Question 1

One consequence of rent ceilings set below the equilibrium rent is that

Accepted Answer

A)  a surplus of housing units develops. 
B)  renters are no longer exploited by landlords. 
C)  it makes the long-run housing supply more elastic. 
D)  search costs for housing increase. 
A)  a surplus of housing units develops. 
B)  renters are no longer exploited by landlords. 
C)  it makes the long-run housing supply more elastic. 
D)  search costs for housing increase.

Question 2

-The figure above shows the market for cotton in Georgestan. The government regulates the market with a production quota set at 8 million pounds per year. The price of cotton in Georgestan is

Accepted Answer

A)  30 cents per pound. 
B)  40 cents per pound. 
C)  60 cents per pound. 
D)  50 cents per pound. 
A)  30 cents per pound. 
B)  40 cents per pound. 
C)  60 cents per pound. 
D)  50 cents per pound.

Question 3

-The figure shows the market for books before and after a sales tax is introduced. Each week, the tax creates a deadweight loss of ________, decreases consumer surplus by ________, and decreases producer surplus by ________.

Accepted Answer

A)  $15; $10; $5 
B)  $12; $8; $4 
C)  $3; $10; $5 
D)  $3; $2; $1 
A)  $15; $10; $5 
B)  $12; $8; $4 
C)  $3; $10; $5 
D)  $3; $2; $1

Question 4

-In the figure above, the demand curve shifts rightward from D0 to D1. There are no rent controls. In the short run, the increase in demand results in

Accepted Answer

A)  higher rents and a decrease in the equilibrium quantity. 
B)  lower rents and a decrease in the equilibrium quantity. 
C)  higher rents and an increase in the equilibrium quantity. 
D)  lower rents and an increase in the equilibrium quantity. 
A)  higher rents and a decrease in the equilibrium quantity. 
B)  lower rents and a decrease in the equilibrium quantity. 
C)  higher rents and an increase in the equilibrium quantity. 
D)  lower rents and an increase in the equilibrium quantity.

Question 5

A sales tax on sellers a good leads to a loss of consumer surplus, but a price ceiling or a price floor on that same product will not.

Accepted Answer

A) True 
 B)False

Question 6

-In the figure above, if the minimum wage is $10 per hour, then

Accepted Answer

A)  the quantity of labor supplied is less than the quantity of labor demanded. 
B)  the quantity of labor supplied is 4 million hours and the quantity of labor demanded is 2 million hours. 
C)  unemployment is 1 million hours. 
D)  the quantity of labor supplied is 3 million hours and the quantity of labor demanded is 3 million hours. 
A)  the quantity of labor supplied is less than the quantity of labor demanded. 
B)  the quantity of labor supplied is 4 million hours and the quantity of labor demanded is 2 million hours. 
C)  unemployment is 1 million hours. 
D)  the quantity of labor supplied is 3 million hours and the quantity of labor demanded is 3 million hours.

Question 7

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. With the tax, the price of salt paid by buyers in Healthyland is

Accepted Answer

A)  $0.40 per pound. 
B)  $0.45 per pound. 
C)  $0.35 per pound. 
D)  $0.50 per pound. 
A)  $0.40 per pound. 
B)  $0.45 per pound. 
C)  $0.35 per pound. 
D)  $0.50 per pound.

Question 8

-The above figure shows the apartment market in Big City. If a government policy results in a shortage of 1,500 apartments in the Big City rental market, it is most likely that the Housing Authority has imposed

Accepted Answer

A)  a rent ceiling of $1500.00 monthly. 
B)  a rent ceiling of $1000.00 monthly. 
C)  a rent floor of $1500.00 monthly. 
D)  a rent floor of $1000.00 monthly. 
A)  a rent ceiling of $1500.00 monthly. 
B)  a rent ceiling of $1000.00 monthly. 
C)  a rent floor of $1500.00 monthly. 
D)  a rent floor of $1000.00 monthly.

Question 9

-Suppose the government has declared beer to be an illegal substance and imposes a fine on any person caught selling a beer. Buying beer, however, remains legal. Using the above figure, in which CBL is the cost of breaking the law, what is the equilibrium price and quantity with this new law in effect?

Accepted Answer

A)  $5 per quart and 300 quarts of beer 
B)  $3 per quart and 500 quarts of beer 
C)  $3 per quart and 100 quarts of beer 
D)  $1 per quart and 300 quarts of beer 
A)  $5 per quart and 300 quarts of beer 
B)  $3 per quart and 500 quarts of beer 
C)  $3 per quart and 100 quarts of beer 
D)  $1 per quart and 300 quarts of beer

Question 10

-The table above gives the supply and demand schedules for scooters. Because of increased injuries sustained by children riding scooters, Citizens Against Scooter Accidents successfully lobbies the government to impose a price floor of $80.00 on scooters.
a) What is the quantity demanded and supplied after the price floor has been imposed?
b) Is there any shortage or surplus at this price floor? If so, how much?
c) If the price floor is raised to $110.00, what is the quantity demanded and supplied?
d) At a price floor of $110.00, is there any shortage or surplus? If so, how much?

Accepted Answer

a) The quantity demanded and supplied is

Question 11

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)  increase; more than; increase 
B)  decrease; more than; decrease 
C)  decrease; less than; decrease 
D)  decrease; the same amount as; remain the same 
A)  increase; more than; increase 
B)  decrease; more than; decrease 
C)  decrease; less than; decrease 
D)  decrease; the same amount as; remain the same

Question 12

-The table above gives the demand and supply schedules for CDs.
a) According to the table, what is the equilibrium price?
b) Suppose the government imposes a price floor of $16 for a CD. What is the result?
c) Suppose the government imposes a price ceiling of $8 for a CD. What is the result?

Accepted Answer

a) The equilibrium price is $14 for a CD

Question 13

In order for a price ceiling to have an effect on the market, must it be set above or below the equilibrium price? Why?

Accepted Answer

In order to have an effect, the price ce

Question 14

A tax is imposed on the sale of a product. As long as neither the supply nor the demand is perfectly elastic or inelastic

Accepted Answer

A)  there is no change in the price paid by the consumers. 
B)  the price paid by the consumers increases by the full amount of the tax. 
C)  the price paid by the consumers increases by less than the amount of the tax. 
D)  the price paid by the consumers increases by more than the amount of the tax. 
A)  there is no change in the price paid by the consumers. 
B)  the price paid by the consumers increases by the full amount of the tax. 
C)  the price paid by the consumers increases by less than the amount of the tax. 
D)  the price paid by the consumers increases by more than the amount of the tax.

Question 15

-The table gives the demand and supply schedules for fireworks on the Island of Big Bang. In the past, because many deaths have resulted from accidents involving fireworks, the government has banned fireworks and is enforcing the ban. A $6 a firework penalty on buyers of fireworks and no penalty on sellers will reduce the number of fireworks bought to ________ a week and decrease the price kept by suppliers to ________ a firework.

Accepted Answer

A)  80; $5 
B)  40; $8 
C)  0; an unknown amount 
D)  140; $3 
A)  80; $5 
B)  40; $8 
C)  0; an unknown amount 
D)  140; $3

Question 16

The incidence of the tax between buyers and sellers depends only on the elasticity of demand.

Accepted Answer

A) True 
 B)False

Question 17

A minimum wage set above the equilibrium wage rate is a price

Accepted Answer

A)  ceiling that results in a shortage of low-skilled labor. 
B)  ceiling that results in a surplus of low-skilled labor. 
C)  floor that results in a shortage of low-skilled labor. 
D)  floor that results in a surplus of low-skilled labor. 
A)  ceiling that results in a shortage of low-skilled labor. 
B)  ceiling that results in a surplus of low-skilled labor. 
C)  floor that results in a shortage of low-skilled labor. 
D)  floor that results in a surplus of low-skilled labor.

Question 18

Compared to the situation in which a good is legal, making the good illegal and imposing ________ results in less being sold.

Accepted Answer

A)  a much higher fine on sellers than on buyers 
B)  a much higher fine on buyers than on sellers 
C)  any fine on either the buyer or the seller 
D)  all of the above 
A)  a much higher fine on sellers than on buyers 
B)  a much higher fine on buyers than on sellers 
C)  any fine on either the buyer or the seller 
D)  all of the above

Question 19

-In the above figure, what is the total tax revenue collected by the government?

Accepted Answer

A)  $20 million 
B)  $40 million 
C)  $200 million 
D)  $400 million 
A)  $20 million 
B)  $40 million 
C)  $200 million 
D)  $400 million

Question 20

A tax imposed on buyers raises the price of the good more than would the same tax if it was imposed on sellers.

Accepted Answer

A) True 
 B)False

One consequence of rent ceilings set below the equilibrium rent is that

-The figure above shows the market for cotton in Georgestan. The government regulates the market with a production quota set at 8 million pounds per year. The price of cotton in Georgestan is

-The figure shows the market for books before and after a sales tax is introduced. Each week, the tax creates a deadweight loss of , decreases consumer surplus by , and decreases producer surplus by .

-In the figure above, the demand curve shifts rightward from D₀ to D₁. There are no rent controls. In the short run, the increase in demand results in

A sales tax on sellers a good leads to a loss of consumer surplus, but a price ceiling or a price floor on that same product will not.

-In the figure above, if the minimum wage is $10 per hour, then

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. With the tax, the price of salt paid by buyers in Healthyland is

-The above figure shows the apartment market in Big City. If a government policy results in a shortage of 1,500 apartments in the Big City rental market, it is most likely that the Housing Authority has imposed

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 .

-The table above gives the demand and supply schedules for CDs. a) According to the table, what is the equilibrium price? b) Suppose the government imposes a price floor of $16 for a CD. What is the result? c) Suppose the government imposes a price ceiling of $8 for a CD. What is the result?

In order for a price ceiling to have an effect on the market, must it be set above or below the equilibrium price? Why?

A tax is imposed on the sale of a product. As long as neither the supply nor the demand is perfectly elastic or inelastic

The incidence of the tax between buyers and sellers depends only on the elasticity of demand.

A minimum wage set above the equilibrium wage rate is a price

Compared to the situation in which a good is legal, making the good illegal and imposing ________ results in less being sold.

-In the above figure, what is the total tax revenue collected by the government?

A tax imposed on buyers raises the price of the good more than would the same tax if it was imposed on sellers.

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

One consequence of rent ceilings set below the equilibrium rent is that

-The figure above shows the market for cotton in Georgestan. The government regulates the market with a production quota set at 8 million pounds per year. The price of cotton in Georgestan is

-The figure shows the market for books before and after a sales tax is introduced. Each week, the tax creates a deadweight loss of ________, decreases consumer surplus by ________, and decreases producer surplus by ________.

-In the figure above, the demand curve shifts rightward from D0 to D1. There are no rent controls. In the short run, the increase in demand results in

A sales tax on sellers a good leads to a loss of consumer surplus, but a price ceiling or a price floor on that same product will not.

-In the figure above, if the minimum wage is $10 per hour, then

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. With the tax, the price of salt paid by buyers in Healthyland is

-The above figure shows the apartment market in Big City. If a government policy results in a shortage of 1,500 apartments in the Big City rental market, it is most likely that the Housing Authority has imposed

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 ________.

-The table above gives the demand and supply schedules for CDs. a) According to the table, what is the equilibrium price? b) Suppose the government imposes a price floor of $16 for a CD. What is the result? c) Suppose the government imposes a price ceiling of $8 for a CD. What is the result?

In order for a price ceiling to have an effect on the market, must it be set above or below the equilibrium price? Why?

A tax is imposed on the sale of a product. As long as neither the supply nor the demand is perfectly elastic or inelastic

The incidence of the tax between buyers and sellers depends only on the elasticity of demand.

A minimum wage set above the equilibrium wage rate is a price

Compared to the situation in which a good is legal, making the good illegal and imposing ________ results in less being sold.

-In the above figure, what is the total tax revenue collected by the government?

A tax imposed on buyers raises the price of the good more than would the same tax if it was imposed on sellers.

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. Each week, the tax creates a deadweight loss of , decreases consumer surplus by , and decreases producer surplus by .

-In the figure above, the demand curve shifts rightward from D₀ to D₁. There are no rent controls. In the short run, the increase in demand results in

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 .