Question 1

If enforcement of the law is aimed at buyers of an illegal good,the result will be

Accepted Answer

A) an increase in the supply of the good. 
B) a decrease in the supply of the good. 
C) a decrease in the demand for the good. 
D) a rise in the price of the good. 
E) no change in the equilibrium quantity. 
A) an increase in the supply of the good. 
B) a decrease in the supply of the good. 
C) a decrease in the demand for the good. 
D) a rise in the price of the good. 
E) no change in the equilibrium quantity. C

Question 2

If enforcement is aimed at sellers of an illegal good,the

Accepted Answer

A) price and quantity bought decrease. 
B) price and quantity bought increase. 
C) price rises and quantity bought decreases. 
D) price falls and quantity bought increases. 
E) price change is uncertain and quantity bought decreases. 
A) price and quantity bought decrease. 
B) price and quantity bought increase. 
C) price rises and quantity bought decreases. 
D) price falls and quantity bought increases. 
E) price change is uncertain and quantity bought decreases. C

Question 3

The burden of the tax on buyers is greater the more
(1) elastic is demand
(2) inelastic is demand
(3) elastic is supply
(4) inelastic is supply

Accepted Answer

A) (2)only 
B) (1)and (3) 
C) (1)and (4) 
D) (2)and (3) 
E) (2)and (4) 
A) (2)only 
B) (1)and (3) 
C) (1)and (4) 
D) (2)and (3) 
E) (2)and (4) D

Question 4

The burden of tax on sellers is greater the more
(1) elastic is demand
(2) inelastic is demand
(3) elastic is supply
(4) inelastic is supply

Accepted Answer

A) (2)only 
B) (1)and (3) 
C) (1)and (4) 
D) (2)and (3) 
E) (2)and (4) 
A) (2)only 
B) (1)and (3) 
C) (1)and (4) 
D) (2)and (3) 
E) (2)and (4)

Question 5

When a price ceiling is set below the equilibrium price,

Accepted Answer

A) the demand curve shifts leftward. 
B) the quantity supplied exceeds the quantity demanded. 
C) the quantity supplied equals the quantity demanded. 
D) the supply curve shifts rightward. 
E) the quantity demanded exceeds the quantity supplied. 
A) the demand curve shifts leftward. 
B) the quantity supplied exceeds the quantity demanded. 
C) the quantity supplied equals the quantity demanded. 
D) the supply curve shifts rightward. 
E) the quantity demanded exceeds the quantity supplied.

Question 6

A production quota is set below the equilibrium quantity.At the quota quantity,marginal social benefit is ________ marginal social cost and the level of production is ________.

Accepted Answer

A) less than;efficient 
B) greater than;efficient 
C) less than;inefficient 
D) equal to;efficient 
A) less than;efficient 
B) greater than;efficient 
C) less than;inefficient 
D) equal to;efficient

Question 7

If the supply of a good is perfectly inelastic,then a tax on the good will be paid

Accepted Answer

A) completely by the buyers. 
B) completely by the sellers. 
C) equally by the buyers and sellers. 
D) mostly but not completely by the buyers. 
E) mostly but not completely by the sellers. 
A) completely by the buyers. 
B) completely by the sellers. 
C) equally by the buyers and sellers. 
D) mostly but not completely by the buyers. 
E) mostly but not completely by the sellers.

Question 8

A production quota

Accepted Answer

A) is a lower limit to the quantity of a good that can be produced in a specified period. 
B) is an upper limit to the quantity of a good that can be produced in a specified period. 
C) is a payment made by a consumer to a producer. 
D) is a payment made by a producer to a consumer. 
E) is a payment made by the government to a producer. 
A) is a lower limit to the quantity of a good that can be produced in a specified period. 
B) is an upper limit to the quantity of a good that can be produced in a specified period. 
C) is a payment made by a consumer to a producer. 
D) is a payment made by a producer to a consumer. 
E) is a payment made by the government to a producer.

Question 9

Use the table below to answer the following questions.
Table 6.3.1
  
-Refer to Table 6.3.1.Suppose a sales tax of $2 a unit is imposed on the good described in the table.The new price paid by consumers is $ ________ and ________ units are sold.

Accepted Answer

A) $6;400 
B) $7;700 
C) $7;500 
D) $6.50;500 
E) $6.50;700 
A) $6;400 
B) $7;700 
C) $7;500 
D) $6.50;500 
E) $6.50;700

Question 10

Use the figure below to answer the following questions.
   
Figure 6.1.1
-Refer to Figure 6.1.1.Suppose the demand for rental housing is shown by demand curve D?,and there is a rent ceiling of $150 per room.What is the highest amount that would be expended on search activity?

Accepted Answer

A) $200. 
B) $150. 
C) $100. 
D) $50. 
E) $0. 
A) $200. 
B) $150. 
C) $100. 
D) $50. 
E) $0.

Question 11

If the government imposes a maximum rent for housing that is above the equilibrium price,then you predict that

Accepted Answer

A) the law will have no effect in the market for housing. 
B) the law will generate a shortage of housing. 
C) the law will create a surplus of housing. 
D) the demand curve for housing shifts rightward. 
E) the supply curve of housing shifts leftward. 
A) the law will have no effect in the market for housing. 
B) the law will generate a shortage of housing. 
C) the law will create a surplus of housing. 
D) the demand curve for housing shifts rightward. 
E) the supply curve of housing shifts leftward.

Question 12

Use the figure below to answer the following questions.
   
Figure 6.3.1
-Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.On each frisbee,the sellers' share of the tax is

Accepted Answer

A) $0.40. 
B) $0.60. 
C) $1.00. 
D) $5.60. 
E) $6.60. 
A) $0.40. 
B) $0.60. 
C) $1.00. 
D) $5.60. 
E) $6.60.

Question 13

Which one of the following is likely to be the outcome of a rent ceiling imposed below the equilibrium rent?

Accepted Answer

A) a black market for rent-controlled housing 
B) long waiting lists of potential suppliers for rent-controlled housing 
C) a surplus of housing 
D) no search activity 
E) Both A and B are correct. 
A) a black market for rent-controlled housing 
B) long waiting lists of potential suppliers for rent-controlled housing 
C) a surplus of housing 
D) no search activity 
E) Both A and B are correct.

Question 14

Use the figure below to answer the following questions.
   
Figure 6.3.1
-Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.On each frisbee,the buyers' share of the tax is

Accepted Answer

A) $0.40. 
B) $0.60. 
C) $1.00. 
D) $5.60. 
E) $6.60. 
A) $0.40. 
B) $0.60. 
C) $1.00. 
D) $5.60. 
E) $6.60.

Question 15

Use the figure below to answer the following questions.
   
Figure 6.1.1
-Consider the market for rental housing illustrated in Figure 6.1.1 when the demand curve is D?.The equilibrium in an unregulated market is

Accepted Answer

A) 1,500 rooms rented at $150 a month. 
B) 1,500 rooms rented at $200 a month. 
C) 1,750 rooms rented at $175 a month. 
D) 1,750 rooms rented at $200 a month. 
E) 2,000 rooms rented at $150 a month. 
A) 1,500 rooms rented at $150 a month. 
B) 1,500 rooms rented at $200 a month. 
C) 1,750 rooms rented at $175 a month. 
D) 1,750 rooms rented at $200 a month. 
E) 2,000 rooms rented at $150 a month.

Question 16

Suppose the government introduces a ceiling on the fees that lawyers are permitted to charge.If the fee ceiling is set ________ the equilibrium wage rate,the amount of work done by lawyers ________,the consumer surplus of people who hire lawyers ________,and the producer surplus of law firms ________.

Accepted Answer

A) below;increases;increases;increases 
B) above;decreases;decreases;decreases 
C) below;decreases;decreases;decreases 
D) above;increases;increases;increases 
E) below;decreases;increases;decreases 
A) below;increases;increases;increases 
B) above;decreases;decreases;decreases 
C) below;decreases;decreases;decreases 
D) above;increases;increases;increases 
E) below;decreases;increases;decreases

Question 17

When a sales tax is imposed on sellers,the supply curve shifts so that the vertical distance between the original supply curve and supply plus tax curve equals the

Accepted Answer

A) sales tax multiplied by the price elasticity of demand. 
B) sales tax multiplied by the price elasticity of supply. 
C) sales tax divided by the price elasticity of demand. 
D) amount of the sales tax per unit. 
E) sales tax divided by the price elasticity of supply. 
A) sales tax multiplied by the price elasticity of demand. 
B) sales tax multiplied by the price elasticity of supply. 
C) sales tax divided by the price elasticity of demand. 
D) amount of the sales tax per unit. 
E) sales tax divided by the price elasticity of supply.

Question 18

Which one of the following statements about illegal goods is true?

Accepted Answer

A) Taxes are more effective in changing preferences than prohibition. 
B) Prohibition is more effective in generating revenue than an equivalent tax. 
C) Taxes and penalties cannot be set to yield equivalent outcomes. 
D) Taxes generate revenues while prohibition sends a signal that might influence preferences. 
E) none of the above 
A) Taxes are more effective in changing preferences than prohibition. 
B) Prohibition is more effective in generating revenue than an equivalent tax. 
C) Taxes and penalties cannot be set to yield equivalent outcomes. 
D) Taxes generate revenues while prohibition sends a signal that might influence preferences. 
E) none of the above

Question 19

Use the figure below to answer the following questions.
   
Figure 6.3.3
-Refer to Figure 6.3.3.Suppose a tax of $1 is imposed.In which market would the seller pay the highest portion of the tax?

Accepted Answer

A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) all markets equally 
A) (a) 
B) (b) 
C) (c) 
D) (d) 
E) all markets equally

Question 20

Daisy and Donald live in a community with rent ceilings.Both are looking for an apartment to rent.Daisy has a job paying $10 per hour and Donald has a job paying $8 per hour.Both value an apartment equally.What is the most likely outcome?

Accepted Answer

A) Daisy will spend more time than Donald searching for an apartment. 
B) Donald will spend more time than Daisy searching for an apartment. 
C) Both of them will spend the same amount of time searching for an apartment. 
D) Daisy will find the apartment. 
E) Donald will find the apartment. 
A) Daisy will spend more time than Donald searching for an apartment. 
B) Donald will spend more time than Daisy searching for an apartment. 
C) Both of them will spend the same amount of time searching for an apartment. 
D) Daisy will find the apartment. 
E) Donald will find the apartment.

Exam 6: Government Actions in Markets

If enforcement of the law is aimed at buyers of an illegal good,the result will be

If enforcement is aimed at sellers of an illegal good,the

The burden of the tax on buyers is greater the more (1) elastic is demand (2) inelastic is demand (3) elastic is supply (4) inelastic is supply

The burden of tax on sellers is greater the more (1) elastic is demand (2) inelastic is demand (3) elastic is supply (4) inelastic is supply

When a price ceiling is set below the equilibrium price,

A production quota is set below the equilibrium quantity.At the quota quantity,marginal social benefit is ________ marginal social cost and the level of production is ________.

If the supply of a good is perfectly inelastic,then a tax on the good will be paid

A production quota

Use the table below to answer the following questions. Table 6.3.1 -Refer to Table 6.3.1.Suppose a sales tax of $2 a unit is imposed on the good described in the table.The new price paid by consumers is $ ________ and ________ units are sold.

Use the figure below to answer the following questions. Figure 6.1.1 -Refer to Figure 6.1.1.Suppose the demand for rental housing is shown by demand curve D?,and there is a rent ceiling of $150 per room.What is the highest amount that would be expended on search activity?

If the government imposes a maximum rent for housing that is above the equilibrium price,then you predict that

Use the figure below to answer the following questions. Figure 6.3.1 -Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.On each frisbee,the sellers' share of the tax is

Which one of the following is likely to be the outcome of a rent ceiling imposed below the equilibrium rent?

Use the figure below to answer the following questions. Figure 6.3.1 -Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.On each frisbee,the buyers' share of the tax is

Use the figure below to answer the following questions. Figure 6.1.1 -Consider the market for rental housing illustrated in Figure 6.1.1 when the demand curve is D?.The equilibrium in an unregulated market is

When a sales tax is imposed on sellers,the supply curve shifts so that the vertical distance between the original supply curve and supply plus tax curve equals the

Which one of the following statements about illegal goods is true?

Use the figure below to answer the following questions. Figure 6.3.3 -Refer to Figure 6.3.3.Suppose a tax of $1 is imposed.In which market would the seller pay the highest portion of the tax?

Daisy and Donald live in a community with rent ceilings.Both are looking for an apartment to rent.Daisy has a job paying $10 per hour and Donald has a job paying $8 per hour.Both value an apartment equally.What is the most likely outcome?

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

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

A production quota is set below the equilibrium quantity.At the quota quantity,marginal social benefit is marginal social cost and the level of production is .

Use the table below to answer the following questions. Table 6.3.1 -Refer to Table 6.3.1.Suppose a sales tax of $2 a unit is imposed on the good described in the table.The new price paid by consumers is $ and units are sold.