Question 1

If enforcement is aimed at buyers 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.

Question 2

Use the figure below to answer the following questions.
   
Figure 6.1.2
-Refer to Figure 6.1.2.If a rigorously enforced price ceiling is set at $10,then

Accepted Answer

A) 100 units will be sold at a price of $20 each. 
B) 100 units will be sold at a price of $15 each. 
C) 150 units will be sold at a price of $15 each. 
D) 200 units will be sold at a price of $10 each. 
E) 100 units will be sold at a price of $10 each. 
A) 100 units will be sold at a price of $20 each. 
B) 100 units will be sold at a price of $15 each. 
C) 150 units will be sold at a price of $15 each. 
D) 200 units will be sold at a price of $10 each. 
E) 100 units will be sold at a price of $10 each.

Question 3

Use the figure below to answer the following questions.
   
Figure 6.1.2
-Refer to Figure 6.1.2.What would be the maximum black market price of the good if a price ceiling is set at $10 a unit?

Accepted Answer

A) $10 
B) $15 
C) $20 
D) 50 goods sold at $10 and 50 goods sold at $20 
E) 50 goods sold at $10 and 50 goods sold at $15 
A) $10 
B) $15 
C) $20 
D) 50 goods sold at $10 and 50 goods sold at $20 
E) 50 goods sold at $10 and 50 goods sold at $15

Question 4

Use the table below to answer the following questions.
Table 6.2.1
  
-Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.In an unregulated market,

Accepted Answer

A) there is no teenage unemployment and the wage rate is $6 per hour. 
B) there is no teenage unemployment and the wage rate is $5 per hour. 
C) teenage unemployment is 400 hours and the wage rate is $6 per hour. 
D) teenage unemployment is 400 hours and the wage rate is $5 per hour. 
E) the minimum wage is $7 per hour. 
A) there is no teenage unemployment and the wage rate is $6 per hour. 
B) there is no teenage unemployment and the wage rate is $5 per hour. 
C) teenage unemployment is 400 hours and the wage rate is $6 per hour. 
D) teenage unemployment is 400 hours and the wage rate is $5 per hour. 
E) the minimum wage is $7 per hour.

Question 5

A $10 per-unit tax on MP3 players raises the equilibrium price paid by consumers by $5.The quantity sold before the tax was 5,000 per year.The revenue from the tax is

Accepted Answer

A) zero. 
B) positive but less than $50,000 per year. 
C) $50,000 per year. 
D) more than $50,000 per year. 
E) greater the more elastic is demand. 
A) zero. 
B) positive but less than $50,000 per year. 
C) $50,000 per year. 
D) more than $50,000 per year. 
E) greater the more elastic is demand.

Question 6

The ________ principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by government.
The ________ principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.

Accepted Answer

A) benefits;ability-to-pay 
B) equality;fairness 
C) services;burden 
D) ability-to-pay;benefits 
E) efficient;inefficient 
A) benefits;ability-to-pay 
B) equality;fairness 
C) services;burden 
D) ability-to-pay;benefits 
E) efficient;inefficient

Question 7

Use the figure below to answer the following questions.
   
Figure 6.3.2
-Refer to Figure 6.3.2.The seller's share of the tax is

Accepted Answer

A) zero. 
B) $0.50. 
C) $1.00. 
D) $1.50. 
E) $2.00. 
A) zero. 
B) $0.50. 
C) $1.00. 
D) $1.50. 
E) $2.00.

Question 8

A production quota is set equal to 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 9

An effective rent ceiling

Accepted Answer

A) increases producer surplus. 
B) results in a producer surplus of zero. 
C) sometimes increases producer surplus and sometimes decreases producer surplus. 
D) decreases producer surplus. 
E) decreases the supply of housing. 
A) increases producer surplus. 
B) results in a producer surplus of zero. 
C) sometimes increases producer surplus and sometimes decreases producer surplus. 
D) decreases producer surplus. 
E) decreases the supply of housing.

Question 10

A rent ceiling

Accepted Answer

A) results in a shortage of housing if the rent ceiling is below the equilibrium rent. 
B) results in a surplus of housing if the rent ceiling is above the equilibrium rent. 
C) always results in a shortage of housing. 
D) always results in a surplus of housing. 
E) Both A and B are correct. 
A) results in a shortage of housing if the rent ceiling is below the equilibrium rent. 
B) results in a surplus of housing if the rent ceiling is above the equilibrium rent. 
C) always results in a shortage of housing. 
D) always results in a surplus of housing. 
E) Both A and B are correct.

Question 11

Suppose the demand for CDs is elastic,but not perfectly elastic,and the supply is inelastic,but not perfectly inelastic.A tax on CDs is paid

Accepted Answer

A) equally by buyers and sellers. 
B) mostly by sellers. 
C) mostly by buyers. 
D) by neither buyers nor sellers. 
E) totally by sellers. 
A) equally by buyers and sellers. 
B) mostly by sellers. 
C) mostly by buyers. 
D) by neither buyers nor sellers. 
E) totally by sellers.

Question 12

In an unregulated housing market with no rent ceiling,the rent is determined by the

Accepted Answer

A) landlords only. 
B) tenants only. 
C) government only. 
D) market. 
E) landlords, tenants, and the government. 
A) landlords only. 
B) tenants only. 
C) government only. 
D) market. 
E) landlords, tenants, and the government.

Question 13

If the penalty on sellers of an illegal good is less than the penalty on buyers of an illegal good,then supply of the good will ________ by ________ demand and the price of the good will ________.

Accepted Answer

A) decrease;more than;rise 
B) decrease;less than;rise 
C) decrease;less than;fall 
D) decrease;more than;fall 
E) increase;less than;rise 
A) decrease;more than;rise 
B) decrease;less than;rise 
C) decrease;less than;fall 
D) decrease;more than;fall 
E) increase;less than;rise

Question 14

An illegal market in which the equilibrium price exceeds the price ceiling is

Accepted Answer

A) a rental market. 
B) a capital market. 
C) a black market. 
D) an efficient market. 
E) a housing market. 
A) a rental market. 
B) a capital market. 
C) a black market. 
D) an efficient market. 
E) a housing market.

Question 15

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.Government revenue from the tax is

Accepted Answer

A) $1,200. 
B) $1,000. 
C) $800. 
D) $600. 
E) zero. 
A) $1,200. 
B) $1,000. 
C) $800. 
D) $600. 
E) zero.

Question 16

In a market with an effective production quota

Accepted Answer

A) marginal social benefit exceeds marginal social cost. 
B) marginal social benefit equals marginal social cost. 
C) marginal social cost exceeds marginal social benefit. 
D) marginal social cost is greater than the equilibrium price. 
E) marginal social benefit is less than the equilibrium price. 
A) marginal social benefit exceeds marginal social cost. 
B) marginal social benefit equals marginal social cost. 
C) marginal social cost exceeds marginal social benefit. 
D) marginal social cost is greater than the equilibrium price. 
E) marginal social benefit is less than the equilibrium price.

Question 17

In an unregulated housing market with no rent ceiling,

Accepted Answer

A) scarce housing resources are allocated inefficiently. 
B) scarce housing resources are allocated efficiently. 
C) tenants pay a lower rent compared to what they pay in a market with an effective rent ceiling. 
D) landlords receive less compared to what they receive in a market with an effective rent ceiling. 
E) consumer surplus equals producer surplus. 
A) scarce housing resources are allocated inefficiently. 
B) scarce housing resources are allocated efficiently. 
C) tenants pay a lower rent compared to what they pay in a market with an effective rent ceiling. 
D) landlords receive less compared to what they receive in a market with an effective rent ceiling. 
E) consumer surplus equals producer surplus.

Question 18

All of the following statements about legalizing and taxing drugs are true except

Accepted Answer

A) legalizing and taxing drugs would eliminate the black market in drugs. 
B) the quantity of a drug bought could be decreased if the drug was legalized and taxed. 
C) a sufficiently high tax could be imposed to decrease supply, raise the price, and achieve the same decrease in the quantity bought as with a prohibition of drugs. 
D) an extremely high tax rate would be needed to cut the quantity of drugs bought to the level prevailing with a prohibition. 
E) tax revenue can be used to make law enforcement more effective. 
A) legalizing and taxing drugs would eliminate the black market in drugs. 
B) the quantity of a drug bought could be decreased if the drug was legalized and taxed. 
C) a sufficiently high tax could be imposed to decrease supply, raise the price, and achieve the same decrease in the quantity bought as with a prohibition of drugs. 
D) an extremely high tax rate would be needed to cut the quantity of drugs bought to the level prevailing with a prohibition. 
E) tax revenue can be used to make law enforcement more effective.

Question 19

A production quota

Accepted Answer

A) increases the marginal social cost of production. 
B) lowers the price and increases the marginal social cost of production. 
C) increases demand for the good. 
D) raises the price and decreases the marginal social cost of production. 
E) makes production more efficient. 
A) increases the marginal social cost of production. 
B) lowers the price and increases the marginal social cost of production. 
C) increases demand for the good. 
D) raises the price and decreases the marginal social cost of production. 
E) makes production more efficient.

Question 20

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 rent that would be charged in a black market?

Accepted Answer

A) $150 a month 
B) $175 a month 
C) $200 a month 
D) $100 a month 
E) cannot be determined from the graph, but we know it is greater than $200 
A) $150 a month 
B) $175 a month 
C) $200 a month 
D) $100 a month 
E) cannot be determined from the graph, but we know it is greater than $200

Exam 6: Government Actions in Markets

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

Use the figure below to answer the following questions. Figure 6.1.2 -Refer to Figure 6.1.2.If a rigorously enforced price ceiling is set at $10,then

Use the figure below to answer the following questions. Figure 6.1.2 -Refer to Figure 6.1.2.What would be the maximum black market price of the good if a price ceiling is set at $10 a unit?

Use the table below to answer the following questions. Table 6.2.1 -Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.In an unregulated market,

A $10 per-unit tax on MP3 players raises the equilibrium price paid by consumers by $5.The quantity sold before the tax was 5,000 per year.The revenue from the tax is

The ________ principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by government. The ________ principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.

Use the figure below to answer the following questions. Figure 6.3.2 -Refer to Figure 6.3.2.The seller's share of the tax is

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

An effective rent ceiling

A rent ceiling

Suppose the demand for CDs is elastic,but not perfectly elastic,and the supply is inelastic,but not perfectly inelastic.A tax on CDs is paid

In an unregulated housing market with no rent ceiling,the rent is determined by the

If the penalty on sellers of an illegal good is less than the penalty on buyers of an illegal good,then supply of the good will ________ by ________ demand and the price of the good will ________.

An illegal market in which the equilibrium price exceeds the price ceiling 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.Government revenue from the tax is

In a market with an effective production quota

In an unregulated housing market with no rent ceiling,

All of the following statements about legalizing and taxing drugs are true except

A production quota

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 rent that would be charged in a black market?

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

The principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by government. The principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.

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

If the penalty on sellers of an illegal good is less than the penalty on buyers of an illegal good,then supply of the good will by demand and the price of the good will .