Question 1

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $6 per hour, how many hours do students work?

Accepted Answer

A)  12,000 hours 
B)  9,000 hours 
C)  6,000 hours 
D)  None of the above answers is correct. 
A)  12,000 hours 
B)  9,000 hours 
C)  6,000 hours 
D)  None of the above answers is correct.

Question 2

-In the figure above, if a minimum wage of $6 per hour has been imposed and the labor demand curve then shifts from D0 to D1 the wage rate ________ and the amount of employment ________.

Accepted Answer

A)  falls; decreases 
B)  does not change; increases 
C)  does not change; decreases 
D)  falls; increases 
A)  falls; decreases 
B)  does not change; increases 
C)  does not change; decreases 
D)  falls; increases

Question 3

-Suppose the government has declared beer to be an illegal substance and imposes a fine on any person caught selling a beer. Buying beer, however, remains legal. Using the above figure, in which CBL is the cost of breaking the law, what is the equilibrium price and quantity with this new law in effect?

Accepted Answer

A)  $5 per quart and 300 quarts of beer 
B)  $3 per quart and 500 quarts of beer 
C)  $3 per quart and 100 quarts of beer 
D)  $1 per quart and 300 quarts of beer 
A)  $5 per quart and 300 quarts of beer 
B)  $3 per quart and 500 quarts of beer 
C)  $3 per quart and 100 quarts of beer 
D)  $1 per quart and 300 quarts of beer

Question 4

A price ceiling set below the equilibrium price ________ search activity and ________ the use of black markets.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases

Question 5

The incidence of sales tax is determined by the

Accepted Answer

A)  level of government (for example, local, state, or federal) which imposes the tax. 
B)  federal government in all cases. 
C)  greed of the sellers. 
D)  price elasticities of supply and demand. 
A)  level of government (for example, local, state, or federal) which imposes the tax. 
B)  federal government in all cases. 
C)  greed of the sellers. 
D)  price elasticities of supply and demand.

Question 6

-Suppose the government imposes a $1 tax on frisbees, and the price of a frisbee paid by demanders rises by $1.

Accepted Answer

A)  The price rise is consistent with a perfectly elastic supply for frisbees. 
B)  The price rise is consistent with a perfectly elastic demand for frisbees. 
C)  The price rise is consistent with a downward-sloping supply curve for frisbees. 
D)  The price could never rise this much, so this situation cannot happen. 
A)  The price rise is consistent with a perfectly elastic supply for frisbees. 
B)  The price rise is consistent with a perfectly elastic demand for frisbees. 
C)  The price rise is consistent with a downward-sloping supply curve for frisbees. 
D)  The price could never rise this much, so this situation cannot happen.

Question 7

If sanctions are imposed on buyers but NOT on sellers of an illegal good, then the equilibrium price ________ and the equilibrium quantity ________.

Accepted Answer

A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases 
A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases

Question 8

-A minimum wage set above the equilibrium wage rate for low-skilled workers ________.

Accepted Answer

A)  creates more employment opportunities for low-skilled workers 
B)  creates more prosperity among younger people 
C)  creates unemployment among low-skilled workers 
D)  increases the number of good paying jobs available to young people 
A)  creates more employment opportunities for low-skilled workers 
B)  creates more prosperity among younger people 
C)  creates unemployment among low-skilled workers 
D)  increases the number of good paying jobs available to young people

Question 9

-In the above figure, the amount of the tax per unit imposed on the sellers is

Accepted Answer

A)  $0.50. 
B)  $1.00. 
C)  $1.50. 
D)  $2.00. 
A)  $0.50. 
B)  $1.00. 
C)  $1.50. 
D)  $2.00.

Question 10

How is the incidence of a sales tax between the buyer and the seller determined?

Accepted Answer

The tax incidence depends on the price e

Question 11

Most of us are dependent on crude oil in some shape or way, whether it's to power our cars or to heat our homes in some parts of the country. More than 80 percent of the home heating oil used in the United States goes to the Northeast. It is suggested that there needs to be government regulation to make it illegal to charge a very high price for oil. This type of regulation would be a ________.

Accepted Answer

A)  price ceiling 
B)  price floor 
C)  shortage regulation 
D)  tax incidence 
A)  price ceiling 
B)  price floor 
C)  shortage regulation 
D)  tax incidence

Question 12

-The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be the new equilibrium price paid by consumers after the tax?

Accepted Answer

A)  less than $27 per game 
B)  $27 per game 
C)  more than $27 per game. 
D)  More information is needed to determine if the price is more than, less than, or equal to $27 per game. 
A)  less than $27 per game 
B)  $27 per game 
C)  more than $27 per game. 
D)  More information is needed to determine if the price is more than, less than, or equal to $27 per game.

Question 13

-A minimum wage set above the equilibrium wage I. increases the supply of labor.
II) increases the quantity of labor supplied.
III) decreases the demand for labor.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II only 
D)  I, II, and III 
A)  I only 
B)  II only 
C)  I and II only 
D)  I, II, and III

Question 14

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. The sport equipment producers' share of this tax would be greater than shown in the above figure if

Accepted Answer

A)  the demand was more elastic. 
B)  the demand was more inelastic. 
C)  the supply was more elastic. 
D)  Both answers A and C are correct. 
A)  the demand was more elastic. 
B)  the demand was more inelastic. 
C)  the supply was more elastic. 
D)  Both answers A and C are correct.

Question 15

If salt has a ________, then ________ pay most of any tax levied on salt.

Accepted Answer

A)  high elasticity of supply; sellers 
B)  low elasticity of demand; buyers 
C)  high elasticity of demand; buyers 
D)  low elasticity of supply; buyers 
A)  high elasticity of supply; sellers 
B)  low elasticity of demand; buyers 
C)  high elasticity of demand; buyers 
D)  low elasticity of supply; buyers

Question 16

-The figure above shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced, what is the amount, including the subsidy, that suppliers keep per gallon?

Accepted Answer

A)  $3.00 a gallon 
B)  between $3.00 and $4.00 per gallon 
C)  $4.00 a gallon 
D)  between $4.00 and $5.00 per gallon 
A)  $3.00 a gallon 
B)  between $3.00 and $4.00 per gallon 
C)  $4.00 a gallon 
D)  between $4.00 and $5.00 per gallon

Question 17

-Suppose the government has declared beer to be an illegal substance and has imposed equal penalties on any person caught buying a beer and on any person caught selling a beer. Using the above figure, in which CBL is the cost of breaking the law, what is the equilibrium price and quantity with this new law in effect?

Accepted Answer

A)  $5 per quart and 300 quarts of beer 
B)  $3 per quart and 500 quarts of beer 
C)  $3 per quart and 100 quarts of beer 
D)  $1 per quart and 300 quarts of beer 
A)  $5 per quart and 300 quarts of beer 
B)  $3 per quart and 500 quarts of beer 
C)  $3 per quart and 100 quarts of beer 
D)  $1 per quart and 300 quarts of beer

Question 18

On Green Island, the demand for pencils is perfectly elastic and the supply of pencils is perfectly inelastic. If a sales tax on pencils is introduced,

Accepted Answer

A)  the tax is split evenly between the buyers and sellers. 
B)  the buyers pay the entire tax. 
C)  no one pays the tax. 
D)  the sellers pay the entire tax. 
A)  the tax is split evenly between the buyers and sellers. 
B)  the buyers pay the entire tax. 
C)  no one pays the tax. 
D)  the sellers pay the entire tax.

Question 19

In general, a fine on smoking cigarettes shifts the ________ curve of cigarettes ________.

Accepted Answer

A)  supply; rightward 
B)  supply; leftward 
C)  demand; rightward 
D)  demand; leftward 
A)  supply; rightward 
B)  supply; leftward 
C)  demand; rightward 
D)  demand; leftward

Question 20

-In the above figure, if there is no minimum wage, the equilibrium employment is ________; if the government imposed a minimum wage of $8 per hour, employment is ________.

Accepted Answer

A)  4,000 hours; 2,000 hours 
B)  3,000 hours; 4,000 hours 
C)  3,000 hours; 2,000 hours 
D)  4,000 hours; 3,000 hours 
A)  4,000 hours; 2,000 hours 
B)  3,000 hours; 4,000 hours 
C)  3,000 hours; 2,000 hours 
D)  4,000 hours; 3,000 hours

Exam 6: Government Actions in Markets

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $6 per hour, how many hours do students work?

-In the figure above, if a minimum wage of $6 per hour has been imposed and the labor demand curve then shifts from D0 to D1 the wage rate ________ and the amount of employment ________.

A price ceiling set below the equilibrium price ________ search activity and ________ the use of black markets.

The incidence of sales tax is determined by the

-Suppose the government imposes a $1 tax on frisbees, and the price of a frisbee paid by demanders rises by $1.

If sanctions are imposed on buyers but NOT on sellers of an illegal good, then the equilibrium price ________ and the equilibrium quantity ________.

-A minimum wage set above the equilibrium wage rate for low-skilled workers ________.

-In the above figure, the amount of the tax per unit imposed on the sellers is

How is the incidence of a sales tax between the buyer and the seller determined?

-The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be the new equilibrium price paid by consumers after the tax?

-A minimum wage set above the equilibrium wage I. increases the supply of labor. II) increases the quantity of labor supplied. III) decreases the demand for labor.

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. The sport equipment producers' share of this tax would be greater than shown in the above figure if

If salt has a ________, then ________ pay most of any tax levied on salt.

-The figure above shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced, what is the amount, including the subsidy, that suppliers keep per gallon?

On Green Island, the demand for pencils is perfectly elastic and the supply of pencils is perfectly inelastic. If a sales tax on pencils is introduced,

In general, a fine on smoking cigarettes shifts the ________ curve of cigarettes ________.

-In the above figure, if there is no minimum wage, the equilibrium employment is ________; if the government imposed a minimum wage of $8 per hour, employment is ________.

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

-In the figure above, if a minimum wage of $6 per hour has been imposed and the labor demand curve then shifts from D₀ to D₁ the wage rate and the amount of employment .

A price ceiling set below the equilibrium price search activity and the use of black markets.

If sanctions are imposed on buyers but NOT on sellers of an illegal good, then the equilibrium price and the equilibrium quantity .

If salt has a , then pay most of any tax levied on salt.

In general, a fine on smoking cigarettes shifts the curve of cigarettes .

-In the above figure, if there is no minimum wage, the equilibrium employment is ; if the government imposed a minimum wage of $8 per hour, employment is .