Question 1

If the supply of a good is perfectly elastic,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 2

An effective production quota

Accepted Answer

A) is efficient because it results in overproduction. 
B) is efficient because it results in underproduction. 
C) is inefficient because it results in underproduction. 
D) is inefficient because it results in overproduction. 
E) is efficient for quantities below the equilibrium quantity and is inefficient for quantities above the equilibrium quantity. 
A) is efficient because it results in overproduction. 
B) is efficient because it results in underproduction. 
C) is inefficient because it results in underproduction. 
D) is inefficient because it results in overproduction. 
E) is efficient for quantities below the equilibrium quantity and is inefficient for quantities above the equilibrium quantity.

Question 3

Suppose the cost of breaking the law is imposed on the sellers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is

Accepted Answer

A) inelastic or the supply is inelastic. 
B) elastic or the supply is elastic. 
C) elastic or the supply is inelastic. 
D) inelastic or the supply is elastic. 
E) perfectly inelastic. 
A) inelastic or the supply is inelastic. 
B) elastic or the supply is elastic. 
C) elastic or the supply is inelastic. 
D) inelastic or the supply is elastic. 
E) perfectly inelastic.

Question 4

Suppose your province raises the provincial sales tax by 1 percent.You predict that the prices of taxed goods (including the tax)will

Accepted Answer

A) rise by 1 percent. 
B) rise by more than 1 percent. 
C) rise by an amount between zero and 1 percent. 
D) not change at all. 
E) fall by an amount between zero and 1 percent. 
A) rise by 1 percent. 
B) rise by more than 1 percent. 
C) rise by an amount between zero and 1 percent. 
D) not change at all. 
E) fall by an amount between zero and 1 percent.

Question 5

Which one of the following statements is false?

Accepted Answer

A) An effective minimum wage sets the wage rate above the equilibrium wage rate. 
B) An effective rent ceiling sets the rent below the equilibrium rent. 
C) An effective rent ceiling leads to a housing shortage. 
D) An effective minimum wage is inefficient. 
E) A minimum wage is a price ceiling in the labour market. 
A) An effective minimum wage sets the wage rate above the equilibrium wage rate. 
B) An effective rent ceiling sets the rent below the equilibrium rent. 
C) An effective rent ceiling leads to a housing shortage. 
D) An effective minimum wage is inefficient. 
E) A minimum wage is a price ceiling in the labour market.

Question 6

When an effective production quota is applied in the market for wheat,the quantity produced ________ and the price ________.The marginal social benefit ________ marginal social cost.

Accepted Answer

A) increases;rises;exceeds 
B) decreases;falls;is less than 
C) decreases;rises;exceeds 
D) increases;falls;is less than 
E) decreases;rises;is less than 
A) increases;rises;exceeds 
B) decreases;falls;is less than 
C) decreases;rises;exceeds 
D) increases;falls;is less than 
E) decreases;rises;is less than

Question 7

Use the table below to answer the following questions.
Table 6.5.1
The Market for a Prohibited Good.
  
-Refer to Table 6.5.1.If a $2-per-unit cost of breaking the law is imposed on both the buyers and the sellers,the new price is ________ and the new equilibrium quantity is ________ units.

Accepted Answer

A) $8;400 
B) $8;300 
C) $7;300 
D) $9;300 
E) $8;200 
A) $8;400 
B) $8;300 
C) $7;300 
D) $9;300 
E) $8;200

Question 8

Governments tend to tax items with inelastic demand because

Accepted Answer

A) governments wish to avoid big rises in after-tax prices. 
B) sellers pay most of the tax in these cases. 
C) buyers pay most of the tax in these cases. 
D) these goods yield the most tax revenues. 
E) none of the above. 
A) governments wish to avoid big rises in after-tax prices. 
B) sellers pay most of the tax in these cases. 
C) buyers pay most of the tax in these cases. 
D) these goods yield the most tax revenues. 
E) none of the above.

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 sellers' share of the tax is

Accepted Answer

A) $2.00. 
B) $1.50. 
C) $1.00. 
D) $0. 
E) $2.50. 
A) $2.00. 
B) $1.50. 
C) $1.00. 
D) $0. 
E) $2.50.

Question 10

A subsidy

Accepted Answer

A) lowers the price received by farmers. 
B) decreases the quantity supplied in the market. 
C) raises the price received by farmers. 
D) prevents the deadweight loss from underproduction. 
E) decreases total revenue received by farmers. 
A) lowers the price received by farmers. 
B) decreases the quantity supplied in the market. 
C) raises the price received by farmers. 
D) prevents the deadweight loss from underproduction. 
E) decreases total revenue received by farmers.

Question 11

The demand for a good and the supply of a good are each neither perfectly elastic nor perfectly inelastic.If a sales tax on sellers of the good is imposed,the tax is paid by

Accepted Answer

A) the buyers only. 
B) both the buyers and the sellers. 
C) the sellers only. 
D) the buyers only if demand for the good increases. 
E) the suppliers only if the supply of the good increases. 
A) the buyers only. 
B) both the buyers and the sellers. 
C) the sellers only. 
D) the buyers only if demand for the good increases. 
E) the suppliers only if the supply of the good increases.

Question 12

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.There is a minimum wage set at $6 per hour.Suppose a new fast food restaurant opens and increases the quantity demanded of teenage labour by 400 hours per week at each wage rate.The result is

Accepted Answer

A) elimination of teenage unemployment and a wage rate of $7 per hour. 
B) elimination of teenage unemployment, but the wage rate remains at $6 per hour. 
C) some teenage unemployment with the wage rate remaining at $6 per hour. 
D) no change in teenage unemployment because the wage rate rises to $7 per hour. 
E) none of the above. 
A) elimination of teenage unemployment and a wage rate of $7 per hour. 
B) elimination of teenage unemployment, but the wage rate remains at $6 per hour. 
C) some teenage unemployment with the wage rate remaining at $6 per hour. 
D) no change in teenage unemployment because the wage rate rises to $7 per hour. 
E) none of the above.

Question 13

Use the figure below to answer the following questions.
   
Figure 6.2.1
-Refer to Figure 6.2.1.If the minimum wage is set at $2 per hour,what is the level of unemployment in millions of hours?

Accepted Answer

A) 50 
B) 40 
C) 20 
D) 10 
E) 0 
A) 50 
B) 40 
C) 20 
D) 10 
E) 0

Question 14

If a rent ceiling imposed by the government is greater than the equilibrium rent for housing,then

Accepted Answer

A) the supply of rental housing will increase. 
B) a shortage of housing will occur. 
C) a surplus of housing will occur. 
D) the equilibrium rent will prevail as long as all else remains constant. 
E) the equilibrium rent will rise. 
A) the supply of rental housing will increase. 
B) a shortage of housing will occur. 
C) a surplus of housing will occur. 
D) the equilibrium rent will prevail as long as all else remains constant. 
E) the equilibrium rent will rise.

Question 15

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.Suppose a new fast food restaurant opens and increases the quantity demanded of teenage labour by 400 hours per week at each wage rate.If the teenage labour market is unregulated,there is an increase in teenage employment to

Accepted Answer

A) 1,000 hours per week and a wage of $5 per hour. 
B) 1,000 hours per week and a wage of $7 per hour. 
C) 800 hours per week and a wage of $6 per hour. 
D) 600 hours per week and a wage of $7 per hour. 
E) 400 hours per week and a wage of $7 per hour. 
A) 1,000 hours per week and a wage of $5 per hour. 
B) 1,000 hours per week and a wage of $7 per hour. 
C) 800 hours per week and a wage of $6 per hour. 
D) 600 hours per week and a wage of $7 per hour. 
E) 400 hours per week and a wage of $7 per hour.

Question 16

Use the table below to answer the following questions.
Table 6.2.2
  
-Refer to Table 6.2.2.What is the level of unemployment in millions of hours if the minimum wage is set at $7 per hour?

Accepted Answer

A) 40 
B) 30 
C) 20 
D) 10 
E) zero 
A) 40 
B) 30 
C) 20 
D) 10 
E) zero

Question 17

Discrimination allocates scarce housing

Accepted Answer

A) to those who are poor. 
B) based on the self-interest of landlords. 
C) to those who are lucky. 
D) to those whose names are on waiting lists. 
E) to those who are willing and able to pay. 
A) to those who are poor. 
B) based on the self-interest of landlords. 
C) to those who are lucky. 
D) to those whose names are on waiting lists. 
E) to those who are willing and able to pay.

Question 18

Use the figure below to answer the following questions.
   
Figure 6.3.2
-Refer to Figure 6.3.2.The amount of the tax per unit 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 19

A subsidy is a

Accepted Answer

A) tax imposed by the government on imported goods. 
B) payment made by the government to a producer. 
C) tax imposed by the government on a producer. 
D) payment made by a consumer to a producer. 
E) payment made by foreign governments to domestic farmers. 
A) tax imposed by the government on imported goods. 
B) payment made by the government to a producer. 
C) tax imposed by the government on a producer. 
D) payment made by a consumer to a producer. 
E) payment made by foreign governments to domestic farmers.

Exam 6: Government Actions in Markets

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

An effective production quota

Suppose the cost of breaking the law is imposed on the sellers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is

Suppose your province raises the provincial sales tax by 1 percent.You predict that the prices of taxed goods (including the tax)will

Which one of the following statements is false?

When an effective production quota is applied in the market for wheat,the quantity produced ________ and the price ________.The marginal social benefit ________ marginal social cost.

Use the table below to answer the following questions. Table 6.5.1 The Market for a Prohibited Good. -Refer to Table 6.5.1.If a $2-per-unit cost of breaking the law is imposed on both the buyers and the sellers,the new price is ________ and the new equilibrium quantity is ________ units.

Governments tend to tax items with inelastic demand because

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 sellers' share of the tax is

A subsidy

The demand for a good and the supply of a good are each neither perfectly elastic nor perfectly inelastic.If a sales tax on sellers of the good is imposed,the tax is paid by

Use the figure below to answer the following questions. Figure 6.2.1 -Refer to Figure 6.2.1.If the minimum wage is set at $2 per hour,what is the level of unemployment in millions of hours?

If a rent ceiling imposed by the government is greater than the equilibrium rent for housing,then

Use the table below to answer the following questions. Table 6.2.2 -Refer to Table 6.2.2.What is the level of unemployment in millions of hours if the minimum wage is set at $7 per hour?

Discrimination allocates scarce housing

Use the figure below to answer the following questions. Figure 6.3.2 -Refer to Figure 6.3.2.The amount of the tax per unit is

A subsidy is a

What Is Economics?

The Economic Problem

Demand and Supply

Elasticity

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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

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International Trade Policy

Filters

When an effective production quota is applied in the market for wheat,the quantity produced and the price .The marginal social benefit marginal social cost.

Use the table below to answer the following questions. Table 6.5.1 The Market for a Prohibited Good. -Refer to Table 6.5.1.If a $2-per-unit cost of breaking the law is imposed on both the buyers and the sellers,the new price is and the new equilibrium quantity is units.