Question 1

If a tax is imposed on buyers in a market in which supply is perfectly inelastic, the

Accepted Answer

A)  buyers pay the entire tax. 
B)  sellers pay the entire tax. 
C)  buyers and the sellers both pay a portion of the tax. 
D)  neither the buyers nor the sellers pay the tax. 
A)  buyers pay the entire tax. 
B)  sellers pay the entire tax. 
C)  buyers and the sellers both pay a portion of the tax. 
D)  neither the buyers nor the sellers pay the tax.

Question 2

-In a supply and demand diagram, illustrate a price floor that affects the market's price and quantity and a price floor that has no effect on the price and quantity.

Accepted Answer

@#IMG-DLM& The figure above shows a price floor th

Question 3

To try to help farmers, governments I. set production quotas.
II) set price ceilings.

Accepted Answer

A)  I and II 
B)  only II 
C)  only I 
D)  neither I nor II 
A)  I and II 
B)  only II 
C)  only I 
D)  neither I nor II

Question 4

-The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be tax revenue?

Accepted Answer

A)  less than $18 
B)  $18 
C)  more than $18 
D)  More information is needed to determine if the tax revenue is more than, less than, or equal to $18. 
A)  less than $18 
B)  $18 
C)  more than $18 
D)  More information is needed to determine if the tax revenue is more than, less than, or equal to $18.

Question 5

-Suppose the government has declared beer to be an illegal substance and imposes a fine on anyone caught buying a beer. Selling 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 6

-In the above figure, what is the amount of the tax per compact disc?

Accepted Answer

A)  $10 
B)  $20 
C)  $30 
D)  $40 
A)  $10 
B)  $20 
C)  $30 
D)  $40

Question 7

What is search activity and how does it influence consumer surplus when a rent ceiling creates a housing shortage?

Accepted Answer

Search activity is the time spent lookin

Question 8

A rent ceiling below the equilibrium rent will create

Accepted Answer

A)  a more efficient allocation of housing. 
B)  a larger number of apartments rented. 
C)  no change in the number of apartments rented. 
D)  increased search time and black markets. 
A)  a more efficient allocation of housing. 
B)  a larger number of apartments rented. 
C)  no change in the number of apartments rented. 
D)  increased search time and black markets.

Question 9

If the elasticity of supply of labor is low and the elasticity of demand for labor is high, then workers pay most of the Social Security tax levied on labor.

Accepted Answer

A) True 
 B)False

Question 10

-The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. How much tax revenue does the government raise from this tax?

Accepted Answer

A)  $2,000 
B)  $3,000 
C)  $4,000 
D)  $6,000 
A)  $2,000 
B)  $3,000 
C)  $4,000 
D)  $6,000

Question 11

The stricter the enforcement of a price ceiling, the

Accepted Answer

A)  smaller is the difference between the black market price and the legal market price of the good. 
B)  larger is the difference between the black market price and the legal market price of the good. 
C)  greater is the amount of the good available in total, from either the legal market or the black market. 
D)  Both answers B and C are correct. 
A)  smaller is the difference between the black market price and the legal market price of the good. 
B)  larger is the difference between the black market price and the legal market price of the good. 
C)  greater is the amount of the good available in total, from either the legal market or the black market. 
D)  Both answers B and C are correct.

Question 12

The federal government pays airlines to service small cities in the United States through a subsidy program called Essential Air Service which was established in 1978 when the airline industry was deregulated. Most subsidies can't exceed $200 per passenger. Without this subsidy, what is true?

Accepted Answer

A)  There would be higher prices and fewer flights. 
B)  There would be lower prices and fewer flights. 
C)  There would be an increase in supply. 
D)  There would be a decrease in demand. 
A)  There would be higher prices and fewer flights. 
B)  There would be lower prices and fewer flights. 
C)  There would be an increase in supply. 
D)  There would be a decrease in demand.

Question 13

-The above figure illustrates the labor market for fast food restaurants in a small city in Peru. What would be the effects of a minimum wage imposed at $4 per hour?

Accepted Answer

A)  a shortage of 200 hours 
B)  a shortage of 100 hours 
C)  a surplus of 200 hours 
D)  nothing because the minimum wage has no effect on the equilibrium price and quantity 
A)  a shortage of 200 hours 
B)  a shortage of 100 hours 
C)  a surplus of 200 hours 
D)  nothing because the minimum wage has no effect on the equilibrium price and quantity

Question 14

If the government decreases the tax on cell phones, ________.

Accepted Answer

A)  the deadweight loss decreases 
B)  the consumer surplus does not change because sellers will not lower the price of a cell phone 
C)  the number of cell phones purchased does not change 
D)  the market becomes less efficient because the government collects less tax revenue 
A)  the deadweight loss decreases 
B)  the consumer surplus does not change because sellers will not lower the price of a cell phone 
C)  the number of cell phones purchased does not change 
D)  the market becomes less efficient because the government collects less tax revenue

Question 15

A sales tax is divided so that the

Accepted Answer

A)  buyers pay the full amount if demand is perfectly elastic. 
B)  buyers pay the full amount if supply is perfectly inelastic. 
C)  sellers pay the full amount if supply is perfectly elastic. 
D)  sellers pay the full amount if demand is perfectly elastic. 
A)  buyers pay the full amount if demand is perfectly elastic. 
B)  buyers pay the full amount if supply is perfectly inelastic. 
C)  sellers pay the full amount if supply is perfectly elastic. 
D)  sellers pay the full amount if demand is perfectly elastic.

Question 16

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, how many apartment units are rented?

Accepted Answer

A)  2,000 
B)  3,000 
C)  4,000 
D)  None of the above answers is correct. 
A)  2,000 
B)  3,000 
C)  4,000 
D)  None of the above answers is correct.

Question 17

-In the table above, the market is in equilibrium. Then a minimum wage is set at $11 per hour. The number of unemployed workers will be

Accepted Answer

A)  0. 
B)  2 million. 
C)  4 million. 
D)  6 million. 
A)  0. 
B)  2 million. 
C)  4 million. 
D)  6 million.

Question 18

Suppose the demand for saline solution is perfectly inelastic for contact lens wearers. If the government imposes a tax on saline solution, what occurs? Be sure to tell what happens to the price paid by the buyers and discuss the incidence of the tax.

Accepted Answer

If demand is perfectly inelastic, then n

Question 19

-The above figure shows the labor market in an undeveloped nation. If the minimum wage is set at $5.00 per hour, what effect will it have on the market for low-skilled labor?

Accepted Answer

A)  The minimum wage will have no effect when set above the equilibrium wage rate. 
B)  The minimum wage will create a surplus of low-skilled labor. 
C)  The minimum wage will create a shortage of low-skilled labor. 
D)  The minimum wage will attract more labor to the low-skilled labor market and cause the wage rate to fall. 
A)  The minimum wage will have no effect when set above the equilibrium wage rate. 
B)  The minimum wage will create a surplus of low-skilled labor. 
C)  The minimum wage will create a shortage of low-skilled labor. 
D)  The minimum wage will attract more labor to the low-skilled labor market and cause the wage rate to fall.

Question 20

-In the above figure, CBL is the cost of breaking the law. If it is illegal to sell, but not illegal to buy, then the price per unit will be

Accepted Answer

A)  $500. 
B)  $400. 
C)  $300. 
D)  $200. 
A)  $500. 
B)  $400. 
C)  $300. 
D)  $200.

Exam 6: Government Actions in Markets

If a tax is imposed on buyers in a market in which supply is perfectly inelastic, the

-In a supply and demand diagram, illustrate a price floor that affects the market's price and quantity and a price floor that has no effect on the price and quantity.

To try to help farmers, governments I. set production quotas. II) set price ceilings.

-The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be tax revenue?

-Suppose the government has declared beer to be an illegal substance and imposes a fine on anyone caught buying a beer. Selling 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?

-In the above figure, what is the amount of the tax per compact disc?

What is search activity and how does it influence consumer surplus when a rent ceiling creates a housing shortage?

A rent ceiling below the equilibrium rent will create

If the elasticity of supply of labor is low and the elasticity of demand for labor is high, then workers pay most of the Social Security tax levied on labor.

-The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. How much tax revenue does the government raise from this tax?

The stricter the enforcement of a price ceiling, the

The federal government pays airlines to service small cities in the United States through a subsidy program called Essential Air Service which was established in 1978 when the airline industry was deregulated. Most subsidies can't exceed $200 per passenger. Without this subsidy, what is true?

-The above figure illustrates the labor market for fast food restaurants in a small city in Peru. What would be the effects of a minimum wage imposed at $4 per hour?

If the government decreases the tax on cell phones, ________.

A sales tax is divided so that the

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, how many apartment units are rented?

-In the table above, the market is in equilibrium. Then a minimum wage is set at $11 per hour. The number of unemployed workers will be

Suppose the demand for saline solution is perfectly inelastic for contact lens wearers. If the government imposes a tax on saline solution, what occurs? Be sure to tell what happens to the price paid by the buyers and discuss the incidence of the tax.

-The above figure shows the labor market in an undeveloped nation. If the minimum wage is set at $5.00 per hour, what effect will it have on the market for low-skilled labor?

-In the above figure, CBL is the cost of breaking the law. If it is illegal to sell, but not illegal to buy, then the price per unit 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

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