. d. less and sellers receive less than they did before the tax.

b. more and sellers receive less than they did before the tax.

Refer to Figure 6-14. The amount of the tax per unit is a. $6. b. $8. c. $14. d. $18.

c. $14.

If a binding price floor is imposed on the video game market, then a. the demand for video games will decrease. b. the supply of video games will increase. c. a surplus of video games will develop. d. All of the above are correct.

c. a surplus of video games will develop.

A price ceiling will be binding only if it is set a. equal to the equilibrium price. b. above the equilibrium price. c. below the equilibrium price. d. either above or below the equilibrium price.

c. below the equilibrium price.

A surplus results when a 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.

c. binding price floor is imposed on a market.

If a tax is levied on the sellers of flour, then a. buyers will bear the entire burden of the tax. b. sellers will bear the entire burden of the tax. c. buyers and sellers will share the burden of the tax. d. the government will bear the entire burden of the tax.

c. buyers and sellers will share the burden of the tax.

Price controls a. always produce a fair outcome. b. always produce an efficient outcome. c. can generate inequities of their own. d. All of the above are correct.

c. can generate inequities of their own.

If the government removes a binding price floor from a market, then the price paid by buyers will a. increase, and the quantity sold in the market will increase. b. increase, and the quantity sold in the market will decrease. c. decrease, and the quantity sold in the market will increase. d. decrease, and the quantity sold in the market will decrease.

c. decrease, and the quantity sold in the market will increase.

If a tax is levied on the sellers of a product, then there will be a(n) a. downward shift of the demand curve. b. upward shift of the demand curve. c. movement up and to the left along the demand curve. d. movement down and to the right along the demand curve.

c. movement up and to the left along the demand curve.

In a competitive market free of government regulation, a. price adjusts until quantity demanded is greater than quantity supplied. b. price adjusts until quantity demanded is less than quantity supplied. c. price adjusts until quantity demanded equals quantity supplied. d. supply adjusts to meet demand at every price.

c. price adjusts until quantity demanded equals quantity supplied.

Refer to Figure 6-14. The price that buyers pay after the tax is imposed is a. $8. b. $10. c. $16. d. $24.

d. $24.

The incidence of a tax falls more heavily on a. consumers than producers if demand is more inelastic than supply. b. producers than consumers if supply is more inelastic than demand. c. consumers than producers if supply is more elastic than demand. d. All of the above are correct.

d. All of the above are correct.

When a binding price floor is imposed on a market, 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.

d. All of the above are correct.

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

d. a shortage will occur at the new market price of P2.

In the housing market, supply and demand are a. more elastic in the short run than in the long run, and so rent control leads to a larger shortage of apartments in the short run than in the long run. b. more elastic in the short run than in the long run, and so rent control leads to a larger shortage of apartments in the long run than in the short run. c. more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the short run than in the long run. d. more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.

d. more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.

In a free, competitive market, what is the rationing mechanism? a. seller bias b. buyer bias c. government law d. price

d. price

If a price ceiling is not binding, then a. there will be a surplus in the market. b. there will be a shortage in the market. c. the market will be less efficient than it would be without the price ceiling. d. there will be no effect on the market price or quantity sold.

d. there will be no effect on the market price or quantity sold.