CUSTOM ID:
130.06.2 – MC – MANK08
131. Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. How much will buyers pay per unit
after the tax is imposed?
a.
$16
b.
between $16 and $20
c.
between $20 and $22
d.
$22
CUSTOM ID:
131.06.2 – MC – MANK08
132. Refer to Figure 6-27. Suppose a tax of $6 per unit is imposed on this market. Which of the following is correct?
a.
Buyers and sellers will share the burden of the tax equally.
b.
Buyers will bear more of the burden of the tax than sellers will.
c.
Sellers will bear more of the burden of the tax than buyers will.
d.
Any of the above is possible.
CUSTOM ID:
132.06.2 – MC – MANK08
Figure 6-28
133. Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. What will be the new equilibrium
quantity in this market?
a.
b.
c.
d.
134. Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. How much will sellers receive per unit
after the tax is imposed?
a.
$4
b.
between $4 and $7
c.
between $7 and $10
d.
$10
135. Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. How much will buyers pay per unit
after the tax is imposed?
a.
$4
b.
between $4 and $7
c.
between $7 and $10
d.
$10
136. Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. Which of the following is correct?
a.
Buyers and sellers will share the burden of the tax equally.
b.
Buyers will bear more of the burden of the tax than sellers.
c.
Sellers will bear more of the burden of the tax than buyers.
d.
Any of the above is possible in this market.
137. Which of the following causes the price paid by buyers to be different than the price received by sellers?
a.
a binding price floor
b.
a binding price ceiling
c.
a tax on the good
d.
All of the above are correct.
138. 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.
All of the above are correct.
139. The price received by sellers in a market will increase if the government decreases a
a.
binding price floor in that market.
b.
binding price ceiling in that market.
c.
tax on the good sold in that market.
d.
None of the above is correct.
140. The quantity sold in a market will decrease if the government
a.
decreases a binding price floor in that market.
b.
increases a binding price ceiling in that market.
c.
increases a tax on the good sold in that market.
d.
All of the above are correct.
141. The price paid by buyers in a market will increase if the government
a.
decreases 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.
imposes a binding price ceiling in that market.
142. The price received by sellers in a market will increase if the government
a.
decreases a binding price floor in that market.
b.
increases a binding price ceiling in that market.
c.
increases a tax on the good sold in that market.
d.
imposes a binding price ceiling in that market.
143. The price received by sellers in a market will decrease if the government
a.
imposes a binding price floor in that market.
b.
decreases a binding price ceiling in that market.
c.
decreases a tax on the good sold in that market.
d.
increases a binding price floor in that market.
144. The quantity sold in a market will decrease if the government decreases a
a.
binding price floor in that market.
b.
binding price ceiling in that market.
c.
tax on the good sold in that market.
d.
All of the above are correct.
145. Which of the following causes a shortage of a good?
a.
a binding price floor
b.
a binding price ceiling
c.
a tax on the good
d.
None of the above is correct.
146. The price paid by buyers in a market will increase if the government
(i)
increases a binding price floor in that market.
(ii)
increases a binding price ceiling in that market.
(iii)
decreases a tax on the good sold in that market.
a.
(ii) only
b.
(iii) only
c.
(i) and (ii) only
d.
(i), (ii), and (iii)
147. The price received by sellers 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.
None of the above is correct.
148. The quantity sold in a market will increase if the government
a.
decreases 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.
More than one of the above is correct.
149. The price paid by buyers in a market will decrease if the government
a.
imposes a binding price floor in that market.
b.
increases a binding price ceiling in that market.
c.
increases a tax on the good sold in that market.
d.
decreases a binding price floor in that market.
150. The quantity sold in a market will increase if the government
a.
decreases a binding price floor in that market.
b.
decreases a binding price ceiling in that market.
c.
increases a tax on the good sold in that market.
d.
More than one of the above is correct.
151. Which of the following causes a surplus of a good?
a.
a binding price floor
b.
a binding price ceiling
c.
a tax on the good
d.
More than one of the above is correct.
152. A payroll tax is a
a.
fixed number of dollars that every firm must pay to the government for each worker that the firm hires.
b.
tax that each firm must pay to the government before the firm can hire workers and operate its business.
c.
tax on the wages that firms pay their workers.
d.
tax on all wages above the minimum wage.
153. When a payroll tax is enacted, the wage received by workers
a.
falls, and the wage paid by firms rises.
b.
falls, and the wage paid by firms falls.
c.
rises, and the wage paid by firms falls.
d.
rises, and the wage paid by firms rises.
154. A key lesson from the payroll tax is that the
a.
tax is a tax solely on workers.
b.
tax is a tax solely on firms that hire workers.
c.
tax eliminates any wedge that might exist between the wage that firms pay and the wage that workers receive.
d.
true burden of a tax cannot be legislated.
155. You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA
(Social Security/Medicare) tax. Which of the following statements is correct?
a.
The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee.
b.
Your employer is required by law to pay $300 to match the $300 deducted from your check.
c.
This type of tax is an example of a payroll tax.
d.
All of the above are correct.
156. You receive a paycheck from your employer, and your pay stub indicates that $400 was deducted to pay the FICA
(Social Security/Medicare) tax. Which of the following statements is correct?
a.
This type of tax is an example of a payback tax.
b.
Your employer is required by law to pay $400 to match the $400 deducted from your check.
c.
The $400 that you paid is the true burden of the tax that falls on you, the employee.
d.
All of the above are correct.
157. The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to
collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of
the tax equally if the
a.
demand for labor is more elastic than the supply of labor.
b.
supply of labor is more elastic than the demand for labor.
c.
demand for labor and supply of labor are equally elastic.
d.
It is not possible for the tax burden to fall equally on firms and workers.
158. The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to
collect half the tax from workers and half the tax from firms. Workers will bear
a.
an equal share of the tax in comparison to firms.
b.
a greater share of the tax in comparison to firms.
c.
a smaller share of the tax in comparison to firms.
d.
All of the above are possible.
159. Most labor economists believe that the supply of labor is
a.
less elastic than the demand, and, therefore, firms bear most of the burden of the payroll tax.
b.
less elastic than the demand, and, therefore, workers bear most of the burden of the payroll tax.
c.
more elastic than the demand, and, therefore, workers bear most of the burden of the payroll tax.
d.
more elastic than the demand, and, therefore, firms bear most of the burden of the payroll tax.
160. The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for
a.
unemployment compensation.
b.
the salaries of members of Congress.
c.
Social Security and Medicare.
d.
housing subsidies for low-income people.
161. The Federal Insurance Contribution Act (FICA) tax is an example of a(n)
a.
payroll tax.
b.
sales tax.
c.
farm subsidy.
d.
income subsidy.
162. Congress intended that
a.
the entire FICA tax be paid by workers.
b.
the entire FICA tax be paid by firms.
c.
one-quarter of the FICA tax be paid by workers, and three-quarters be paid by firms.
d.
half the FICA tax be paid by workers, and half be paid by firms.
163. Although lawmakers legislated a fifty–fifty division of the payment of the FICA tax,
a.
the actual tax incidence is unaffected by the legislated tax incidence.
b.
the employer now is required by law to pay more than 50 percent of the tax.
c.
the employee now is required by law to pay more than 50 percent of the tax.
d.
employers are no longer required by law to pay any portion of the tax.
164. Lawmakers designed the burden of the FICA payroll tax to be split evenly between workers and firms. Labor
economists believe that
a.
lawmakers may have actually achieved their goal because statistics show that the tax burden is currently
equally divided.
b.
the tax raises too little revenue for the government, so it should be eliminated.
c.
firms bear most of the burden of the tax.
d.
workers bear most of the burden of the tax.
165. Tax incidence
a.
depends on the legislated burden.
b.
is entirely random.
c.
depends on the elasticities of supply and demand.
d.
falls entirely on buyers or entirely on sellers.
166. 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.
167. Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a
tax is imposed in this market, then the
a.
buyers will bear a greater burden of the tax than the sellers.
b.
sellers will bear a greater burden of the tax than the buyers.
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.
168. If a tax is imposed on a market with inelastic demand and elastic supply, then
a.
buyers will bear most of the burden of the tax.
b.
sellers will bear most of the burden of the tax.
c.
the burden of the tax will be shared equally between buyers and sellers.
d.
it is impossible to determine how the burden of the tax will be shared.
169. Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A
tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by
a.
less than $0.50.
b.
$0.50.
c.
between $0.50 and $1.
d.
$1.
170. Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A
tax of $1 per frame levied on picture frames will decrease the effective price received by sellers of picture frames by
a.
less than $0.50.
b.
$0.50.
c.
between $0.50 and $1.
d.
$1.
171. The tax burden will fall most heavily on buyers of the good when the demand curve
a.
is relatively steep, and the supply curve is relatively flat.
b.
is relatively flat, and the supply curve is relatively steep.
c.
and the supply curve are both relatively flat.
d.
and the supply curve are both relatively steep.
172. Buyers of a good bear the larger share of the tax burden when the
(i)
supply is more elastic than the demand for the product.
(ii)
demand in more elastic than the supply for the product.
(iii)
tax is placed on the sellers of the product.
(iv)
tax is placed on the buyers of the product.
a.
(i) only
b.
(ii) only