Question 1

Which of the following statements is TRUE about taxes?

Accepted Answer

A)  Taxes always create more deadweight loss than do price ceilings and price floors. 
B)  Taxes decrease both consumer surplus and producer surplus while creating a deadweight loss. 
C)  Government revenue from a tax is always greater than the loss of producer surplus and consumer surplus. 
D)  Both answers A and C are correct. 
A)  Taxes always create more deadweight loss than do price ceilings and price floors. 
B)  Taxes decrease both consumer surplus and producer surplus while creating a deadweight loss. 
C)  Government revenue from a tax is always greater than the loss of producer surplus and consumer surplus. 
D)  Both answers A and C are correct.

Question 2

The more elastic the demand for a good, the

Accepted Answer

A)  less a sales tax lowers the price paid by buyers. 
B)  more a sales tax lowers the price paid by buyers. 
C)  less a sales tax raises the price paid by buyers. 
D)  more a sales tax raises the price paid by buyers. 
A)  less a sales tax lowers the price paid by buyers. 
B)  more a sales tax lowers the price paid by buyers. 
C)  less a sales tax raises the price paid by buyers. 
D)  more a sales tax raises the price paid by buyers.

Question 3

-The figure shows the market for books before and after a sales tax is introduced. The tax on books is ________ a book, buyers pay ________ of tax per book, and the government's tax revenue is ________ a week.

Accepted Answer

A)  $1.20; $0.80; $128 
B)  $0.80; $1.20; $12 
C)  $0.40; $0.40; $4 
D)  $1.20; $0.80; $12 
A)  $1.20; $0.80; $128 
B)  $0.80; $1.20; $12 
C)  $0.40; $0.40; $4 
D)  $1.20; $0.80; $12

Question 4

The amount of a tax paid by the buyers will be larger the

Accepted Answer

A)  more elastic the demand and the more inelastic the supply. 
B)  more inelastic the demand and the more elastic the supply. 
C)  more inelastic are both the supply and demand. 
D)  more elastic are both the supply and demand. 
A)  more elastic the demand and the more inelastic the supply. 
B)  more inelastic the demand and the more elastic the supply. 
C)  more inelastic are both the supply and demand. 
D)  more elastic are both the supply and demand.

Question 5

-The figure above shows the market for gasoline. The government has imposed a tax on gasoline.
a) What is the amount of the tax per gallon of gasoline?
b) How much of the tax is paid by consumers? How much is paid by producers? Which is more elastic, the supply or demand for gasoline?

Accepted Answer

a) The tax is $1.50 per gallon, the amou

Question 6

A rent ceiling set above the equilibrium rent has no effect.

Accepted Answer

A) True 
 B)False

Question 7

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $16 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 8

-The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $10 per hour is imposed. Employment will fall by

Accepted Answer

A)  0 hours. 
B)  10 million hours per year. 
C)  20 million hours per year. 
D)  30 million hours per year. 
A)  0 hours. 
B)  10 million hours per year. 
C)  20 million hours per year. 
D)  30 million hours per year.

Question 9

-The above figure shows the apartment market in Big City. What is the equilibrium rent in Big City?

Accepted Answer

A)  $1500 
B)  $1350 
C)  $1250 
D)  $1125 
A)  $1500 
B)  $1350 
C)  $1250 
D)  $1125

Question 10

-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. The minimum wage ________ the employers' surplus by ________ million per year.

Accepted Answer

A)  decreases; $60 
B)  decreases; $120 
C)  increases; $40 
D)  increases; $100 
A)  decreases; $60 
B)  decreases; $120 
C)  increases; $40 
D)  increases; $100

Question 11

When a government imposes penalties on both sellers and buyers of an illegal good, the price of the good ________ and the quantity ________.

Accepted Answer

A)  falls; decreases 
B)  falls; might increase, decrease, or not change 
C)  rises; might increase, decrease, or not change 
D)  might rise, fall, or not change; decreases 
A)  falls; decreases 
B)  falls; might increase, decrease, or not change 
C)  rises; might increase, decrease, or not change 
D)  might rise, fall, or not change; decreases

Question 12

In the market for books, initially there are no taxes on books. Books are normal goods. The government introduces a tax of $4 a book and, at the same time, people's income fall by $4,000 a year. Following these two changes, the equilibrium quantity of books

Accepted Answer

A)  decreases. 
B)  increases. 
C)  remains unchanged. 
D)  either increases or decreases. We cannot say which. 
A)  decreases. 
B)  increases. 
C)  remains unchanged. 
D)  either increases or decreases. We cannot say which.

Question 13

Because a subsidy raises marginal benefit, it can be used to eliminate the deadweight loss from overproduction.

Accepted Answer

A) True 
 B)False

Question 14

-The figure above shows the housing market in the city of Appleville. A rent ceiling of $650 per month is imposed. With the rent ceiling, the deadweight loss in the Appleville housing market is

Accepted Answer

A)  zero. 
B)  at least $15,000 per month. 
C)  at most $7,500 per month. 
D)  300 units per month. 
A)  zero. 
B)  at least $15,000 per month. 
C)  at most $7,500 per month. 
D)  300 units per month.

Question 15

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. The sports equipment consumers' share of this tax would be greater than that shown in the above figure

Accepted Answer

A)  only if the demand was more elastic. 
B)  only if the demand was more inelastic. 
C)  only if the supply was more elastic. 
D)  if either the demand was more inelastic or the supply more elastic. 
A)  only if the demand was more elastic. 
B)  only if the demand was more inelastic. 
C)  only if the supply was more elastic. 
D)  if either the demand was more inelastic or the supply more elastic.

Question 16

What is a black market and how does it influence the market for rental housing if a rent ceiling creates a housing shortage? What determines the level of the black market rent?

Accepted Answer

A black market is an illegal market in w

Question 17

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, how much deadweight loss results from this tax on sports equipment?

Accepted Answer

A)  cbd 
B)  ced 
C)  abd 
D)  acd 
A)  cbd 
B)  ced 
C)  abd 
D)  acd

Question 18

Which of the following is a CORRECT statement about markets for prohibited goods?

Accepted Answer

A)  Penalizing sellers of an illegal good decreases supply and penalizing buyers decreases demand. 
B)  Penalizing either buyers or sellers of an illegal good decreases the quantity bought. 
C)  Taxing a good at a sufficiently high rate can achieve the same consumption level as prohibition. 
D)  All of the above are correct statements. 
A)  Penalizing sellers of an illegal good decreases supply and penalizing buyers decreases demand. 
B)  Penalizing either buyers or sellers of an illegal good decreases the quantity bought. 
C)  Taxing a good at a sufficiently high rate can achieve the same consumption level as prohibition. 
D)  All of the above are correct statements.

Question 19

-The table above gives the demand and supply schedules for the housing market in a small town. If a rent ceiling of $200 a month is imposed, what is the quantity demanded, the quantity supplied, and the shortage of housing?

Accepted Answer

The quantity demanded is 350 u

Question 20

Consider the market for heart transplants. The demand for a heart transplant is perfectly inelastic and the supply curve is upward sloping. If a $1,000 tax per transplant tax is imposed on buyers (the recipients), how will the tax be divided between the buyer and seller?

Accepted Answer

A)  The sellers will pay the entire tax. 
B)  The buyers will pay the entire tax. 
C)  The tax will be evenly divided between the sellers and buyers. 
D)  More information is needed to determine how the tax is split. 
A)  The sellers will pay the entire tax. 
B)  The buyers will pay the entire tax. 
C)  The tax will be evenly divided between the sellers and buyers. 
D)  More information is needed to determine how the tax is split.

Which of the following statements is TRUE about taxes?

The more elastic the demand for a good, the

-The figure shows the market for books before and after a sales tax is introduced. The tax on books is a book, buyers pay of tax per book, and the government's tax revenue is a week.

The amount of a tax paid by the buyers will be larger the

-The figure above shows the market for gasoline. The government has imposed a tax on gasoline. a) What is the amount of the tax per gallon of gasoline? b) How much of the tax is paid by consumers? How much is paid by producers? Which is more elastic, the supply or demand for gasoline?

A rent ceiling set above the equilibrium rent has no effect.

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $16 per hour, how many hours do students work?

-The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $10 per hour is imposed. Employment will fall by

-The above figure shows the apartment market in Big City. What is the equilibrium rent in Big City?

-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. The minimum wage the employers' surplus by million per year.

When a government imposes penalties on both sellers and buyers of an illegal good, the price of the good and the quantity .

In the market for books, initially there are no taxes on books. Books are normal goods. The government introduces a tax of $4 a book and, at the same time, people's income fall by $4,000 a year. Following these two changes, the equilibrium quantity of books

Because a subsidy raises marginal benefit, it can be used to eliminate the deadweight loss from overproduction.

-The figure above shows the housing market in the city of Appleville. A rent ceiling of $650 per month is imposed. With the rent ceiling, the deadweight loss in the Appleville housing market is

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. The sports equipment consumers' share of this tax would be greater than that shown in the above figure

What is a black market and how does it influence the market for rental housing if a rent ceiling creates a housing shortage? What determines the level of the black market rent?

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, how much deadweight loss results from this tax on sports equipment?

Which of the following is a CORRECT statement about markets for prohibited goods?

-The table above gives the demand and supply schedules for the housing market in a small town. If a rent ceiling of $200 a month is imposed, what is the quantity demanded, the quantity supplied, and the shortage of housing?

Consider the market for heart transplants. The demand for a heart transplant is perfectly inelastic and the supply curve is upward sloping. If a $1,000 tax per transplant tax is imposed on buyers (the recipients), how will the tax be divided between the buyer and seller?

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

Which of the following statements is TRUE about taxes?

The more elastic the demand for a good, the

-The figure shows the market for books before and after a sales tax is introduced. The tax on books is ________ a book, buyers pay ________ of tax per book, and the government's tax revenue is ________ a week.

The amount of a tax paid by the buyers will be larger the

-The figure above shows the market for gasoline. The government has imposed a tax on gasoline. a) What is the amount of the tax per gallon of gasoline? b) How much of the tax is paid by consumers? How much is paid by producers? Which is more elastic, the supply or demand for gasoline?

A rent ceiling set above the equilibrium rent has no effect.

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $16 per hour, how many hours do students work?

-The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $10 per hour is imposed. Employment will fall by

-The above figure shows the apartment market in Big City. What is the equilibrium rent in Big City?

-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. The minimum wage ________ the employers' surplus by ________ million per year.

When a government imposes penalties on both sellers and buyers of an illegal good, the price of the good ________ and the quantity ________.

In the market for books, initially there are no taxes on books. Books are normal goods. The government introduces a tax of $4 a book and, at the same time, people's income fall by $4,000 a year. Following these two changes, the equilibrium quantity of books

Because a subsidy raises marginal benefit, it can be used to eliminate the deadweight loss from overproduction.

-The figure above shows the housing market in the city of Appleville. A rent ceiling of $650 per month is imposed. With the rent ceiling, the deadweight loss in the Appleville housing market is

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. The sports equipment consumers' share of this tax would be greater than that shown in the above figure

What is a black market and how does it influence the market for rental housing if a rent ceiling creates a housing shortage? What determines the level of the black market rent?

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, how much deadweight loss results from this tax on sports equipment?

Which of the following is a CORRECT statement about markets for prohibited goods?

-The table above gives the demand and supply schedules for the housing market in a small town. If a rent ceiling of $200 a month is imposed, what is the quantity demanded, the quantity supplied, and the shortage of housing?

Consider the market for heart transplants. The demand for a heart transplant is perfectly inelastic and the supply curve is upward sloping. If a $1,000 tax per transplant tax is imposed on buyers (the recipients), how will the tax be divided between the buyer and seller?

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

-The figure shows the market for books before and after a sales tax is introduced. The tax on books is a book, buyers pay of tax per book, and the government's tax revenue is a week.

-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. The minimum wage the employers' surplus by million per year.

When a government imposes penalties on both sellers and buyers of an illegal good, the price of the good and the quantity .