midterm 2 - Name: _ Class: _ Date: _ ID: A Midterm 2...

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Name: ________________________ Class: ___________________ Date: __________ ID: A 1 Midterm 2 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. A price floor a. is a legal minimum on the price at which a good can be sold. b. can result when sellers of a good are successful in their attempts to convince the government that the market outcome without a price floor is unfair to them. c. can create inequities in a market. d. All of the above are correct. ____ 2. Suppose a price ceiling is not binding ; this means that a. the equilibrium price is above the price ceiling. b. the equilibrium price is below the price ceiling. c. it has no legal enforcement mechanism. d. people are finding a way to circumvent the law. Figure 6-2 ____ 3. Refer to Figure 6-2 . A binding price ceiling would be the result if the price ceiling were set at a. $14. b. $12. c. $10. d. $8. ____ 4. Refer to Figure 6-2 . If the government imposes a price ceiling of $12 in this market, the result would be a. a surplus of 10. b. a surplus of 20. c. a shortage of 20. d. neither a surplus nor a shortage.
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Name: ________________________ ID: A 2 ____ 5. When a tax is imposed on the buyers of a good, the demand curve shifts a. downward by the amount of the tax. b. upward by the amount of the tax. c. downward by less than the amount of the tax. d. upward by more than the amount of the tax. Figure 6-8 ____ 6. Refer to Figure 6-8 . As the figure is drawn, who sends the tax payments to the government? a. the buyers b. the sellers c. A portion of the tax payments is sent by the buyers and the remaining portion is sent by the sellers. d. The question of who sends the tax payments cannot be determined from the figure. ____ 7. Refer to Figure 6-8 . The burden of the tax on sellers is a. $1.00 per unit. b. $1.50 per unit. c. $2.00 per unit. d. $3.00 per unit. ____ 8. A tax on the buyers of coffee will a. increase the effective price of coffee paid by buyers, increase the price of coffee received by sellers, and increase the equilibrium quantity of coffee. b. decrease the effective price of coffee paid by buyers, increase the price of coffee received by sellers, and decrease the equilibrium quantity of coffee. c. increase the effective price of coffee paid by buyers, decrease the price of coffee received by sellers, and decrease the equilibrium quantity of coffee. d. increase the effective price of coffee paid by buyers, decrease the price of coffee received by sellers, and increase the equilibrium quantity of coffee. ____ 9. Suppose that a tax is placed on books. If the buyers pay the majority of the tax, we know that the a. demand is more inelastic than the supply.
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This note was uploaded on 04/19/2008 for the course ECON 2304 taught by Professor Majumder during the Fall '07 term at University of Houston.

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midterm 2 - Name: _ Class: _ Date: _ ID: A Midterm 2...

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