Question 1

-In the above figure, if the minimum wage is set at $18 per hour, what quantity of labor is employed?

Accepted Answer

A)  100 million hours 
B)  200 million hours 
C)  300 million hours 
D)  400 million hours 
A)  100 million hours 
B)  200 million hours 
C)  300 million hours 
D)  400 million hours

Question 2

-The table above shows the demand for and supply of labor in a small less developed country.
a) Draw the demand and supply curves. What are the equilibrium wage and the level of employment?
b) Currently, the minimum wage is set at $4.50 per hour. How many hours are worked? How many hours of labor are unemployed?
c) If the minimum wage is raised to $6 per hour, what are employment and unemployment?

Accepted Answer

@#IMG-DLM& a) The figure above shows the labor mar

Question 3

If a tax is imposed on buyers in a market in which supply is perfectly inelastic, the

Accepted Answer

A)  buyers pay the entire tax. 
B)  sellers pay the entire tax. 
C)  buyers and the sellers both pay a portion of the tax. 
D)  neither the buyers nor the sellers pay the tax. 
A)  buyers pay the entire tax. 
B)  sellers pay the entire tax. 
C)  buyers and the sellers both pay a portion of the tax. 
D)  neither the buyers nor the sellers pay the tax.

Question 4

Suppose the government wants to discourage the use of cigarettes. If it imposes a tax on cigarettes, the equilibrium quantity falls the most when the elasticity of demand equals

Accepted Answer

A)  2.00. 
B)  1.00. 
C)  0.50. 
D)  0. 
A)  2.00. 
B)  1.00. 
C)  0.50. 
D)  0.

Question 5

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, how many apartment units are rented?

Accepted Answer

A)  2,000 
B)  3,000 
C)  4,000 
D)  None of the above answers is correct. 
A)  2,000 
B)  3,000 
C)  4,000 
D)  None of the above answers is correct.

Question 6

-In the figure above, if the minimum wage is $9 per hour, then

Accepted Answer

A)  the quantity of labor supplied is 4 million hours and the quantity of labor demanded is 2 million hours. 
B)  the quantity of labor demanded is 4 million hours and the quantity of labor supplied 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 4 million hours and the quantity of labor demanded is 2 million hours. 
B)  the quantity of labor demanded is 4 million hours and the quantity of labor supplied 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 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 quantity of housing rented in Appleville is

Accepted Answer

A)  200 units below the efficient level. 
B)  100 units above the efficient level. 
C)  300 units below the efficient level. 
D)  efficient. 
A)  200 units below the efficient level. 
B)  100 units above the efficient level. 
C)  300 units below the efficient level. 
D)  efficient.

Question 8

When the minimum wage is set above the equilibrium wage rate, the number of hours of labor employed is determined by the ________ and the ________.

Accepted Answer

A)  supply of labor; minimum wage 
B)  demand for labor; supply of labor 
C)  supply of and demand for labor; the minimum wage 
D)  demand for labor; minimum wage 
A)  supply of labor; minimum wage 
B)  demand for labor; supply of labor 
C)  supply of and demand for labor; the minimum wage 
D)  demand for labor; minimum wage

Question 9

When a government fines and/or imprisons convicted drug dealers, it is attempting to reduce the illegal drug trade by shifting the ________ curve for illegal drugs ________.

Accepted Answer

A)  demand; rightward 
B)  demand; leftward 
C)  supply; rightward 
D)  supply; leftward 
A)  demand; rightward 
B)  demand; leftward 
C)  supply; rightward 
D)  supply; leftward

Question 10

If demand for good is very inelastic and supply for the good is very elastic a sales tax imposed on sellers will cause the price received by sellers

Accepted Answer

A)  would not change very much. 
B)  would rise by more than the amount of the tax. 
C)  would fall by an amount of the tax. 
D)  would fall by more than the amount of the tax. 
A)  would not change very much. 
B)  would rise by more than the amount of the tax. 
C)  would fall by an amount of the tax. 
D)  would fall by more than the amount of the tax.

Question 11

Two small California cities, Richmond and El Monte, are planning to impose a penny per ounce tax on sugary drinks. They are being opposed by the soda industry that is vehemently against this new legislation. (Source: Reuters, September 6, 2012)
-One reason why soda companies are so fervently against this tax might be because they assume sellers will pay the entire tax. Sellers will pay the entire tax if

Accepted Answer

A)  supply is perfectly inelastic. 
B)  the price elasticity of supply is between zero and 1. 
C)  supply is unit elastic. 
D)  supply is perfectly elastic. 
A)  supply is perfectly inelastic. 
B)  the price elasticity of supply is between zero and 1. 
C)  supply is unit elastic. 
D)  supply is perfectly elastic.

Question 12

-The table above shows the demand for and supply of rental housing in Crainsboro. The city government is considering imposing a rent ceiling of $700 a month. Help the government to analyze the effects of the proposed rent ceiling.
a) Draw the demand and supply curves. With no rent ceiling, what is the rent and how many apartments are rented?
b) With the rent ceiling, what is the rent and how many apartments are rented? What is the shortage of housing? Explain.
c) If the rent ceiling is strictly enforced, what is the maximum price that someone is willing to pay for the last unit of housing available? Is the housing market efficient? Explain.
d) If a black market develops, how high could the black market rent be? Explain your answer.

Accepted Answer

@#IMG-DLM& a) The figure above shows the housing m

Question 13

If penalties are imposed only on the buyers of illegal drugs, the equilibrium price of illegal drugs will ________ and the equilibrium quantity will ________.

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

-In the figure above, originally the apartment rental market is in short-run and long-run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month. The deadweight loss is borne by

Accepted Answer

A)  the producers only. 
B)  the consumers only. 
C)  all producers and some consumers. 
D)  all consumers and some producers. 
A)  the producers only. 
B)  the consumers only. 
C)  all producers and some consumers. 
D)  all consumers and some producers.

Question 15

A minimum wage set above the equilibrium wage rate is a price ________ that ________ the quantity of low-skilled labor demanded.

Accepted Answer

A)  ceiling; decreases 
B)  ceiling; increases 
C)  floor; decreases 
D)  floor; increases 
A)  ceiling; decreases 
B)  ceiling; increases 
C)  floor; decreases 
D)  floor; increases

Question 16

-In the table above, what is the level of unemployment (in millions of workers) if the minimum wage is set at $8 per hour?

Accepted Answer

A)  0 
B)  1 
C)  3 
D)  4 
A)  0 
B)  1 
C)  3 
D)  4

Question 17

The amount of a tax paid by the buyers will be smaller 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 18

If policy makers believe that the equilibrium wage rate is too low, policy makers can raise wages by legislating a minimum wage, that is, a wage

Accepted Answer

A)  ceiling above the equilibrium wage. 
B)  ceiling below the equilibrium wage. 
C)  floor above the equilibrium wage. 
D)  floor below the equilibrium wage. 
A)  ceiling above the equilibrium wage. 
B)  ceiling below the equilibrium wage. 
C)  floor above the equilibrium wage. 
D)  floor below the equilibrium wage.

Question 19

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. The government would raise more tax revenue from this excise tax if

Accepted Answer

A)  the demand was more inelastic. 
B)  it places a price ceiling on blouses in addition to the tax. 
C)  it places a price floor on blouses in addition to the tax. 
D)  all of the above. 
A)  the demand was more inelastic. 
B)  it places a price ceiling on blouses in addition to the tax. 
C)  it places a price floor on blouses in addition to the tax. 
D)  all of the above.

Question 20

In some recent past years, prices of basic food commodities such as corn, rice, and wheat have increased sharply. Chinese authorities were concerned that escalating prices would cause inflation and be followed by civil unrest.
-If the Chinese government sets a price ceiling below the equilibrium price, the result will be to

Accepted Answer

A)  increase total surplus. 
B)  create deadweight loss. 
C)  increase surplus and create deadweight loss. 
D)  eliminate deadweight loss. 
A)  increase total surplus. 
B)  create deadweight loss. 
C)  increase surplus and create deadweight loss. 
D)  eliminate deadweight loss.

-In the above figure, if the minimum wage is set at $18 per hour, what quantity of labor is employed?

If a tax is imposed on buyers in a market in which supply is perfectly inelastic, the

Suppose the government wants to discourage the use of cigarettes. If it imposes a tax on cigarettes, the equilibrium quantity falls the most when the elasticity of demand equals

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, how many apartment units are rented?

-In the figure above, if the minimum wage is $9 per hour, then

-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 quantity of housing rented in Appleville is

When the minimum wage is set above the equilibrium wage rate, the number of hours of labor employed is determined by the and the .

When a government fines and/or imprisons convicted drug dealers, it is attempting to reduce the illegal drug trade by shifting the curve for illegal drugs .

If demand for good is very inelastic and supply for the good is very elastic a sales tax imposed on sellers will cause the price received by sellers

If penalties are imposed only on the buyers of illegal drugs, the equilibrium price of illegal drugs will and the equilibrium quantity will .

-In the figure above, originally the apartment rental market is in short-run and long-run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month. The deadweight loss is borne by

A minimum wage set above the equilibrium wage rate is a price that the quantity of low-skilled labor demanded.

-In the table above, what is the level of unemployment (in millions of workers) if the minimum wage is set at $8 per hour?

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

If policy makers believe that the equilibrium wage rate is too low, policy makers can raise wages by legislating a minimum wage, that is, a wage

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. The government would raise more tax revenue from this excise tax if

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

-In the above figure, if the minimum wage is set at $18 per hour, what quantity of labor is employed?

If a tax is imposed on buyers in a market in which supply is perfectly inelastic, the

Suppose the government wants to discourage the use of cigarettes. If it imposes a tax on cigarettes, the equilibrium quantity falls the most when the elasticity of demand equals

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, how many apartment units are rented?

-In the figure above, if the minimum wage is $9 per hour, then

-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 quantity of housing rented in Appleville is

When the minimum wage is set above the equilibrium wage rate, the number of hours of labor employed is determined by the ________ and the ________.

When a government fines and/or imprisons convicted drug dealers, it is attempting to reduce the illegal drug trade by shifting the ________ curve for illegal drugs ________.

If demand for good is very inelastic and supply for the good is very elastic a sales tax imposed on sellers will cause the price received by sellers

If penalties are imposed only on the buyers of illegal drugs, the equilibrium price of illegal drugs will ________ and the equilibrium quantity will ________.

-In the figure above, originally the apartment rental market is in short-run and long-run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month. The deadweight loss is borne by

A minimum wage set above the equilibrium wage rate is a price ________ that ________ the quantity of low-skilled labor demanded.

-In the table above, what is the level of unemployment (in millions of workers) if the minimum wage is set at $8 per hour?

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

If policy makers believe that the equilibrium wage rate is too low, policy makers can raise wages by legislating a minimum wage, that is, a wage

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. The government would raise more tax revenue from this excise tax if

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

When the minimum wage is set above the equilibrium wage rate, the number of hours of labor employed is determined by the and the .

When a government fines and/or imprisons convicted drug dealers, it is attempting to reduce the illegal drug trade by shifting the curve for illegal drugs .

If penalties are imposed only on the buyers of illegal drugs, the equilibrium price of illegal drugs will and the equilibrium quantity will .

A minimum wage set above the equilibrium wage rate is a price that the quantity of low-skilled labor demanded.