Question 1

Among the factors that create a deadweight loss and inefficiency are

Accepted Answer

A)  minimum wages, but not taxes. 
B)  rent ceilings, but not taxes. 
C)  taxes, but not minimum wages or rent ceilings. 
D)  minimum wages, rent ceilings, and taxes. 
A)  minimum wages, but not taxes. 
B)  rent ceilings, but not taxes. 
C)  taxes, but not minimum wages or rent ceilings. 
D)  minimum wages, rent ceilings, and taxes.

Question 2

Search activity ________.

Accepted Answer

A)  occurs when there is a surplus of the good 
B)  is unnecessary when a black market exists 
C)  increases when an effective price ceiling is set on a good 
D)  decreases when an effective price ceiling is set on a good 
A)  occurs when there is a surplus of the good 
B)  is unnecessary when a black market exists 
C)  increases when an effective price ceiling is set on a good 
D)  decreases when an effective price ceiling is set on a good

Question 3

-The above figure shows the demand and supply curves for housing. What would be the effects of a rent ceiling equal to $500 per month?

Accepted Answer

A)  a surplus equal to 3,000 apartments 
B)  a shortage equal to 3,000 apartments 
C)  a shortage equal to 250 apartments 
D)  nothing because the rent ceiling has no effect on the equilibrium price and quantity 
A)  a surplus equal to 3,000 apartments 
B)  a shortage equal to 3,000 apartments 
C)  a shortage equal to 250 apartments 
D)  nothing because the rent ceiling has no effect on the equilibrium price and quantity

Question 4

Governments often intervene in agricultural markets by

Accepted Answer

A)  granting subsidies. 
B)  setting production quotas that will increase production. 
C)  setting price floors that reduce prices for buyers. 
D)  imposing heavy taxes on farm products. 
A)  granting subsidies. 
B)  setting production quotas that will increase production. 
C)  setting price floors that reduce prices for buyers. 
D)  imposing heavy taxes on farm products.

Question 5

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, how much producer surplus is lost from this tax on sports equipment?

Accepted Answer

A)  abd 
B)  acd 
C)  P0P1ba 
D)  P0P1da 
A)  abd 
B)  acd 
C)  P0P1ba 
D)  P0P1da

Question 6

-In the figure above, the demand curve shifts rightward from D0 to D1 so that D1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $500 per month. In the short run there will be

Accepted Answer

A)  a surplus of apartments. 
B)  a shortage of 200,000 apartments. 
C)  a shortage of 300,000 apartments. 
D)  neither a shortage nor a surplus of apartments. 
A)  a surplus of apartments. 
B)  a shortage of 200,000 apartments. 
C)  a shortage of 300,000 apartments. 
D)  neither a shortage nor a surplus of apartments.

Question 7

-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 price that consumers pay?

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 8

-In the above figure suppose a minimum wage of $8 per hour is imposed. As a result, the quantity of labor supplied is ________ hours and the quantity of labor demanded is ________ hours.

Accepted Answer

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

Question 9

We know that the minimum wage causes unemployment. So, why does the government impose a minimum wage?

Accepted Answer

The main reason for the minimum wage is

Question 10

The black market price for a legally prohibited good will be the same whether a $1,000 fine is placed on the buyer or the seller.

Accepted Answer

A) True 
 B)False

Question 11

A sales tax is divided so that buyers pay the full amount if

Accepted Answer

A)  demand has unitary elasticity. 
B)  supply has unitary elasticity. 
C)  demand is perfectly inelastic. 
D)  supply is perfectly inelastic. 
A)  demand has unitary elasticity. 
B)  supply has unitary elasticity. 
C)  demand is perfectly inelastic. 
D)  supply is perfectly inelastic.

Question 12

-The minimum wage

Accepted Answer

A)  is type of price ceiling. 
B)  is a type of price floor. 
C)  can create a surplus of labor. 
D)  Both answers A and C are correct. 
A)  is type of price ceiling. 
B)  is a type of price floor. 
C)  can create a surplus of labor. 
D)  Both answers A and C are correct.

Question 13

The more ________, the larger is the amount of the tax on the good that the ________ pays.

Accepted Answer

A)  elastic the demand for a good; buyers 
B)  inelastic the demand for a good; buyers 
C)  inelastic the supply of a good; buyers 
D)  elastic the supply of a good; sellers 
A)  elastic the demand for a good; buyers 
B)  inelastic the demand for a good; buyers 
C)  inelastic the supply of a good; buyers 
D)  elastic the supply of a good; sellers

Question 14

Economists generally agree that increases in the minimum wage increase employment.

Accepted Answer

A) True 
 B)False

Question 15

Do rent ceilings result in any deadweight loss?

Accepted Answer

Yes. Because the number of apartments re

Question 16

-A minimum wage set above the equilibrium wage will

Accepted Answer

A)  create a shortage of labor. 
B)  create a surplus of labor. 
C)  have no effect because the equilibrium level of employment is not affected by a minimum wage above the equilibrium wage. 
D)  create a lower wage rate for skilled workers than for unskilled workers. 
A)  create a shortage of labor. 
B)  create a surplus of labor. 
C)  have no effect because the equilibrium level of employment is not affected by a minimum wage above the equilibrium wage. 
D)  create a lower wage rate for skilled workers than for unskilled workers.

Question 17

-A recent article by CBS news correspondent Bill Whitaker discussed the high level of unemployment among teens, especially during the summer months. Unemployment among the population as a whole was 9.1 percent, but among teens it was close to 24 percent. Many of these teens were hoping to get entry level jobs as small businesses. (Source: CBS news, June 4, 2011) A minimum wage set above the equilibrium wage rate is called

Accepted Answer

A)  a price floor. 
B)  a price ceiling. 
C)  quota. 
D)  subsidy. 
A)  a price floor. 
B)  a price ceiling. 
C)  quota. 
D)  subsidy.

Question 18

-Of the $3 per pizza tax illustrated in the above figure, the

Accepted Answer

A)  consumers pay $2 of the $3 per pizza tax. 
B)  sellers pay $1 of the $3 per pizza tax. 
C)  government collects $120 thousand in revenue from the pizza tax. 
D)  All of the above answers are correct. 
A)  consumers pay $2 of the $3 per pizza tax. 
B)  sellers pay $1 of the $3 per pizza tax. 
C)  government collects $120 thousand in revenue from the pizza tax. 
D)  All of the above answers are correct.

Question 19

A rent ceiling set above the equilibrium rent

Accepted Answer

A)  decreases the quantity demanded but not the quantity supplied. 
B)  decreases the quantity supplied but not the quantity demanded. 
C)  decreases both the quantity demanded and the quantity supplied. 
D)  has no effect on the market outcome. 
A)  decreases the quantity demanded but not the quantity supplied. 
B)  decreases the quantity supplied but not the quantity demanded. 
C)  decreases both the quantity demanded and the quantity supplied. 
D)  has no effect on the market outcome.

Question 20

-The figure above shows the market for tickets to the Super Bowl the day of the game. Suppose the government imposes an entertainment tax of $100 per ticket.
a) What is the equilibrium price of a Super Bowl ticket before the tax? What is the price paid by buyers after the tax? What is the price received by sellers after the tax?
b) What is the equilibrium quantity of tickets before the tax? What is the equilibrium quantity after the tax?
c) Do buyers or sellers bear the largest incidence of the tax?

Accepted Answer

a) The equilibrium price before the tax

Exam 6: Government Actions in Markets

Among the factors that create a deadweight loss and inefficiency are

Search activity ________.

-The above figure shows the demand and supply curves for housing. What would be the effects of a rent ceiling equal to $500 per month?

Governments often intervene in agricultural markets by

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, how much producer surplus is lost from this tax on sports equipment?

-In the figure above, the demand curve shifts rightward from D0 to D1 so that D1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $500 per month. In the short run there will be

-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 price that consumers pay?

-In the above figure suppose a minimum wage of $8 per hour is imposed. As a result, the quantity of labor supplied is ________ hours and the quantity of labor demanded is ________ hours.

We know that the minimum wage causes unemployment. So, why does the government impose a minimum wage?

The black market price for a legally prohibited good will be the same whether a $1,000 fine is placed on the buyer or the seller.

A sales tax is divided so that buyers pay the full amount if

-The minimum wage

The more ________, the larger is the amount of the tax on the good that the ________ pays.

Economists generally agree that increases in the minimum wage increase employment.

Do rent ceilings result in any deadweight loss?

-A minimum wage set above the equilibrium wage will

-Of the $3 per pizza tax illustrated in the above figure, the

A rent ceiling set above the equilibrium rent

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, the demand curve shifts rightward from D₀ to D₁ so that D₁ is the relevant demand curve. Suppose the government imposes a rent ceiling of $500 per month. In the short run there will be

-In the above figure suppose a minimum wage of $8 per hour is imposed. As a result, the quantity of labor supplied is hours and the quantity of labor demanded is hours.

The more , the larger is the amount of the tax on the good that the pays.