Prices, Wages & Taxes MCQs

Option A: The tax burden generated from a tax placed on a good consumer perceive to be a necessity will fall most heavily on the sellers of the good

Option B: The burden of a tax falls on the side of the market (buyers or sellers) from which it is collected

Option C: The distribution of the burden of a tax is determined by the relative elasticities of determined by legislation.

Option D: The tax burden falls most heavily on the side of the market (buyers and sellers) that is most willing to leave the market when price movements are unfavorable to them.

Correct Answer: The distribution of the burden of a tax is determined by the relative elasticities of determined by legislation. ✔

Option A: falls more heavily on sellers

Option B: falls entirely on sellers

Option C: falls more heavily on buyers.

Option D: is evenly distributed between buyers and sellers.

Correct Answer: falls more heavily on buyers. ✔

Option A: the tax burden falls most heavily on the buyers.

Option B: the buyers bear the burden of the tax

Option C: the sellers bear the burden of the tax

Option D: the tax burden on the buyers and sellers in the same as an equivalent tax collected from the sellers

Correct Answer: the tax burden on the buyers and sellers in the same as an equivalent tax collected from the sellers ✔

Option A: demand curve downward by the size of the tax per unit.

Option B: supply curve downward by the size of the tax per unit

Option C: demand curve upward by the size of the tax per unit.

Option D: supply curve upward by the size of the tax per unit

Correct Answer: supply curve upward by the size of the tax per unit ✔

Option A: a teenage worker with few qualifications.

Option B: A manual worker with fifteen years of work experience

Option C: A professional worker with university degree.

Option D: All there are equally likely to find it difficult to get a job

Correct Answer: a teenage worker with few qualifications. ✔

Option A: the minimum wage

Option B: rent controls

Option C: restricting petrol prices to Rs100 per litre when the equilibrium price is Rs150 per litre

Option D: All of these answers are price floors

Correct Answer: the minimum wage ✔

Option A: the buyers

Option B: Neither buyers nor sellers desire a price floor.

Option C: the sellers

Option D: Both buyers and sellers desire a price floor.

Correct Answer: the sellers ✔

Option A: always determines the price at which a good must be sold

Option B: sets a legal maximum on the price at which a good can be sold

Option C: is not a binding constraint if it is set above the equilibrium price

Option D: sets a legal minimum on the price at which a good can be sold

Correct Answer: sets a legal minimum on the price at which a good can be sold ✔

Option A: a shortage or a surplus depending on whether the price ceiling is set above or below the equilibrium price

Option B: a surplus

Option C: a shortage

Option D: an equilibrium

Correct Answer: a shortage ✔

Option A: Clothing

Option B: food

Option C: housing

Option D: entertainment

Correct Answer: entertainment ✔

Option A: both supply and demand are inelastic

Option B: demand is elastic, and supply are inelastic

Option C: both supply and demand are elastic

Option D: demand is inelastic, and supply is elastic

Correct Answer: demand is inelastic, and supply is elastic ✔

Option A: both supply and demand are elastic

Option B: both supply and demand are inelastic

Option C: demand is inelastic and supply in elastic

Option D: demand is elastic, and supply is inelastic

Correct Answer: demand is elastic, and supply is inelastic ✔

Option A: a decrease in the price buyers pay, an increase in the price sellers receive, and a decrease in the quantity sold

Option B: an increase in the price buyers pay a decrease in the price sellers receive, and an increase in the quantity sold

Option C: a decrease in the price buyers pay, an increase in the price sellers receive and an increase in the quantity sold

Option D: an increase in the price buyers pay a decrease in the price sellers receive and a decrease in the quantity sold

Correct Answer: an increase in the price buyers pay a decrease in the price sellers receive and a decrease in the quantity sold ✔

Option A: supply curve downward by the size of the tax per unit.

Option B: Supply curve upward by the size of the tax per unit

Option C: demand curve upward by the size of the tax per unit.

Option D: demand curve downward by the size of the tax per unit

Correct Answer: demand curve downward by the size of the tax per unit ✔

Option A: A significant increase in the demand for petrol could cause the price ceiling to become a binding constraint.

Option B: A significant increase in the supply for petrol could cause the price ceiling to become a binding constraint.

Option C: There will be a shortage of petrol

Option D: There will be surplus of petrol

Correct Answer: A significant increase in the demand for petrol could cause the price ceiling to become a binding constraint. ✔

Option A: demand is inelastic and supply in elastic

Option B: supply is inelastic, and demand is elastic

Option C: both supply and demand are elastic

Option D: both supply and demand are inelastic

Correct Answer: both supply and demand are elastic ✔

Option A: The shortage created by the price ceiling is greater in the short ran than in the long run.

Option B: The surplus created by the price ceiling is greater in the short run than in the long run

Option C: The surplus created by the price ceiling is greater in the long run than in the short run

Option D: The shortage created by the price ceiling is greater in the long run than in the short run

Correct Answer: The shortage created by the price ceiling is greater in the long run than in the short run ✔

Option A: There may be long lines of buyers waiting for apartments

Option B: Landlords may discriminate among apartment renters

Option C: Landlords may be offered bribes to rent apartments

Option D: there will be a storage of housing

Correct Answer: the quality of apartments will improve ✔

Option A: above the equilibrium price

Option B: below the equilibrium price

Option C: precisely at the equilibrium price

Option D: at any price because all price ceilings are binding constraints

Correct Answer: below the equilibrium price ✔