Indicate the answer choice that best completes the statement or answers the question.

167. Suppose the government imposes a 50-cent tax on the sellers of packets of chewing gum. The tax would
a. shift the supply curve upward by less than 50 cents.
b. raise the equilibrium price by 50 cents.
c. create a 50-cent tax burden each for buyers and
sellers.
d. discourage market activity.

168. If the government imposes a binding price ceiling on a market, then the price paid by buyers will
a. decrease, and the quantity sold in the market will decrease
.
b. increase, and the quantity sold in the market will increase.
c. increase, and the quantity sold in the market will decrease.
d. decrease, and the quantity sold in the market will increase.

169. Suppose there is currently a tax of $80 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax
to the government. If the tax is reduced from $80 per ticket to $64 per ticket, then the
a. demand curve will shift upward by $16, and the price paid by buyers will decrease by less than $16.
b. demand curve will shift upward by $16, and the price paid by buyers will decrease by $16.
c. supply curve will shift downward by $16, and the effective price received by sellers will increase by less than
$16.
d. supply curve will shift downward by $16, and the effective price received by sellers will increase by $16.

170. A shortage results when a

a. nonbinding price ceiling is imposed on a market.
b. nonbinding price ceiling is removed from a market
.
c. binding price ceiling is imposed on a market.
d. binding price ceiling is removed from a market.

172. If the government levies a $700 tax per motorcycle on sellers of motorcycles, then the price paid by buyers of
motorcycles would
a. increase by more than $700.
b. increase by exactly $700.
c. increase by less than $700.
d. decrease by an indeterminate amount.

173. A price ceiling is

a. often imposed on markets in which “cutthroat competition” would prevail without a price ceiling.
b. a legal maximum on the price at which a good can be sold.
c. often imposed when sellers of a good are successful in their attempts to convince the government that the
market outcome is unfair without a price ceiling.
d. imposed to make sure everyone can earn a fair wage.

174. Rent control

a. serves as an example of how a social problem can be alleviated or even solved by government
policies.
 b. serves as an example of a price ceiling.
c. is regarded by most economists as an efficient way of helping the poor.
d. is the most efficient way to allocate scarce housing resources.

Figure 6-10
The vertical distance between points A and B represents the tax in the market.

175. Refer to Figure 6-10. The amount of the tax per unit is
a. $6.
b. $8.
c. $14.
d. $18.

Figure 6-13
176. Refer to Figure 6-13. What is the amount of the tax per unit?
a. $1
b. $2
c. $3
d. $4

Figure 6-14
177. Refer to Figure 6-14. The buyers will bear the highest share of the tax burden compared to sellers if the demand is
a. D1, and the supply is S1.
b. D2, and the supply is S1.
c. D1, and the supply is S2.
d. D2, and the supply is S2.

Figure 6-13

181. Refer to Figure 6-13. How is the burden of the tax shared between buyers and sellers? Buyers bear
a. three-fourths of the burden, and sellers bear one-fourth of the
burden.
b. two-thirds of the burden, and sellers bear one-third of the burden.
c. one-half of the burden, and sellers bear one-half of the burden.
d. one-fourth of the burden, and sellers bear three-fourths of the
burden.

183. The price paid by buyers in a market will decrease if the government
a. increases a binding price floor in that market.
b. increases a binding price ceiling in that
market.
c. decreases a tax on the good sold in that
market.
d. increases a tax on the good sold in that market.
Figure 6-11

187. Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?
a. One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on
sellers.
b. One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on
sellers.
c. One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers.
d. Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on
sellers.

188. Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium
quantity in this market?
a. Less than 60 units
b. 60 units
c. Between 60 units and 100 units
d. Greater than 100 units

191. The imposition of a binding price ceiling on a market causes

a. quantity demanded to be greater than quantity supplied.
b. quantity demanded to be less than quantity supplied.
c. quantity demanded to be equal to quantity supplied.
d. the price of the good to be greater than its equilibrium
price.

Figure 6-14
197. Refer to Figure 6-14. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1
represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run.
After the imposition of the $2 tax, the price paid by buyers will be
a. higher in the long run than in the short run.
b. higher in the short run than in the long run.
c. equivalent in the short run and the long run.
d. unable to be determined without additional
information.

199. If a tax is levied on the sellers of a product, then the demand curve will
a. shift down.
b. shift up.
c. become flatter.
d. not shift.

Figure 6-10
The vertical distance between points A and B represents the tax in the market.
200. Refer to Figure 6-10. The per-unit burden of the tax on buyers is
a. $6.
b. $8.
c. $14.
d. $24.

201. A legal minimum on the price at which a good can be sold is called a
a. price subsidy.
b. price floor.
c. tax.
d. price ceiling.

Figure 6-13
202. Refer to Figure 6-13. Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit
as shown in the graph). Relative to the tax on sellers, the tax on buyers would result in
a. buyers bearing a larger share of the tax burden.
b. sellers bearing a smaller share of the tax burden.
c. the same amount of tax revenue for the government.
d. an increase in the amount of tax revenue for the
government.

Figure 6-3
205. Refer to Figure 6-3. A government-imposed price of $24 in this market is an example of a
a. binding price ceiling that creates a shortage.
b. nonbinding price ceiling that creates a shortage
c. binding price floor that creates a surplus.
d. nonbinding price floor that creates a surplus.

206. To say that a price ceiling is nonbinding is to say that the price ceiling
a. results in a surplus.
b. is set above the equilibrium price.
c. causes quantity demanded to exceed quantity supplied.
d. is set below the equilibrium price.

209. Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the
a. demand is more inelastic than the supply.
b. supply is more inelastic than the demand.
c. government has required that buyers remit the tax
payments.
d. government has required that sellers remit the tax payments.

211. Suppose that in a particular market, the supply curve is highly inelastic and the demand curve is highly elastic. If a
tax is imposed in this market, then the
a. sellers will bear a greater burden of the tax than the buyers.
b. buyers will bear a greater burden of the tax than the sellers.
c. buyers and sellers are likely to share the burden of the tax equally.
d. buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater
burden of the tax without more information.
212. A tax on the buyers of smart watches encourages
a. sellers to supply a smaller quantity at every price.
b. buyers to demand a smaller quantity at every
price.
c. sellers to supply a larger quantity at every price.
d. buyers to demand a larger quantity at every price.

213. A $1.39 tax levied on the buyers of elderberry juice will shift the demand curve
a. upward by exactly $1.39.
b. upward by less than $1.39.
c. downward by exactly $1.39.
d. downward by less than $1.39.

227. When a tax is placed on the sellers 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.

228. Under rent control, landlords can cease to be responsive to tenants' concerns about the quality of the housing because
a. with rent control, the government guarantees landlords a minimum level of profit.
b. they become resigned to the fact that many of their apartments are going to be vacant at any given
time.
c. with shortages and waiting lists, they have no incentive to maintain and improve their property.
d. with rent control, it becomes the government's responsibility to maintain rental housing.

229. 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.

237. Minimum-wage laws dictate

a. the exact wage that firms must pay workers.
b. only a maximum wage that firms may pay workers.
c. only a minimum wage that firms may pay workers.
d. both a minimum wage and a maximum wage that firms may pay
workers.

239. If a binding price floor is imposed on the drone market, then

a. the demand for drones will
decrease.
b. the supply of drones will increase.
c. a surplus of drones will develop.
d. a shortage of drones will develop.
240. If the government wants to reduce the burning of fossil fuels, it should impose a tax on
a. only the buyers of gasoline.
b. only the sellers of gasoline.
c. either buyers or sellers of gasoline.
d. whichever side of the market is less
elastic.

247. If the government removes a tax on a good, then the price paid by buyers will
a. increase, and the price received by sellers will increase.
b. increase, and the price received by sellers will decrease.
c. decrease, and the price received by sellers will increase.
d. decrease, and the price received by sellers will
decrease.

251. If a price floor is not binding, then

a. there will be a surplus in the market.
b. there will be a shortage in the market.
c. there will be no effect on the market price or quantity sold.
d. the market will be less efficient than it would be without the price
floor.

252. If a price floor is not binding, then

a. the equilibrium price is above the price floor.
b. the equilibrium price is below the price
floor.
c. there will be a surplus in the market.
d. there will be a shortage in the market.

255. The term tax incidence refers 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 (and death) are the only certainties in life.

259. When a tax is placed on the sellers of cell phones, the size of the cell phone market
a. and the effective price received by sellers both increase.
b. increases, but the effective price received by sellers
decreases.
c. decreases, but the effective price received by sellers
increases.
d. and the effective price received by sellers both decrease.

266. Price ceilings and price floors that are binding

a. are desirable because they make markets more efficient and more fair.
 b. cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price.
c. can have the effect of restoring a market to equilibrium.
d. are imposed because they can make the poor in the economy better off without causing adverse
effects.

Figure 6-9

267. Refer to Figure 6-9. In this market, a minimum wage of $6 is

a. binding and creates a labor shortage.
b. binding and creates unemployment.
c. nonbinding and creates a labor shortage.
d. nonbinding and creates neither a labor shortage nor
unemployment.

268. When a tax is placed on the buyers of lemonade, the

a. sellers bear the entire burden of the tax.
b. buyers bear the entire burden of the tax.
c. burden of the tax will always be equally divided between the buyers and the sellers.
d. burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always
equal.

269. Suppose sellers of cologne are required to send $1.50 to the government for every bottle of cologne they sell.
Further, suppose this tax causes the price paid by buyers of cologne to rise by $0.90 per bottle. Which of the following
statements is correct?
a. The effective price received by sellers is $0.60 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 cologne to shift downward by $1.50 at each quantity of
cologne.
d. This tax does not change the quantity of cologne bought and sold.