Question 1

The graph shown demonstrates a tax on buyers. After the tax is in place, buyers purchase _______ units, and the post-tax price paid for each one is _______.

Accepted Answer

A)   6; $22
B)   6; $34
C)   9; $18
D)   9; $30E) B) and C)
F) A) and B)

Question 2

If a price ceiling is set at $8 in the market in the graph shown:

Accepted Answer

A)   some consumers will benefit because they pay a lower price.
B)   producers will lose because they sell at a lower price.
C)   the quantity traded in the market will fall.
D)   All of these are correct.E) B) and C)
F) A) and D)

Question 3

Does a subsidy to sellers affect the demand curve?

Accepted Answer

A)   Yes; the demand curve shifts up by the amount of the subsidy.
B)   Yes; the demand curve shifts to the right by the amount of the subsidy.
C)   No; the demand curve does not move, as quantity demanded increases instead.
D)   No; the demand curve does not move, as quantity demanded decreases instead.E) None of the above
F) A) and B)

Question 4

A price floor in the market shown in the graph would be non-binding if it were set at:

Accepted Answer

A)   $30.
B)   $23.
C)   $16.
D)   Any of these prices.E) A) and D)
F) B) and C)

Question 5

Suppose a price floor is set at $10 in the market shown in the graph. Which of the following statements is true?

Accepted Answer

A)   A shortage of five units occurs
B)   Excess supply of five units occurs
C)   Total surplus increases
D)   Deadweight loss fallsE) All of the above
F) None of the above

Question 6

If a price ceiling is set at $8 in the market shown in the graph, which area(s)  would represent deadweight loss?

Accepted Answer

A)   F + G
B)   B + D
C)   E
D)   B + D + F + GE) B) and C)
F) None of the above

Question 7

The graph shown demonstrates a tax on sellers. After the tax is in place, buyers experience:

Accepted Answer

A)   a decrease in demand.
B)   an increase in demand.
C)   a decrease in quantity demanded.
D)   an increase in quantity demanded.E) All of the above
F) A) and D)

Question 8

If a price floor is set at $23 in the market shown in the graph, which area(s)  would represent the surplus that is transferred from consumers to producers?

Accepted Answer

A)   B + C + D
B)   B + C
C)   C
D)   BE) A) and B)
F) All of the above

Question 9

What type of public policy could a government set in response to rising prices of a basic necessity?

Accepted Answer

A)   Make it illegal to charge higher prices for the good
B)   Hire more producers of the good
C)   Subsidize the price of the good
D)   All of these are ways a government can try to address rising prices of a basic necessity.E) A) and B)
F) A) and C)

Question 10

If the intended aim of the price floor set at $12, as shown in the graph, was a net increase in the well-being of producers, then positive analysis would consider the policy to be:

Accepted Answer

A)   effective if area C is larger than area E.
B)   effective if areas E + B are larger than areas C + D + F.
C)   ineffective if area B is larger than area E.
D)   ineffective if areas E + B are larger than areas A + C + D + F.E) B) and C)
F) B) and D)

Question 11

A binding price ceiling:

Accepted Answer

A)   will cause quantity supplied to exceed quantity demanded.
B)   will increase total well-being.
C)   will set a legal minimum price in a market.
D)   will cause quantity demanded to exceed quantity supplied.E) None of the above
F) A) and B)

Question 12

If the intended aim of the price ceiling set at $6, as shown in the graph, was a net increase in the well-being of consumers, the policy was:

Accepted Answer

A)   effective because consumers gained in surplus overall.
B)   ineffective because some consumers lost surplus.
C)   ineffective because consumers lost surplus overall.
D)   effective because all consumers gained surplus.E) None of the above
F) All of the above

Question 13

Suppose a $4 tax is imposed on sellers in the market shown in the graph. The tax-inclusive price (or after-tax price)  paid by the buyer will be _______ and the tax-inclusive price (or after-tax price)  received by the seller will be _______.

Accepted Answer

A)   $12; $8
B)   $11; $5
C)   $8; $4
D)   $10; $6E) All of the above
F) C) and D)

Question 14

Who benefits from a subsidy to sellers?

Accepted Answer

A)   Only buyers benefit.
B)   Only sellers benefit.
C)   The benefit is shared by sellers and buyers depending on the elasticity of the supply and demand curves.
D)   None of these statements are true.E) A) and D)
F) A) and C)

Question 15

Suppose a $5 tax is imposed on buyers in the market shown in the graph. What will be the tax-inclusive price paid by the buyers as a result of this tax?

Accepted Answer

A)   $8
B)   $16
C)   $13
D)   $6E) A) and C)
F) B) and D)

Question 16

A binding price floor:

Accepted Answer

A)   will cause quantity demanded to exceed quantity supplied.
B)   will cause quantity supplied to exceed quantity demanded.
C)   will increase total well-being.
D)   will set a legal maximum price in a market.E) None of the above
F) B) and C)

Question 17

The graph shown best represents:

Accepted Answer

A)   a binding price ceiling.
B)   a binding price floor.
C)   a missing market.
D)   the market for an inferior good.E) All of the above
F) B) and C)

Question 18

The graph shown demonstrates a tax on sellers. After the tax has been imposed, the sellers produce _______ units, and the post-tax price received for each one sold is _______.

Accepted Answer

A)   15; $16
B)   15; $6
C)   31; $9
D)   31; $19E) B) and C)
F) All of the above

Question 19

The graph shown demonstrates a tax on sellers. The post-tax price paid by buyers is _______ than that received by sellers, and the difference is the _______. Leading is incorrect on this QS.

Accepted Answer

A)   greater; tax wedge
B)   less; total tax revenue
C)   greater; total tax revenue
D)   less; tax wedgeE) B) and C)
F) A) and B)

Question 20

If a price floor is set at $23 in the market shown in the graph:

Accepted Answer

A)   excess supply of 27 will occur.
B)   excess supply of 37 will occur.
C)   excess supply of 10 will occur.
D)   no excess supply will occur.E) None of the above
F) A) and C)

Exam 6: Governmentintervention

If a price floor is set at $23 in the market shown in the graph, which area(s) would represent the surplus that is transferred from consumers to producers?

Correct AnswerverifiedShow Answer

The graph shown demonstrates a tax on sellers. The post-tax price paid by buyers is _______ than that received by sellers, and the difference is the _______. Leading is incorrect on this QS.

Correct AnswerverifiedShow Answer

A price floor in the market shown in the graph would be non-binding if it were set at:

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The graph shown demonstrates a tax on sellers. After the tax is in place, buyers experience:

Correct AnswerverifiedShow Answer

Does a subsidy to sellers affect the demand curve?

Correct AnswerverifiedShow Answer

If a price floor is set at $23 in the market shown in the graph:

Correct AnswerverifiedShow Answer

The graph shown demonstrates a tax on sellers. After the tax has been imposed, the sellers produce _______ units, and the post-tax price received for each one sold is _______.

Correct AnswerverifiedShow Answer

What type of public policy could a government set in response to rising prices of a basic necessity?

Correct AnswerverifiedShow Answer

A binding price floor:

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Suppose a $4 tax is imposed on sellers in the market shown in the graph. The tax-inclusive price (or after-tax price) paid by the buyer will be _______ and the tax-inclusive price (or after-tax price) received by the seller will be _______.

Correct AnswerverifiedShow Answer

A binding price ceiling:

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If a price ceiling is set at $8 in the market shown in the graph, which area(s) would represent deadweight loss?

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Suppose a $5 tax is imposed on buyers in the market shown in the graph. What will be the tax-inclusive price paid by the buyers as a result of this tax?

Correct AnswerverifiedShow Answer

If a price ceiling is set at $8 in the market in the graph shown:

Correct AnswerverifiedShow Answer

If the intended aim of the price ceiling set at $6, as shown in the graph, was a net increase in the well-being of consumers, the policy was:

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Suppose a price floor is set at $10 in the market shown in the graph. Which of the following statements is true?

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The graph shown best represents:

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The graph shown demonstrates a tax on buyers. After the tax is in place, buyers purchase _______ units, and the post-tax price paid for each one is _______.

Correct AnswerverifiedShow Answer

If the intended aim of the price floor set at $12, as shown in the graph, was a net increase in the well-being of producers, then positive analysis would consider the policy to be:

Correct AnswerverifiedShow Answer

Who benefits from a subsidy to sellers?

Correct AnswerverifiedShow Answer

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The graph shown demonstrates a tax on sellers. The post-tax price paid by buyers is _ than that received by sellers, and the difference is the _. Leading is incorrect on this QS.

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The graph shown demonstrates a tax on sellers. After the tax has been imposed, the sellers produce _ units, and the post-tax price received for each one sold is _.

Correct Answer
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Suppose a $4 tax is imposed on sellers in the market shown in the graph. The tax-inclusive price (or after-tax price) paid by the buyer will be _ and the tax-inclusive price (or after-tax price) received by the seller will be _.

Correct Answer
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The graph shown demonstrates a tax on buyers. After the tax is in place, buyers purchase _ units, and the post-tax price paid for each one is _.

Correct Answer
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