Economics questions

Question # 00003022 Posted By: neil2103 Updated on: 10/31/2013 04:09 AM Due on: 10/31/2013
Subject Economics Topic General Economics Tutorials:
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Economics questions


Figure 6-4

136.Refer to Figure 6-4. For a price ceiling to be binding in this market, it would have to be set at

a.

any price below $6.

b.

a price between $3 and $6.

c.

a price between $6 and $9.

d.

any price above $6.

137.Refer to Figure 6-4. For a price floor to be binding in this market, it would have to be set at

a.

any price below $6.

b.

a price between $3 and $6.

c.

a price between $6 and $9.

d.

any price above $6.

138.Refer to Figure 6-4. Which of the following price controls would cause a shortage of 20 units of the good?

a.

a price ceiling of $4

b.

a price ceiling of $5

c.

a price floor of $7

d.

a price floor of $8

139.Refer to Figure 6-4. Which of the following price controls would cause a surplus of 20 units of the good?

a.

a price ceiling of $4

b.

a price ceiling of $5

c.

a price floor of $7

d.

a price floor of $8

140.Refer to Figure 6-4. Suppose a price ceiling of $5 is imposed on this market. As a result,

a.

the quantity of the good supplied decreases by 20 units.

b.

the demand curve shifts to the left so as to now pass through the point (quantity = 40, price = $5).

c.

buyers’ total expenditure on the good decreases by $100.

d.

the price of the good continues to serve as the rationing mechanism.

141.Refer to Figure 6-4. Suppose a price floor of $7 is imposed on this market. As a result,

a.

buyers’ total expenditure on the good decreases by $20.

b.

the supply curve shifts to the left so as to now pass through the point (quantity = 40, price = $7).

c.

the quantity of the good demanded decreases by 20 units.

d.

the price of the good continues to serve as the rationing mechanism.

Figure 6-5

142.Refer to Figure 6-5. If the government imposes a price ceiling of $2 on this market, then the result is a

a.

shortage of 0 units of the good.

b.

shortage of 40 units of the good.

c.

shortage of 60 units of the good.

d.

shortage of 85 units of the good.

143.Refer to Figure 6-5. If the government imposes a price floor of $5 on this market, then the result is a

a.

surplus of 0 units of the good.

b.

surplus of 20 units of the good.

c.

surplus of 30 units of the good.

d.

surplus of 55 units of the good.

144.Refer to Figure 6-5. The price of the good would continue to serve as the rationing mechanism if

a.

a price ceiling of $4 is imposed.

b.

a price ceiling of $5 is imposed.

c.

a price floor of $3 is imposed.

d.

All of the above are correct.

145.Refer to Figure 6-5. When a certain price control is imposed on this market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P1 dollars per unit for that quantity and sellers are willing and able to accept a minimum of P2 dollars per unit for that quantity. If P1 - P2 = $3, then the price control in question is

a.

a price ceiling of $2.00.

b.

a price ceiling of $5.00.

c.

a price floor of $5.00.

d.

either a price ceiling of $2.00 or a price floor of $5.00.

Figure 6-6

146.Refer to Figure 6-6. Which of the following statements is correct?

a.

A price ceiling set at $4 will be binding and will result in a shortage of 3 units.

b.

A price ceiling set at $4 will be binding and will result in a shortage of 6 units.

c.

A price ceiling set at $7 will be binding and will result in a surplus of 6 units.

d.

A price ceiling set at $7 will be binding and will result in a surplus of 12 units.

147.Refer to Figure 6-6. Which of the following statements is correct?

a.

A price floor set at $4 will be binding and will result in a shortage of 3 units.

b.

A price floor set at $4 will be binding and will result in a shortage of 6 units.

c.

A price floor set at $7 will be binding and will result in a surplus of 6 units.

d.

A price floor set at $7 will be binding and will result in a surplus of 12 units.

148.Refer to Figure 6-7. Which of the following statements is correct?

a.

A price ceiling set at $6 will be binding and will result in a shortage of 8 units.

b.

A price ceiling set at $6 will be binding and will result in a shortage of 4 units.

c.

A price ceiling set at $16 will be binding and will result in a shortage of 12 units.

d.

A price ceiling set at $16 will be binding and will result in a shortage of 6 units.

149.Refer to Figure 6-7. Which of the following statements is correct?

a.

A price floor set at $6 will be binding and will result in a surplus of 8 units.

b.

A price floor set at $6 will be binding and will result in a surplus of 4 units.

c.

A price floor set at $16 will be binding and will result in a surplus of 12 units.

d.

A price floor set at $16 will be binding and will result in a surplus of 6 units.

Figure 6-8

150.Refer to Figure 6-8. 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.

151.Refer to Figure 6-8. 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

a.

less than Q3.

b.

Q3.

c.

between Q1 and Q3.

d.

at least Q1.

152.Refer to Figure 6-8. Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

a.

Buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price.

b.

Buyers of gasoline paid a price of P1 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price.

c.

Buyers of gasoline paid a price of P2 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, with no shortage of gasoline at that price.

d.

The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC increased the price of crude oil in 1973.

153.When policymakers set prices by legal decree, they

a.

are usually following the advice of mainstream economists.

b.

improve the organization of economic activity.

c.

obscure the signals that normally guide the allocation of society’s resources.

d.

are demonstrating a willingness to sacrifice fairness for the sake of a gain in efficiency.

154.Which of the following is not a function of prices in a market system?

a.

Prices have the crucial job of balancing supply and demand.

b.

Prices send signals to buyers and sellers to help them make rational economic decisions.

c.

Prices coordinate economic activity.

d.

Prices ensure an equal distribution of goods and services among consumers.

155.Which of the following is correct?

a.

Price controls always help those they are designed to help.

b.

Price controls never help those they are designed to help.

c.

Price controls often hurt those they are designed to help.

d.

Price controls always hurt those they are designed to help.

156.An alternative to rent-control laws that would not reduce the quantity of housing supplied is

a.

the payment by government of a fraction of a poor family’s rent.

b.

higher taxes on rental income earned by landlords.

c.

a policy that prevents landlords from evicting tenants.

d.

a policy that allows government to confiscate residential property for the purpose of commercial development.

157.Unlike minimum wage laws, wage subsidies

a.

discourage firms from hiring the working poor.

b.

cause unemployment.

c.

help only wealthy workers.

d.

raise the living standards of the working poor without creating unemployment.

158.The Earned Income Tax Credit is an example of

a.

a minimum-wage law.

b.

a price ceiling.

c.

a wage subsidy.

d.

a rent subsidy.

159.One disadvantage of government subsidies over price controls is that subsidies

a.

prevent the attainment of equilibrium in the markets in which they are imposed.

b.

make higher taxes necessary.

c.

are always unfair to those with low incomes.

d.

cause unemployment.

Sec02 - Supply, Demand, and Government Policies - Taxes

MULTIPLE CHOICE

1. The term tax incidencerefers to

a.

whether buyers or sellers of a good are required to send tax payments to the government.

b.

whether the demand curve or the supply curve shifts when the tax is imposed.

c.

the distribution of the tax burden between buyers and sellers.

d.

widespread view that taxes always will be a fact of life.

2. If a tax is levied on the sellers of a product, then the demand curve

a.

will shift down.

b.

will shift up.

c.

will become flatter.

d.

will not shift.

3. If a tax is levied on the sellers of a product, then the supply curve

a.

will shift up.

b.

will shift down.

c.

will become flatter.

d.

will not shift.

4. 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.

5. If a tax is levied on the sellers of a product, then there will be a(n)

a.

downward shift of the supply curve.

b.

upward shift of the supply curve.

c.

movement up and to the right along the supply curve.

d.

movement down and to the left along the supply curve.

6. A tax on the sellers of TVs

a.

leads sellers to supply a smaller quantity at every price.

b.

leads buyers to demand a smaller quantity at every price.

c.

leads sellers to supply a larger quantity at every price.

d.

Both (a) and (b) are correct.

7. A tax levied on the sellers of blueberries

a.

increases sellers’ costs, reduces profits, and shifts the supply curve up.

b.

increases sellers’ costs, reduces profits, and shifts the supply curve down.

c.

decreases sellers’ costs, increases profits, and shifts the supply curve up.

d.

decreases sellers’ costs, increases profits, and shifts the supply curve down.

8. A tax on sellers will

a.

shift the demand curve upwards by the amount of the tax.

b.

shift the demand curve downwards by the amount of the tax.

c.

shift the supply curve upwards by the amount of the tax.

d.

shift the supply curve downwards by the amount of the tax.

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

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.

10. A $2.00 tax levied on the sellers of mailboxes 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

11. A $0.10 tax levied on the sellers of chocolate bars will cause the

a.

supply curve for chocolate bars to shift down by $0.10.

b.

supply curve for chocolate bars to shift up by $0.10.

c.

demand curve for chocolate bars to shift down by $0.10.

d.

demand curve for chocolate bars to shift up by $0.10.

12. A tax on the sellers of popcorn

a.

increases the size of the popcorn market.

b.

decreases the size of the popcorn market.

c.

has no effect on the size of the popcorn market.

d.

may increase, decrease, or have no effect on the size of the popcorn market.

13. When a tax is placed on the sellers of a product,

a.

buyers pay more and sellers receive more than they did before the tax.

b.

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

c.

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

d.

buyers pay less and sellers receive less than they did before the tax.

14. A tax on the sellers of coffee will

a.

increase the price of coffee paid by buyers, increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.

b.

increase the price of coffee paid by buyers, increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

c.

increase the price of coffee paid by buyers, decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.

d.

increase the price of coffee paid by buyers, decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

15. A tax imposed on the sellers of a good will

a.

raise the price paid by buyers and lower the equilibrium quantity.

b.

raise the price paid by buyers and raise the equilibrium quantity.

c.

raise the effective price received by sellers and lower the equilibrium quantity.

d.

raise the effective price received by sellers and raise the equilibrium quantity.

16. A tax imposed on the sellers of a good will

a.

lower the price paid by buyers and lower the equilibrium quantity.

b.

lower the price paid by buyers and raise the equilibrium quantity.

c.

lower the effective price received by sellers and lower the equilibrium quantity.

d.

lower the effective price received by sellers and raise the equilibrium quantity.

17. A tax imposed on the sellers of a good will

a.

raise both the price buyers pay and the effective price sellers receive.

b.

raise the price buyers pay and lower the effective price sellers receive.

c.

lower the price buyers pay and raise the effective price sellers receive.

d.

lower both the price buyers pay and the effective price sellers receive.

18. When a tax is placed on the sellers of a product, the

a.

size of the market decreases.

b.

effective price received by sellers decreases and the price paid by buyers increases.

c.

supply of the product decreases.

d.

All of the above are correct.

19. If the government levies a $500 tax per car on sellers of cars, then the price paid by buyers of cars would

a.

increase by more than $500.

b.

increase by exactly $500.

c.

increase by less than $500.

d.

decrease by an indeterminate amount.

20. If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would

a.

decrease by less than $500.

b.

decrease by exactly $500.

c.

decrease by more than $500.

d.

increase by an indeterminate amount.

21. When a tax is placed on the sellers of cell phones,

a.

the size of the cell phone market and the effective price received by sellers both increase.

b.

the size of the cell phone market increases, but the effective price received by sellers decreases.

c.

the size of the cell phone market decreases, but the effective price received by sellers increases.

d.

the size of the cell phone market and the effective price received by sellers both decrease.

22. When a tax is placed on the sellers of cell phones,

a.

the size of the cell phone market and the price paid by buyers both increase.

b.

the size of the cell phone market increases, but the price paid by buyers decreases.

c.

the size of the cell phone market decreases, but the price paid by buyers increases.

d.

the size of the cell phone market and the price paid by buyers both decrease.

23. When a tax is placed on the sellers of lemonade,

a.

the sellers bear the entire burden of the tax.

b.

the buyers bear the entire burden of the tax.

c.

the burden of the tax will be always be equally divided between the buyers and the sellers.

d.

the burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

24. If a tax is levied on the sellers of sugar, 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.

25. If the government passes a law requiring sellers of motorcycles to send $500 to the government for every motorcycle they sell, then

a.

the supply curve for motorcycles shifts downward by $500.

b.

sellers of motorcycles receive $500 less per motorcycle than they were receiving before the tax.

c.

buyers of motorcycles are unaffected by the tax.

d.

None of the above is correct.

26. Suppose sellers of liquor are required to send $1.00 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 $0.80 per bottle. Which of the following statements is correct?

a.

This tax causes the supply curve for liquor to shift upward by $1.00 at each quantity of liquor.

b.

The effective price received by sellers is $0.20 per bottle less than it was before the tax.

c.

Eighty percent of the burden of the tax falls on buyers.

d.

All of the above are correct.

27. Suppose sellers of liquor are required to send $1.00 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 $0.60 per bottle. Which of the following statements is correct?

a.

The effective price received by sellers is $0.40 per bottle less than it was before the tax.

b.

Sixty percent of the burden of the tax falls on sellers.

c.

This tax causes the demand curve for liquor to shift downward by $1.00 at each quantity of liquor.

d.

All of the above are correct.

28. Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then

a.

the demand curve will shift upward by $20, and the price paid by buyers will decrease by less than $20.

b.

the demand curve will shift upward by $20, and the price paid by buyers will decrease by $20.

c.

the supply curve will shift downward by $20, and the effective price received by sellers will increase by less than $20.

d.

the supply curve will shift downward by $20, and the effective price received by sellers will increase by $20.

29. Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then

a.

the demand curve will shift upward by $20, and the effective price received by sellers will increase by $20.

b.

the demand curve will shift upward by $20, and the effective price received by sellers will increase by less than $20.

c.

the supply curve will shift downward by $20, and the price paid by buyers will decrease by $20.

d.

the supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20.

30. When a tax is levied on sellers of tea,

a.

the well-being of both sellers and buyers of tea is unaffected.

b.

sellers of tea are made worse off and the well-being of buyers is unaffected.

c.

sellers of tea are made worse off and buyers of tea are made better off.

d.

sellers and buyers of tea both are made worse off.

31. If a tax is levied on the buyers of a product, then the supply curve

a.

will not shift.

b.

will shift up.

c.

will shift down.

d.

will become flatter.

32. If a tax is levied on the buyers of a product, then the demand curve

a.

will not shift.

b.

will shift down.

c.

will shift up.

d.

will become flatter.

33. If a tax is levied on the buyers of a product, then there will be a(n)

a.

downward shift of the supply curve.

b.

upward shift of the supply curve.

c.

movement up and to the right along the supply curve.

d.

movement down and to the left along the supply curve.

34. If a tax is levied on the buyers of a product, then there will be a(n)

a.

upward shift of the demand curve.

b.

downward 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.

35. A tax on the buyers of TVs

a.

leads sellers to supply a smaller quantity at every price.

b.

leads buyers to demand a smaller quantity at every price.

c.

leads buyers to demand a larger quantity at every price.

d.

Both (a) and (b) are correct.

36. A tax on buyers will

a.

shift the demand curve upwards by the amount of the tax.

b.

shift the demand curve downwards by the amount of the tax.

c.

shift the supply curve upwards by the amount of the tax.

d.

shift the supply curve downwards by the amount of the tax.

37. When a tax is imposed on the buyers of a good, the demand curve shifts

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.

38. A $2.00 tax levied on the buyers of lawnmowers will shift the demand 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.

39. A $0.10 tax levied on the buyers of socks will cause the

a.

supply curve for socks to shift down by $0.10.

b.

supply curve for socks to shift up by $0.10.

c.

demand curve for socks to shift down by $0.10.

d.

demand curve for socks to shift up by $0.10.

40. A tax on the buyers of popcorn

a.

increases the size of the popcorn market.

b.

decreases the size of the popcorn market.

c.

has no effect on the size of the popcorn market.

d.

may increase, decrease, or have no effect on the size of the popcorn market.

41. When a tax is placed on the buyers of a product,

a.

buyers pay more and sellers receive more than they did before the tax.

b.

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

c.

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

d.

buyers pay less and sellers receive less than they did before the tax.

42. A tax on the buyers of coffee will

a.

increase the price of coffee paid by buyers, decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

b.

increase the price of coffee paid by buyers, decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.

c.

increase the price of coffee paid by buyers, increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

d.

increase the price of coffee paid by buyers, increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee.

43. A tax imposed on the buyers of a good will

a.

raise the price paid by buyers and lower the equilibrium quantity.

b.

raise the price paid by buyers and raise the equilibrium quantity.

c.

raise the effective price received by sellers and lower the equilibrium quantity.

d.

raise the effective price received by sellers and raise the equilibrium quantity.

44. A tax imposed on the buyers of a good will

a.

lower the price paid by buyers and lower the equilibrium quantity.

b.

lower the price paid by buyers and raise the equilibrium quantity.

c.

lower the effective price received by sellers and lower the equilibrium quantity.

d.

lower the effective price received by sellers and raise the equilibrium quantity.

45. A tax imposed on the buyers of a good will

a.

raise both the price buyers pay and the effective price sellers receive.

b.

raise the price buyers pay and lower the effective price sellers receive.

c.

lower the price buyers pay and raise the effective price sellers receive.

d.

lower both the price buyers pay and the effective price sellers receive.

46. When a tax is placed on the buyers of a product, the

a.

size of the market decreases.

b.

effective price received by sellers decreases and the price paid by buyers increases.

c.

demand for the product decreases.

d.

All of the above are correct.

47. If the government levies a $500 tax per car on buyers of cars, then the price paid by buyers of cars would

a.

increase by less than $500.

b.

increase by exactly $500.

c.

increase by more than $500.

d.

decrease by an indeterminate amount.

48. If the government levies a $500 tax per car on buyers of cars, then the price received by sellers of cars would

a.

decrease by more than $500.

b.

decrease by exactly $500.

c.

decrease by less than $500.

d.

increase by an indeterminate amount.

49. When a tax is placed on the buyers of cell phones,

a.

the size of the cell phone market and the effective price received by sellers both decrease.

b.

the size of the cell phone market decreases, but the effective price received by sellers increases.

c.

the size of the cell phone market increases, but the effective price received by sellers decreases.

d.

the size of the cell phone market and the effective price received by sellers both increase.

50. When a tax is placed on the buyers of cell phones,

a.

the size of the cell phone market and the price paid by buyers both decrease.

b.

the size of the cell phone market decreases, but the price paid by buyers increases.

c.

the size of the cell phone market increases, but the price paid by buyers decreases.

d.

the size of the cell phone market and the price paid by buyers both increase.

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