Question 1

Which one of the following statements about illegal goods is true?

Accepted Answer

A) Taxes are more effective in changing preferences than prohibition. 
B) Prohibition is more effective in generating revenue than an equivalent tax. 
C) Taxes and penalties cannot be set to yield equivalent outcomes. 
D) Taxes generate revenues while prohibition sends a signal that might influence preferences. 
E) Taxes and prohibition eliminate the market for illegal goods. 
A) Taxes are more effective in changing preferences than prohibition. 
B) Prohibition is more effective in generating revenue than an equivalent tax. 
C) Taxes and penalties cannot be set to yield equivalent outcomes. 
D) Taxes generate revenues while prohibition sends a signal that might influence preferences. 
E) Taxes and prohibition eliminate the market for illegal goods.

Question 2

If enforcement of the law is aimed at buyers of an illegal good,the result will be

Accepted Answer

A) an increase in the supply of the good. 
B) a decrease in the supply of the good. 
C) a decrease in the demand for the good. 
D) a rise in the price of the good. 
E) no change in the equilibrium quantity. 
A) an increase in the supply of the good. 
B) a decrease in the supply of the good. 
C) a decrease in the demand for the good. 
D) a rise in the price of the good. 
E) no change in the equilibrium quantity.

Question 3

Use the table below to answer the following questions.
Table 6.2.1  
-Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.Suppose the Genoa City Council sets a minimum wage of $16 per hour.Teenage unemployment is ________ hours a week.

Accepted Answer

A) 800 
B) 600 
C) 400 
D) 200 
E) zero 
A) 800 
B) 600 
C) 400 
D) 200 
E) zero

Question 4

Use the table below to answer the following questions.
Table 6.1.1
  
-Refer to Table 6.1.1,which gives the demand schedule and the supply schedule for the apartment market in Anytown,Alberta.If a rent ceiling of $300 is imposed in the apartment market,then

Accepted Answer

A) there is a shortage of 40 apartments. 
B) there is a surplus of 40 apartments. 
C) the supply of apartments will increase. 
D) the supply of apartments will decrease. 
E) the quantity of apartments supplied is 60 units. 
A) there is a shortage of 40 apartments. 
B) there is a surplus of 40 apartments. 
C) the supply of apartments will increase. 
D) the supply of apartments will decrease. 
E) the quantity of apartments supplied is 60 units.

Question 5

Consider the effect of a minimum wage imposed in an unregulated labour market.Which of the following statements is correct? i.A minimum wage set above the equilibrium wage increases the quantity of labour supplied.
Ii.A minimum wage set above the equilibrium wage increases the supply of labour.
Iii.A minimum wage set above the equilibrium wage decreases the demand for labour.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) ii and iii only 
E) i,ii,and iii 
A) i only 
B) ii only 
C) iii only 
D) ii and iii only 
E) i,ii,and iii

Question 6

Suppose the cost of breaking the law is imposed on the buyers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is

Accepted Answer

A) inelastic or the supply is inelastic. 
B) elastic or the supply is elastic. 
C) elastic or the supply is inelastic. 
D) inelastic or the supply is elastic. 
E) perfectly inelastic. 
A) inelastic or the supply is inelastic. 
B) elastic or the supply is elastic. 
C) elastic or the supply is inelastic. 
D) inelastic or the supply is elastic. 
E) perfectly inelastic.

Question 7

The ________ principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by government. The ________ principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.

Accepted Answer

A) benefits;ability-to-pay 
B) equality;fairness 
C) services;burden 
D) ability-to-pay;benefits 
E) efficient;inefficient 
A) benefits;ability-to-pay 
B) equality;fairness 
C) services;burden 
D) ability-to-pay;benefits 
E) efficient;inefficient

Question 8

Which one of the following is likely to be the outcome of a rent ceiling imposed below the equilibrium rent?

Accepted Answer

A) a black market for rent-controlled housing 
B) an increase in the demand for rent-controlled housing 
C) a surplus of housing 
D) a decrease in search activity 
E) a decrease in the supply of rent-controlled housing 
A) a black market for rent-controlled housing 
B) an increase in the demand for rent-controlled housing 
C) a surplus of housing 
D) a decrease in search activity 
E) a decrease in the supply of rent-controlled housing

Question 9

In a market with an effective production quota,

Accepted Answer

A) marginal social benefit exceeds marginal social cost. 
B) marginal social benefit equals marginal social cost. 
C) marginal social cost exceeds marginal social benefit. 
D) marginal social cost is greater than the equilibrium price. 
E) marginal social benefit is less than the equilibrium price. 
A) marginal social benefit exceeds marginal social cost. 
B) marginal social benefit equals marginal social cost. 
C) marginal social cost exceeds marginal social benefit. 
D) marginal social cost is greater than the equilibrium price. 
E) marginal social benefit is less than the equilibrium price.

Question 10

Use the figure below to answer the following questions.   Figure 6.2.1
-Refer to Figure 6.2.1.If the minimum wage is set at $4 per hour,what is the level of unemployment in millions of hours?

Accepted Answer

A) 50 
B) 40 
C) 20 
D) 10 
E) 0 
A) 50 
B) 40 
C) 20 
D) 10 
E) 0

Question 11

Use the table below to answer the following questions.
Table 6.5.1
The Market for a Prohibited Good  
-Refer to Table 6.5.1.If a $2-per-unit cost of breaking the law is imposed on sellers,the price received by sellers (net of the cost of breaking the law)would be

Accepted Answer

A) $8. 
B) $7. 
C) $9. 
D) $10. 
E) $6. 
A) $8. 
B) $7. 
C) $9. 
D) $10. 
E) $6.

Question 12

Suppose the cost of breaking the law is imposed on the sellers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is

Accepted Answer

A) inelastic or the supply is inelastic. 
B) elastic or the supply is elastic. 
C) elastic or the supply is inelastic. 
D) inelastic or the supply is elastic. 
E) perfectly inelastic. 
A) inelastic or the supply is inelastic. 
B) elastic or the supply is elastic. 
C) elastic or the supply is inelastic. 
D) inelastic or the supply is elastic. 
E) perfectly inelastic.

Question 13

A production quota is set equal to the equilibrium quantity.At the quota quantity,marginal social benefit is ________ marginal social cost and the level of production is ________.

Accepted Answer

A) greater than;efficient 
B) greater than;inefficient 
C) less than;efficient 
D) less than;inefficient 
E) equal to;efficient 
A) greater than;efficient 
B) greater than;inefficient 
C) less than;efficient 
D) less than;inefficient 
E) equal to;efficient

Question 14

Use the figure below to answer the following questions.   Figure 6.2.1
-Refer to Figure 6.2.1.If the minimum wage is set at $12 per hour,what is the level of unemployment in millions of hours?

Accepted Answer

A) 50 
B) 40 
C) 20 
D) 10 
E) 0 
A) 50 
B) 40 
C) 20 
D) 10 
E) 0

Question 15

Use the figure below to answer the following questions.   Figure 6.1.2
-Refer to Figure 6.1.2.If a rigorously enforced price ceiling is set at $10,then

Accepted Answer

A) 100 units will be sold at a price of $20 each. 
B) 100 units will be sold at a price of $15 each. 
C) 150 units will be sold at a price of $15 each. 
D) 200 units will be sold at a price of $10 each. 
E) 100 units will be sold at a price of $10 each. 
A) 100 units will be sold at a price of $20 each. 
B) 100 units will be sold at a price of $15 each. 
C) 150 units will be sold at a price of $15 each. 
D) 200 units will be sold at a price of $10 each. 
E) 100 units will be sold at a price of $10 each.

Question 16

The burden of tax on sellers is greater the more (1)elastic is demand.
(2)inelastic is demand.
(3)elastic is supply.
(4)inelastic is supply.

Accepted Answer

A) (2)only 
B) (1)and (3) 
C) (1)and (4) 
D) (2)and (3) 
E) (2)and (4) 
A) (2)only 
B) (1)and (3) 
C) (1)and (4) 
D) (2)and (3) 
E) (2)and (4)

Question 17

Use the figure below to answer the following questions.   Figure 6.3.3
-Refer to Figure 6.3.3.Suppose a tax of $1 is imposed.In which market would the seller pay the highest portion of the tax?

Accepted Answer

A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) all markets equally 
A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) all markets equally

Question 18

Use the table below to answer the following questions.
Table 6.3.1  
-Refer to Table 6.3.1.Suppose a sales tax of $2 a unit is imposed on the good described in the table.Government revenue from the tax is

Accepted Answer

A) $1,200. 
B) $1,000. 
C) $800. 
D) $600. 
E) zero. 
A) $1,200. 
B) $1,000. 
C) $800. 
D) $600. 
E) zero.

Question 19

Good A has a perfectly inelastic demand and an upward-sloping supply curve.Good B has a perfectly inelastic supply and a downward-sloping demand curve.If the same sales tax is imposed on the sellers of both good A and good B,the

Accepted Answer

A) price paid by buyers of good B rises by more than the price paid by buyers of good A. 
B) price paid by buyers of good A rises by more than the price paid by buyers of good B. 
C) price paid by buyers of good A rises by the same amount as the price paid by buyers of good B. 
D) quantity bought by buyers of good B decreases by more than the quantity bought by buyers of good A. 
E) quantity bought by buyers of good A decreases by more than the quantity bought by buyers of good A. 
A) price paid by buyers of good B rises by more than the price paid by buyers of good A. 
B) price paid by buyers of good A rises by more than the price paid by buyers of good B. 
C) price paid by buyers of good A rises by the same amount as the price paid by buyers of good B. 
D) quantity bought by buyers of good B decreases by more than the quantity bought by buyers of good A. 
E) quantity bought by buyers of good A decreases by more than the quantity bought by buyers of good A.

Question 20

Use the figure below to answer the following questions.   Figure 6.1.1
-Refer to Figure 6.1.1.If the demand for rental housing increases and the demand curve shifts rightward from D0 to D1,and there is a strictly enforced rent ceiling of $150 per room,

Accepted Answer

A) the number of rooms rented will increase to 2,000. 
B) the number of rooms rented is 1,500. 
C) there is a housing surplus of 500 rooms. 
D) the number of rooms rented decreases to 1,000. 
E) the rent is $175 per room. 
A) the number of rooms rented will increase to 2,000. 
B) the number of rooms rented is 1,500. 
C) there is a housing surplus of 500 rooms. 
D) the number of rooms rented decreases to 1,000. 
E) the rent is $175 per room.

Which one of the following statements about illegal goods is true?

If enforcement of the law is aimed at buyers of an illegal good,the result will be

Use the table below to answer the following questions. Table 6.2.1 -Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.Suppose the Genoa City Council sets a minimum wage of $16 per hour.Teenage unemployment is ________ hours a week.

Use the table below to answer the following questions. Table 6.1.1 -Refer to Table 6.1.1,which gives the demand schedule and the supply schedule for the apartment market in Anytown,Alberta.If a rent ceiling of $300 is imposed in the apartment market,then

Suppose the cost of breaking the law is imposed on the buyers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is

The principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by government. The principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.

Which one of the following is likely to be the outcome of a rent ceiling imposed below the equilibrium rent?

In a market with an effective production quota,

Use the figure below to answer the following questions. Figure 6.2.1 -Refer to Figure 6.2.1.If the minimum wage is set at $4 per hour,what is the level of unemployment in millions of hours?

Use the table below to answer the following questions. Table 6.5.1 The Market for a Prohibited Good -Refer to Table 6.5.1.If a $2-per-unit cost of breaking the law is imposed on sellers,the price received by sellers (net of the cost of breaking the law)would be

Suppose the cost of breaking the law is imposed on the sellers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is

A production quota is set equal to the equilibrium quantity.At the quota quantity,marginal social benefit is marginal social cost and the level of production is .

Use the figure below to answer the following questions. Figure 6.2.1 -Refer to Figure 6.2.1.If the minimum wage is set at $12 per hour,what is the level of unemployment in millions of hours?

Use the figure below to answer the following questions. Figure 6.1.2 -Refer to Figure 6.1.2.If a rigorously enforced price ceiling is set at $10,then

The burden of tax on sellers is greater the more (1)elastic is demand. (2)inelastic is demand. (3)elastic is supply. (4)inelastic is supply.

Use the figure below to answer the following questions. Figure 6.3.3 -Refer to Figure 6.3.3.Suppose a tax of $1 is imposed.In which market would the seller pay the highest portion of the tax?

Use the table below to answer the following questions. Table 6.3.1 -Refer to Table 6.3.1.Suppose a sales tax of $2 a unit is imposed on the good described in the table.Government revenue from the tax is

Good A has a perfectly inelastic demand and an upward-sloping supply curve.Good B has a perfectly inelastic supply and a downward-sloping demand curve.If the same sales tax is imposed on the sellers of both good A and good B,the

Use the figure below to answer the following questions. Figure 6.1.1 -Refer to Figure 6.1.1.If the demand for rental housing increases and the demand curve shifts rightward from D₀ to D₁,and there is a strictly enforced rent ceiling of $150 per room,

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 6: Government Actions in Markets

Which one of the following statements about illegal goods is true?

If enforcement of the law is aimed at buyers of an illegal good,the result will be

Use the table below to answer the following questions. Table 6.2.1 -Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.Suppose the Genoa City Council sets a minimum wage of $16 per hour.Teenage unemployment is ________ hours a week.

Use the table below to answer the following questions. Table 6.1.1 -Refer to Table 6.1.1,which gives the demand schedule and the supply schedule for the apartment market in Anytown,Alberta.If a rent ceiling of $300 is imposed in the apartment market,then

Suppose the cost of breaking the law is imposed on the buyers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is

The ________ principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by government. The ________ principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.

Which one of the following is likely to be the outcome of a rent ceiling imposed below the equilibrium rent?

In a market with an effective production quota,

Use the figure below to answer the following questions. Figure 6.2.1 -Refer to Figure 6.2.1.If the minimum wage is set at $4 per hour,what is the level of unemployment in millions of hours?

Use the table below to answer the following questions. Table 6.5.1 The Market for a Prohibited Good -Refer to Table 6.5.1.If a $2-per-unit cost of breaking the law is imposed on sellers,the price received by sellers (net of the cost of breaking the law)would be

Suppose the cost of breaking the law is imposed on the sellers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is

A production quota is set equal to the equilibrium quantity.At the quota quantity,marginal social benefit is ________ marginal social cost and the level of production is ________.

Use the figure below to answer the following questions. Figure 6.2.1 -Refer to Figure 6.2.1.If the minimum wage is set at $12 per hour,what is the level of unemployment in millions of hours?

Use the figure below to answer the following questions. Figure 6.1.2 -Refer to Figure 6.1.2.If a rigorously enforced price ceiling is set at $10,then

The burden of tax on sellers is greater the more (1)elastic is demand. (2)inelastic is demand. (3)elastic is supply. (4)inelastic is supply.

Use the figure below to answer the following questions. Figure 6.3.3 -Refer to Figure 6.3.3.Suppose a tax of $1 is imposed.In which market would the seller pay the highest portion of the tax?

Use the table below to answer the following questions. Table 6.3.1 -Refer to Table 6.3.1.Suppose a sales tax of $2 a unit is imposed on the good described in the table.Government revenue from the tax is

Good A has a perfectly inelastic demand and an upward-sloping supply curve.Good B has a perfectly inelastic supply and a downward-sloping demand curve.If the same sales tax is imposed on the sellers of both good A and good B,the

Use the figure below to answer the following questions. Figure 6.1.1 -Refer to Figure 6.1.1.If the demand for rental housing increases and the demand curve shifts rightward from D0 to D1,and there is a strictly enforced rent ceiling of $150 per room,

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

The principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by government. The principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.

A production quota is set equal to the equilibrium quantity.At the quota quantity,marginal social benefit is marginal social cost and the level of production is .

Use the figure below to answer the following questions. Figure 6.1.1 -Refer to Figure 6.1.1.If the demand for rental housing increases and the demand curve shifts rightward from D₀ to D₁,and there is a strictly enforced rent ceiling of $150 per room,