Question 1

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. D

Question 2

-Suppose the government has declared beer to be an illegal substance and has imposed penalties on any person caught selling a beer. Buying a beer, however, remains legal. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by

Accepted Answer

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

Question 3

Good A has a perfectly inelastic demand and an upward-sloping supply curve. Good B has a perfectly inelastic supply and a downward-sloping demand curve. If the same sales tax is imposed on the sellers of both good A and good B, the price paid by

Accepted Answer

A)  buyers of good A rises by more than the price paid by buyers of good B. 
B)  buyers of good B rises by more than the price paid by buyers of good A. 
C)  buyers of good A rises by the same amount as the price paid by buyers of good B. 
D)  More information is needed to determine whether the price paid by buyers of good A rises by more than, less than, or the same amount as the price paid by buyers of good B. 
A)  buyers of good A rises by more than the price paid by buyers of good B. 
B)  buyers of good B rises by more than the price paid by buyers of good A. 
C)  buyers of good A rises by the same amount as the price paid by buyers of good B. 
D)  More information is needed to determine whether the price paid by buyers of good A rises by more than, less than, or the same amount as the price paid by buyers of good B. A

Question 4

Suppose that the equilibrium wage in the low-skilled labor market is $9.25. Further, suppose the federal government raises the minimum wage to $9.00 an hour from its present level of $7.25. The government's action of increasing the minimum wage will result in

Accepted Answer

A)  a decrease in unemployment. 
B)  an increase in unemployment. 
C)  a shortage of low-skilled labor. 
D)  neither a shortage nor a surplus of labor in the low-skilled labor market. 
A)  a decrease in unemployment. 
B)  an increase in unemployment. 
C)  a shortage of low-skilled labor. 
D)  neither a shortage nor a surplus of labor in the low-skilled labor market.

Question 5

-In the above figure suppose a minimum wage of $16 per hour is imposed. As a result, the quantity of labor supplied is ________ hours and the quantity of labor demanded is ________ hours.

Accepted Answer

A)  3,000; 4,000 
B)  4,000; 4,000 
C)  2,000; 4,000 
D)  4,000; 2,000 
A)  3,000; 4,000 
B)  4,000; 4,000 
C)  2,000; 4,000 
D)  4,000; 2,000

Question 6

Why would an increase in the minimum wage to $15 per hour lead to more unemployment for teenage and low-skilled workers?

Accepted Answer

Many teenage and low-skilled workers ear

Question 7

Search activity

Accepted Answer

A)  occurs when there is a surplus of the good. 
B)  is unnecessary when a black market exists. 
C)  increases when an effective price ceiling is set on a good. 
D)  decreases when an effective price ceiling is set on a good. 
A)  occurs when there is a surplus of the good. 
B)  is unnecessary when a black market exists. 
C)  increases when an effective price ceiling is set on a good. 
D)  decreases when an effective price ceiling is set on a good.

Question 8

-In the above figure, at what minimum wage is the unemployment level equal to 200 million hours?

Accepted Answer

A)  $6 per hour 
B)  $12 per hour 
C)  $18 per hour 
D)  $24 per hour 
A)  $6 per hour 
B)  $12 per hour 
C)  $18 per hour 
D)  $24 per hour

Question 9

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $12 per hour, how many hours do students work?

Accepted Answer

A)  12,000 hours 
B)  9,000 hours 
C)  6,000 hours 
D)  None of the above answers is correct. 
A)  12,000 hours 
B)  9,000 hours 
C)  6,000 hours 
D)  None of the above answers is correct.

Question 10

Most of us are dependent on crude oil in some shape or way, whether it's to power our cars or to heat our homes in some parts of the country. More than 80 percent of the home heating oil used in the United States goes to the Northeast. It is suggested that there needs to be government regulation to make it illegal to charge a very high price for oil. This type of regulation would be a

Accepted Answer

A)  price ceiling. 
B)  price floor. 
C)  shortage regulation. 
D)  tax incidence. 
A)  price ceiling. 
B)  price floor. 
C)  shortage regulation. 
D)  tax incidence.

Question 11

-The figure above shows the market for low-skilled labor in Midland city in a nation to the south. The government sets a minimum wage at $6 per hour. With the minimum wage law enacted, at the quantity of labor employed, the value to the firm of last worker hired is ________ the wage rate for which that person is willing to work.

Accepted Answer

A)  the same as 
B)  $3 per hour less than 
C)  $3 per hour greater than 
D)  $1 per hour greater 
A)  the same as 
B)  $3 per hour less than 
C)  $3 per hour greater than 
D)  $1 per hour greater

Question 12

If a minimum wage is set above the equilibrium wage rate, employment

Accepted Answer

A)  will increase. 
B)  will not change. 
C)  will decrease. 
D)  may increase, decrease or not change depending on how the supply of labor is affected by the minimum wage. 
A)  will increase. 
B)  will not change. 
C)  will decrease. 
D)  may increase, decrease or not change depending on how the supply of labor is affected by the minimum wage.

Question 13

If penalties are imposed only on buyers (but not on sellers) of marijuana, the equilibrium price of marijuana ________, and the equilibrium quantity of marijuana sold ________.

Accepted Answer

A)  rise; increase 
B)  rise; decrease 
C)  fall; increase 
D)  fall; decrease 
A)  rise; increase 
B)  rise; decrease 
C)  fall; increase 
D)  fall; decrease

Question 14

The Social Security tax is a tax that Congress imposes equally on both employers and employees. Does this mean that the burden of this tax is shared equally between firms and workers? Explain.

Accepted Answer

No. A tax has the same effect regardless

Question 15

-You are in the business of producing and selling hamburgers, french fries, pizza, and ice cream. The mayor plans to impose a tax on one of these products. Based on the elasticities in the above table, as a profit-minded business person who seeks to avoid taxes whenever possible, which good would you least like to have taxed?

Accepted Answer

A)  hamburgers 
B)  pizza 
C)  French fries 
D)  ice cream 
A)  hamburgers 
B)  pizza 
C)  French fries 
D)  ice cream

Question 16

-In the above figure, the tax incidence is

Accepted Answer

A)  that most of it is paid by the buyers. 
B)  that most of it is paid by the sellers. 
C)  split equally so that the buyers and sellers pay the same amount. 
D)  that neither the buyers nor the sellers pay it. 
A)  that most of it is paid by the buyers. 
B)  that most of it is paid by the sellers. 
C)  split equally so that the buyers and sellers pay the same amount. 
D)  that neither the buyers nor the sellers pay it.

Question 17

More than 80 percent of the home heating oil used in the United States goes to the Northeast. In Vermont, the vast majority of people there use oil to stay warm when it's cold outside. Richard Izor heats his home with oil and inquires, "I'd like to see them come in and put a ceiling on the oil price now before it gets any higher. Why they haven't done this is more than I can understand." Which of the following is NOT likely to occur if such a price ceiling was imposed?

Accepted Answer

A)  There would be a surplus of heating oil. 
B)  A heating oil shortage may occur. 
C)  A black market for heating oil may be created. 
D)  There would be an increase in inefficiency in the heating oil market. 
A)  There would be a surplus of heating oil. 
B)  A heating oil shortage may occur. 
C)  A black market for heating oil may be created. 
D)  There would be an increase in inefficiency in the heating oil market.

Question 18

-The figure above shows the market for tickets to the Super Bowl the day of the game. Suppose the government imposes an entertainment tax of $100 per ticket.
a) What is the equilibrium price of a Super Bowl ticket before the tax? What is the price paid by buyers after the tax? What is the price received by sellers after the tax?
b) What is the equilibrium quantity of tickets before the tax? What is the equilibrium quantity after the tax?
c) Do buyers or sellers bear the largest incidence of the tax?

Accepted Answer

a) The equilibrium price before the tax

Question 19

Do rent ceilings result in any deadweight loss?

Accepted Answer

Yes. Because the number of apartments re

Question 20

A price floor

Accepted Answer

A)  always results in a surplus. 
B)  always results in a shortage. 
C)  results in a surplus if the floor price is higher than the equilibrium price. 
D)  results in a shortage if the floor price is higher than the equilibrium price. 
A)  always results in a surplus. 
B)  always results in a shortage. 
C)  results in a surplus if the floor price is higher than the equilibrium price. 
D)  results in a shortage if the floor price is higher than the equilibrium price.

A sales tax is divided so that the

-Suppose the government has declared beer to be an illegal substance and has imposed penalties on any person caught selling a beer. Buying a beer, however, remains legal. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by

Good A has a perfectly inelastic demand and an upward-sloping supply curve. Good B has a perfectly inelastic supply and a downward-sloping demand curve. If the same sales tax is imposed on the sellers of both good A and good B, the price paid by

Suppose that the equilibrium wage in the low-skilled labor market is $9.25. Further, suppose the federal government raises the minimum wage to $9.00 an hour from its present level of $7.25. The government's action of increasing the minimum wage will result in

-In the above figure suppose a minimum wage of $16 per hour is imposed. As a result, the quantity of labor supplied is hours and the quantity of labor demanded is hours.

Why would an increase in the minimum wage to $15 per hour lead to more unemployment for teenage and low-skilled workers?

Search activity

-In the above figure, at what minimum wage is the unemployment level equal to 200 million hours?

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $12 per hour, how many hours do students work?

If a minimum wage is set above the equilibrium wage rate, employment

If penalties are imposed only on buyers (but not on sellers) of marijuana, the equilibrium price of marijuana , and the equilibrium quantity of marijuana sold .

The Social Security tax is a tax that Congress imposes equally on both employers and employees. Does this mean that the burden of this tax is shared equally between firms and workers? Explain.

-In the above figure, the tax incidence is

Do rent ceilings result in any deadweight loss?

A price floor

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 6: Government Actions in Markets

A sales tax is divided so that the

-Suppose the government has declared beer to be an illegal substance and has imposed penalties on any person caught selling a beer. Buying a beer, however, remains legal. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by

Good A has a perfectly inelastic demand and an upward-sloping supply curve. Good B has a perfectly inelastic supply and a downward-sloping demand curve. If the same sales tax is imposed on the sellers of both good A and good B, the price paid by

Suppose that the equilibrium wage in the low-skilled labor market is $9.25. Further, suppose the federal government raises the minimum wage to $9.00 an hour from its present level of $7.25. The government's action of increasing the minimum wage will result in

-In the above figure suppose a minimum wage of $16 per hour is imposed. As a result, the quantity of labor supplied is ________ hours and the quantity of labor demanded is ________ hours.

Why would an increase in the minimum wage to $15 per hour lead to more unemployment for teenage and low-skilled workers?

Search activity

-In the above figure, at what minimum wage is the unemployment level equal to 200 million hours?

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $12 per hour, how many hours do students work?

If a minimum wage is set above the equilibrium wage rate, employment

If penalties are imposed only on buyers (but not on sellers) of marijuana, the equilibrium price of marijuana ________, and the equilibrium quantity of marijuana sold ________.

The Social Security tax is a tax that Congress imposes equally on both employers and employees. Does this mean that the burden of this tax is shared equally between firms and workers? Explain.

-In the above figure, the tax incidence is

Do rent ceilings result in any deadweight loss?

A price floor

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

-In the above figure suppose a minimum wage of $16 per hour is imposed. As a result, the quantity of labor supplied is hours and the quantity of labor demanded is hours.

If penalties are imposed only on buyers (but not on sellers) of marijuana, the equilibrium price of marijuana , and the equilibrium quantity of marijuana sold .