Question 1

-In the above figure, a rent ceiling of $500 per month would

Accepted Answer

A)  not affect the equilibrium quantity. 
B)  create a shortage. 
C)  raise the rent and cause a surplus. 
D)  reduce the rent and create a surplus. 
A)  not affect the equilibrium quantity. 
B)  create a shortage. 
C)  raise the rent and cause a surplus. 
D)  reduce the rent and create a surplus.

Question 2

Which of the following leads to the demanders paying all of a tax?

Accepted Answer

A)  The supply is unit elastic. 
B)  The supply is perfectly inelastic. 
C)  The demand is perfectly elastic. 
D)  The demand is perfectly inelastic. 
A)  The supply is unit elastic. 
B)  The supply is perfectly inelastic. 
C)  The demand is perfectly elastic. 
D)  The demand is perfectly inelastic.

Question 3

What are the effects of a rent ceiling set below the equilibrium rent?

Accepted Answer

A rent ceiling is the maximum legal rent

Question 4

-The above figure shows the market for neckties after the government has imposed a tax. How much deadweight loss results from this tax?

Accepted Answer

A)  $250.00 
B)  $200.00 
C)  $150.00 
D)  $50.00 
A)  $250.00 
B)  $200.00 
C)  $150.00 
D)  $50.00

Question 5

-The table above shows the demand and supply schedules for milk in Cowland. A subsidy on milk of $1 per gallon is proposed and the government asks you to examine the effects of the subsidy.
a) Draw the demand and supply curves. If there is no subsidy, what is the price of milk and how many gallons are sold?
b) With the subsidy, what is the price that consumers pay? What is the price that sellers receive? How many gallons of milk are sold?
c) Assuming no external costs and benefits, what is the efficient level of milk production? Explain.
d) With the subsidy, what is the marginal social benefit from milk? What is the marginal social cost of milk? If the subsidy is introduced, will the level of production be efficient? Why or why not?

Accepted Answer

@#IMG-DLM& a) The figure above shows that with no

Question 6

The more elastic the demand for a good, the

Accepted Answer

A)  less a sales tax lowers the price paid by buyers. 
B)  more a sales tax lowers the price paid by buyers. 
C)  less a sales tax raises the price paid by buyers. 
D)  more a sales tax raises the price paid by buyers. 
A)  less a sales tax lowers the price paid by buyers. 
B)  more a sales tax lowers the price paid by buyers. 
C)  less a sales tax raises the price paid by buyers. 
D)  more a sales tax raises the price paid by buyers.

Question 7

-The market for unskilled labor is illustrated in the figure above. If a minimum wage of $5 per hour is imposed, an employer who breaks the law will be able to find a worker who is willing to work for

Accepted Answer

A)  less than or equal to $4 per hour. 
B)  between $4 and $5 per hour. 
C)  more than or equal to $5 per hour. 
D)  None of the above because workers are not willing to supply labor for wage rates less than $5 per hour. 
A)  less than or equal to $4 per hour. 
B)  between $4 and $5 per hour. 
C)  more than or equal to $5 per hour. 
D)  None of the above because workers are not willing to supply labor for wage rates less than $5 per hour.

Question 8

The government wants to increase its tax revenue and plans to implement an additional sales tax. The government will raise more tax revenue if it taxes a good with an ________ rather than a good with an ________.

Accepted Answer

A)  inelastic demand; elastic demand 
B)  elastic demand; inelastic demand 
C)  elastic supply; inelastic supply 
D)  None of the above answers is correct. 
A)  inelastic demand; elastic demand 
B)  elastic demand; inelastic demand 
C)  elastic supply; inelastic supply 
D)  None of the above answers is correct.

Question 9

In order for a price ceiling to have an effect on the market, must it be set above or below the equilibrium price? Why?

Accepted Answer

In order to have an effect, the price ce

Question 10

The amount of a tax paid by the buyers will be larger the

Accepted Answer

A)  more elastic the demand and the more inelastic the supply. 
B)  more inelastic the demand and the more elastic the supply. 
C)  more inelastic are both the supply and demand. 
D)  more elastic are both the supply and demand. 
A)  more elastic the demand and the more inelastic the supply. 
B)  more inelastic the demand and the more elastic the supply. 
C)  more inelastic are both the supply and demand. 
D)  more elastic are both the supply and demand.

Question 11

-A price floor

Accepted Answer

A)  always results in a surplus. 
B)  always results in a shortage. 
C)  results in a surplus if the floor price is higher than the equilibrium price. 
D)  results in a shortage if the floor price is higher than the equilibrium price. 
A)  always results in a surplus. 
B)  always results in a shortage. 
C)  results in a surplus if the floor price is higher than the equilibrium price. 
D)  results in a shortage if the floor price is higher than the equilibrium price.

Question 12

"Farm subsidies in the European Union spill over to the rest of the world." Explain this assertion.

Accepted Answer

Farm subsidies in the European Union low

Question 13

Suppose penalties are imposed on both buyers and sellers of marijuana, but the cost of breaking the law to sellers is greater than that to buyers. This measure will ________ the equilibrium price of marijuana and ________ the equilibrium quantity of marijuana sold.

Accepted Answer

A)  lower; increase 
B)  raise; increase 
C)  raise; decrease 
D)  not change; will decrease 
A)  lower; increase 
B)  raise; increase 
C)  raise; decrease 
D)  not change; will decrease

Question 14

Why would an increase in the minimum wage to $15 per hour lead to more unemployment for teenage and low-skilled workers?

Accepted Answer

Many teenage and low-skilled workers ear

Question 15

-The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $500 per month, the rent ceiling will help

Accepted Answer

A)  all renters. 
B)  some renters and hurt other renters. 
C)  all landlords. 
D)  some landlords and hurt other landlords. 
A)  all renters. 
B)  some renters and hurt other renters. 
C)  all landlords. 
D)  some landlords and hurt other landlords.

Question 16

-The table above shows the demand and supply schedules for the market for coffee in Roastville. A tax on coffee of 75 cents per pound is proposed and the local government asks you to examine the effects of the tax.
a) Draw the demand and supply curves. If there is no tax on coffee, what is the price and how many pounds are sold?
b) With the tax, what is the price that consumers pay? What is the price that sellers receive? How many pounds of coffee are sold?
c) What is the government's total tax revenue? How much of the 75¢ per pound tax is paid by buyers? How much is paid by sellers?
d) If there are no external costs and benefits, what is the efficient level of coffee production?
e) If the tax is imposed, will the level of production be efficient? Why or why not?

Accepted Answer

@#IMG-DLM& a) The figure is above. With no tax, th

Question 17

-If policy makers believe that the equilibrium wage rate is too low, policy makers can raise wages by legislating a minimum wage, that is, a wage

Accepted Answer

A)  ceiling above the equilibrium wage. 
B)  ceiling below the equilibrium wage. 
C)  floor above the equilibrium wage. 
D)  floor below the equilibrium wage. 
A)  ceiling above the equilibrium wage. 
B)  ceiling below the equilibrium wage. 
C)  floor above the equilibrium wage. 
D)  floor below the equilibrium wage.

Question 18

A sales tax on sellers of a good shifts the demand curve leftward because the tax raises the price that consumers must pay.

Accepted Answer

A) True 
 B)False

Question 19

-The figure above illustrates the current market for apartments in Washington, D.C.
a) If the local government imposes a price ceiling of $1,500 per month, is there a shortage? If so, how much, if not, why not?
b) If the local government imposes a price ceiling of $900 per month, is there a shortage? If so, how much, if not, why not?

Accepted Answer

a) There is not a shortage. The equilibr

Question 20

-The figure above shows the housing market in the city of Appleville. A rent ceiling of $650 per month is imposed. With the rent ceiling, the deadweight loss in the Appleville housing market is

Accepted Answer

A)  zero. 
B)  at least $15,000 per month. 
C)  at most $7,500 per month. 
D)  300 units per month. 
A)  zero. 
B)  at least $15,000 per month. 
C)  at most $7,500 per month. 
D)  300 units per month.

Exam 6: Government Actions in Markets

-In the above figure, a rent ceiling of $500 per month would

Which of the following leads to the demanders paying all of a tax?

What are the effects of a rent ceiling set below the equilibrium rent?

-The above figure shows the market for neckties after the government has imposed a tax. How much deadweight loss results from this tax?

The more elastic the demand for a good, the

-The market for unskilled labor is illustrated in the figure above. If a minimum wage of $5 per hour is imposed, an employer who breaks the law will be able to find a worker who is willing to work for

The government wants to increase its tax revenue and plans to implement an additional sales tax. The government will raise more tax revenue if it taxes a good with an ________ rather than a good with an ________.

In order for a price ceiling to have an effect on the market, must it be set above or below the equilibrium price? Why?

The amount of a tax paid by the buyers will be larger the

-A price floor

"Farm subsidies in the European Union spill over to the rest of the world." Explain this assertion.

Suppose penalties are imposed on both buyers and sellers of marijuana, but the cost of breaking the law to sellers is greater than that to buyers. This measure will ________ the equilibrium price of marijuana and ________ the equilibrium quantity of marijuana sold.

Why would an increase in the minimum wage to $15 per hour lead to more unemployment for teenage and low-skilled workers?

-The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $500 per month, the rent ceiling will help

-If policy makers believe that the equilibrium wage rate is too low, policy makers can raise wages by legislating a minimum wage, that is, a wage

A sales tax on sellers of a good shifts the demand curve leftward because the tax raises the price that consumers must pay.

-The figure above shows the housing market in the city of Appleville. A rent ceiling of $650 per month is imposed. With the rent ceiling, the deadweight loss in the Appleville housing market 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

The government wants to increase its tax revenue and plans to implement an additional sales tax. The government will raise more tax revenue if it taxes a good with an rather than a good with an .

Suppose penalties are imposed on both buyers and sellers of marijuana, but the cost of breaking the law to sellers is greater than that to buyers. This measure will the equilibrium price of marijuana and the equilibrium quantity of marijuana sold.