Question 1

A tax imposed on buyers raises the price of the good more than would the same tax if it was imposed on sellers.

Accepted Answer

A) True 
 B)False

Question 2

In the market for books, initially there are no taxes on books. Books are normal goods. The government introduces a tax of $4 a book and, at the same time, people's income fall by $4,000 a year. Following these two changes, the equilibrium quantity of books

Accepted Answer

A)  decreases. 
B)  increases. 
C)  remains unchanged. 
D)  either increases or decreases. We cannot say which. 
A)  decreases. 
B)  increases. 
C)  remains unchanged. 
D)  either increases or decreases. We cannot say which.

Question 3

-When the minimum wage is set above the equilibrium wage rate, the number of hours of labor employed is determined by the ________ and the ________.

Accepted Answer

A)  supply of labor; minimum wage 
B)  demand for labor; supply of labor 
C)  supply of and demand for labor; the minimum wage 
D)  demand for labor; minimum wage 
A)  supply of labor; minimum wage 
B)  demand for labor; supply of labor 
C)  supply of and demand for labor; the minimum wage 
D)  demand for labor; minimum wage

Question 4

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. With the tax, the price of salt paid by buyers in Healthyland is

Accepted Answer

A)  $0.40 per pound. 
B)  $0.45 per pound. 
C)  $0.35 per pound. 
D)  $0.50 per pound. 
A)  $0.40 per pound. 
B)  $0.45 per pound. 
C)  $0.35 per pound. 
D)  $0.50 per pound.

Question 5

"A price floor that is less than the equilibrium price leads to a shortage of the good." Is this assertion true or false? Explain your answer.

Accepted Answer

The assertion is False. A price floor is

Question 6

A rent ceiling results in a shortage. As a result, which of the following do you expect?

Accepted Answer

A)  The shortage will persist as long as the ceiling is in effect. 
B)  Discrimination as landlords choose their tenants, possibly based on race, age, or gender. 
C)  A black market for apartments whereby higher rents are obtained through various other charges. 
D)  All of the above would be expected. 
A)  The shortage will persist as long as the ceiling is in effect. 
B)  Discrimination as landlords choose their tenants, possibly based on race, age, or gender. 
C)  A black market for apartments whereby higher rents are obtained through various other charges. 
D)  All of the above would be expected.

Question 7

Which would be a better source of tax revenue for the government, a good with elastic or a good with an inelastic demand? Explain your reasoning.

Accepted Answer

Inelastic goods are better sources of ta

Question 8

A good has a perfectly inelastic supply and a downward sloping demand curve. Imposing a sales tax of $1 per unit on the sellers of the good

Accepted Answer

A)  raises the price paid by demanders by more than $1.00. 
B)  raises the price paid by demanders by $1.00. 
C)  raises the price paid by demanders by less than $1.00. 
D)  does not change the price paid by demanders. 
A)  raises the price paid by demanders by more than $1.00. 
B)  raises the price paid by demanders by $1.00. 
C)  raises the price paid by demanders by less than $1.00. 
D)  does not change the price paid by demanders.

Question 9

When a rent ceiling is imposed in a housing market, the opportunity cost of housing equals the

Accepted Answer

A)  rent. 
B)  market equilibrium rent that would prevail in the absence of a rent ceiling. 
C)  value of the time and resources spent searching plus the rent. 
D)  consumer surplus. 
A)  rent. 
B)  market equilibrium rent that would prevail in the absence of a rent ceiling. 
C)  value of the time and resources spent searching plus the rent. 
D)  consumer surplus.

Question 10

If the government makes a good illegal and then imposes stiffer penalties on illegal drug buyers than on sellers, the price of the good ________ and the quantity ________.

Accepted Answer

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

Question 11

Rent controls and the minimum wage are both examples of price ceilings.

Accepted Answer

A) True 
 B)False

Question 12

-In the above figure, if the minimum wage is set at $6 per hour, what quantity of labor is employed?

Accepted Answer

A)  100 million hours 
B)  200 million hours 
C)  300 million hours 
D)  400 million hours 
A)  100 million hours 
B)  200 million hours 
C)  300 million hours 
D)  400 million hours

Question 13

-In the above figure, the deadweight loss due to the tax is

Accepted Answer

A)  $1,000. 
B)  $2,000. 
C)  $4,000. 
D)  $8,000. 
A)  $1,000. 
B)  $2,000. 
C)  $4,000. 
D)  $8,000.

Question 14

-The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $1,000 per month, the ceiling will

Accepted Answer

A)  help all renters. 
B)  help some renters and hurt other renters. 
C)  help all landlords. 
D)  have no effect at all on the Bigtown rental market. 
A)  help all renters. 
B)  help some renters and hurt other renters. 
C)  help all landlords. 
D)  have no effect at all on the Bigtown rental market.

Question 15

-In the above figure, the imposition of a $0.25 sales tax on sellers will

Accepted Answer

A)  raise the market price paid by buyers of hotdogs by $0.25. 
B)  lower the market price paid by buyers of hotdogs by $0.25. 
C)  raise the market price paid by buyers of hotdogs by $0.125. 
D)  have no effect on the market price of hot dogs. 
A)  raise the market price paid by buyers of hotdogs by $0.25. 
B)  lower the market price paid by buyers of hotdogs by $0.25. 
C)  raise the market price paid by buyers of hotdogs by $0.125. 
D)  have no effect on the market price of hot dogs.

Question 16

-When a minimum wage is set above the equilibrium wage rate, ________.

Accepted Answer

A)  the supply of low-skilled workers decreases and the supply curve shifts rightward 
B)  unemployment increases 
C)  search activity decreases 
D)  the supply of low-skilled workers increases and the supply curve shifts leftward 
A)  the supply of low-skilled workers decreases and the supply curve shifts rightward 
B)  unemployment increases 
C)  search activity decreases 
D)  the supply of low-skilled workers increases and the supply curve shifts leftward

Question 17

A rent ceiling set above the equilibrium rent efficiently allocates resources in the housing market.

Accepted Answer

A) True 
 B)False

Question 18

What is a minimum wage? What are the effects of a minimum wage set below the equilibrium wage rate?

Accepted Answer

A minimum wage is a regulation that make

Question 19

-The table above gives the demand and supply schedules for the housing market in a small town. If a rent ceiling of $200 a month is imposed, what is the quantity demanded, the quantity supplied, and the shortage of housing?

Accepted Answer

The quantity demanded is 350 u

Question 20

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

Accepted Answer

A)  $1,000,000. 
B)  $500,000. 
C)  $250,000. 
D)  $125,000. 
A)  $1,000,000. 
B)  $500,000. 
C)  $250,000. 
D)  $125,000.

Exam 6: Government Actions in Markets

A tax imposed on buyers raises the price of the good more than would the same tax if it was imposed on sellers.

In the market for books, initially there are no taxes on books. Books are normal goods. The government introduces a tax of $4 a book and, at the same time, people's income fall by $4,000 a year. Following these two changes, the equilibrium quantity of books

-When the minimum wage is set above the equilibrium wage rate, the number of hours of labor employed is determined by the ________ and the ________.

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. With the tax, the price of salt paid by buyers in Healthyland is

"A price floor that is less than the equilibrium price leads to a shortage of the good." Is this assertion true or false? Explain your answer.

A rent ceiling results in a shortage. As a result, which of the following do you expect?

Which would be a better source of tax revenue for the government, a good with elastic or a good with an inelastic demand? Explain your reasoning.

A good has a perfectly inelastic supply and a downward sloping demand curve. Imposing a sales tax of $1 per unit on the sellers of the good

When a rent ceiling is imposed in a housing market, the opportunity cost of housing equals the

If the government makes a good illegal and then imposes stiffer penalties on illegal drug buyers than on sellers, the price of the good ________ and the quantity ________.

Rent controls and the minimum wage are both examples of price ceilings.

-In the above figure, if the minimum wage is set at $6 per hour, what quantity of labor is employed?

-In the above figure, the deadweight loss due to the tax is

-The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $1,000 per month, the ceiling will

-In the above figure, the imposition of a $0.25 sales tax on sellers will

-When a minimum wage is set above the equilibrium wage rate, ________.

A rent ceiling set above the equilibrium rent efficiently allocates resources in the housing market.

What is a minimum wage? What are the effects of a minimum wage set below the equilibrium wage rate?

-The table above gives the demand and supply schedules for the housing market in a small town. If a rent ceiling of $200 a month is imposed, what is the quantity demanded, the quantity supplied, and the shortage of housing?

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

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

-When the minimum wage is set above the equilibrium wage rate, the number of hours of labor employed is determined by the and the .

If the government makes a good illegal and then imposes stiffer penalties on illegal drug buyers than on sellers, the price of the good and the quantity .