Question 1

-In the figure above, D0 is the demand for labor curve. Imposing a minimum wage of $6 per hour will

Accepted Answer

A)  have no effect on the market. 
B)  result in unemployment. 
C)  result in a labor shortage. 
D)  immediately shift the demand curve to D1. 
A)  have no effect on the market. 
B)  result in unemployment. 
C)  result in a labor shortage. 
D)  immediately shift the demand curve to D1.

Question 2

A minimum wage is a government-imposed price ________ that is designed to be ________ the equilibrium wage rate.

Accepted Answer

A)  ceiling; above 
B)  ceiling; below 
C)  floor; above 
D)  floor; below 
A)  ceiling; above 
B)  ceiling; below 
C)  floor; above 
D)  floor; below

Question 3

If salt has a ________, then ________ pay most of any tax levied on salt.

Accepted Answer

A)  high elasticity of supply; sellers 
B)  low elasticity of demand; buyers 
C)  high elasticity of demand; buyers 
D)  low elasticity of supply; buyers 
A)  high elasticity of supply; sellers 
B)  low elasticity of demand; buyers 
C)  high elasticity of demand; buyers 
D)  low elasticity of supply; buyers

Question 4

The Volumetric Ethanol Excise Tax Credit (VEETC) is a tax credit (which acts like a subsidy) for registered ethanol-gasoline blenders. Qualified blenders receive $0.51 for each gallon of pure ethanol they blend into gasoline. What statement is TRUE?

Accepted Answer

A)  With a subsidy, the price paid by consumers will be lower than without a subsidy. 
B)  Without a subsidy, the quantity produced by blenders will be greater than the quantity demanded. 
C)  With a subsidy, the equilibrium quantity produced will be lower than without a subsidy. 
D)  With a subsidy, production will be efficient. 
A)  With a subsidy, the price paid by consumers will be lower than without a subsidy. 
B)  Without a subsidy, the quantity produced by blenders will be greater than the quantity demanded. 
C)  With a subsidy, the equilibrium quantity produced will be lower than without a subsidy. 
D)  With a subsidy, production will be efficient.

Question 5

-The table above shows the demand and supply schedules for the market for coffee in Roastville. A tax on coffee of 75 cents per pound is proposed and the local government asks you to examine the effects of the tax.
a) Draw the demand and supply curves. If there is no tax on coffee, what is the price and how many pounds are sold?
b) With the tax, what is the price that consumers pay? What is the price that sellers receive? How many pounds of coffee are sold?
c) What is the government's total tax revenue? How much of the 75¢ per pound tax is paid by buyers? How much is paid by sellers?
d) If there are no external costs and benefits, what is the efficient level of coffee production?
e) If the tax is imposed, will the level of production be efficient? Why or why not?

Accepted Answer

@#IMG-DLM& a) The figure is above. With no tax, th

Question 6

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $8 per hour, how many hours of students' labor are unemployed?

Accepted Answer

A)  12,000 hours 
B)  9,000 hours 
C)  6,000 hours 
D)  0 hours 
A)  12,000 hours 
B)  9,000 hours 
C)  6,000 hours 
D)  0 hours

Question 7

The government wants to increase its tax revenue and plans to implement an additional sales tax. The government will raise more tax revenue if it taxes a good with an ________ rather than a good with an ________.

Accepted Answer

A)  inelastic demand; elastic demand 
B)  elastic demand; inelastic demand 
C)  elastic supply; inelastic supply 
D)  None of the above answers is correct. 
A)  inelastic demand; elastic demand 
B)  elastic demand; inelastic demand 
C)  elastic supply; inelastic supply 
D)  None of the above answers is correct.

Question 8

A sales tax is imposed on the sellers of gasoline. This tax shifts

Accepted Answer

A)  the supply of gasoline curve leftward. 
B)  the supply of gasoline curve rightward. 
C)  the demand for gasoline curve leftward. 
D)  both the supply curve of gasoline and demand curve for gasoline leftward. 
A)  the supply of gasoline curve leftward. 
B)  the supply of gasoline curve rightward. 
C)  the demand for gasoline curve leftward. 
D)  both the supply curve of gasoline and demand curve for gasoline leftward.

Question 9

When a tax is imposed on sellers of a good, the resulting rise in the equilibrium price is usually less than the amount of the tax itself. Why doesn't the equilibrium price rise by the full amount of the tax?

Accepted Answer

Because firms collect taxes from consume

Question 10

-In the table above, what is the equilibrium wage rate in an unregulated market?

Accepted Answer

A)  $8.00 per hour 
B)  $9.00 per hour 
C)  $10.00 per hour 
D)  $11.00 per hour 
A)  $8.00 per hour 
B)  $9.00 per hour 
C)  $10.00 per hour 
D)  $11.00 per hour

Question 11

When a tax is imposed on the suppliers of a good or service, then

Accepted Answer

A)  in general, the producers pay all the tax. 
B)  in general, the consumers pay all the tax. 
C)  the consumers pay a larger part of the tax as the elasticity of demand for the product becomes smaller. 
D)  the consumers pay a larger part of the tax as the elasticity of demand for the product becomes larger. 
A)  in general, the producers pay all the tax. 
B)  in general, the consumers pay all the tax. 
C)  the consumers pay a larger part of the tax as the elasticity of demand for the product becomes smaller. 
D)  the consumers pay a larger part of the tax as the elasticity of demand for the product becomes larger.

Question 12

-The market for unskilled labor is illustrated in the figure above. If a minimum wage of $10 per hour is imposed, an employer who breaks the law will be able to find a worker who is willing to work for

Accepted Answer

A)  less than or equal to $9 per hour. 
B)  between $9 and $10 per hour. 
C)  more than or equal to $10 per hour. 
D)  None of the above because workers are not willing to supply labor for wage rates less than $10 per hour. 
A)  less than or equal to $9 per hour. 
B)  between $9 and $10 per hour. 
C)  more than or equal to $10 per hour. 
D)  None of the above because workers are not willing to supply labor for wage rates less than $10 per hour.

Question 13

If the same fine is imposed on buyers and sellers of an illegal good so that the cost of breaking the law is the same for both, then

Accepted Answer

A)  there is more government revenue collected than with an excise tax on the good. 
B)  there is no deadweight loss in this market because the extra producer surplus will exactly offset the lost consumer surplus. 
C)  the supply and demand curves both shift leftward by equal amounts. 
D)  the equilibrium price of the good definitely increases. 
A)  there is more government revenue collected than with an excise tax on the good. 
B)  there is no deadweight loss in this market because the extra producer surplus will exactly offset the lost consumer surplus. 
C)  the supply and demand curves both shift leftward by equal amounts. 
D)  the equilibrium price of the good definitely increases.

Question 14

If the elasticities of demand for alcohol, tobacco and gasoline are low and the elasticities of supply are high, then the burden of these taxes (excise taxes) falls more heavily on buyers than on sellers.

Accepted Answer

A) True 
 B)False

Question 15

-The above table gives the demand schedule and the supply schedule for housing in Anytown, U.S.A. If a rent ceiling of $600 was imposed in the housing market, then

Accepted Answer

A)  there would be a surplus of apartments. 
B)  there would be a shortage of apartments. 
C)  the market would reach equilibrium at the quantity of 60 housing units. 
D)  the supply of housing would increase. 
A)  there would be a surplus of apartments. 
B)  there would be a shortage of apartments. 
C)  the market would reach equilibrium at the quantity of 60 housing units. 
D)  the supply of housing would increase.

Question 16

-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, which causes a shortage. Suppose that apartments are a normal good and incomes rise. The increase in income

Accepted Answer

A)  decreases the shortage. 
B)  has no effect on the shortage. 
C)  increases the shortage. 
D)  raises the rent. 
A)  decreases the shortage. 
B)  has no effect on the shortage. 
C)  increases the shortage. 
D)  raises the rent.

Question 17

-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 loss of producer surplus as a result of the price ceiling is

Accepted Answer

A)  $50,000 per month. 
B)  $250,000 per month. 
C)  $500,000 per month. 
D)  more than $500,000 per month. 
A)  $50,000 per month. 
B)  $250,000 per month. 
C)  $500,000 per month. 
D)  more than $500,000 per month.

Question 18

-In the above figure, if there is no minimum wage, the equilibrium employment is ________; if the government imposed a minimum wage of $16 per hour, employment is ________.

Accepted Answer

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

Question 19

A rent ceiling

Accepted Answer

A)  increases the quantity of rental units supplied. 
B)  cannot change the market price. 
C)  set above equilibrium price has no effect. 
D)  generally aims at insuring that landlords receive a higher rent than would otherwise be the case. 
A)  increases the quantity of rental units supplied. 
B)  cannot change the market price. 
C)  set above equilibrium price has no effect. 
D)  generally aims at insuring that landlords receive a higher rent than would otherwise be the case.

Question 20

-In the above figure, without a minimum wage, the equilibrium quantity of labor employed ________ million hours, and the equilibrium wage rate is ________ per hour.

Accepted Answer

A)  100; $6 
B)  200; $12 
C)  300; $18 
D)  400; $24 
A)  100; $6 
B)  200; $12 
C)  300; $18 
D)  400; $24

-In the figure above, D₀ is the demand for labor curve. Imposing a minimum wage of $6 per hour will

A minimum wage is a government-imposed price that is designed to be the equilibrium wage rate.

If salt has a , then pay most of any tax levied on salt.

The Volumetric Ethanol Excise Tax Credit (VEETC) is a tax credit (which acts like a subsidy) for registered ethanol-gasoline blenders. Qualified blenders receive $0.51 for each gallon of pure ethanol they blend into gasoline. What statement is TRUE?

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $8 per hour, how many hours of students' labor are unemployed?

The government wants to increase its tax revenue and plans to implement an additional sales tax. The government will raise more tax revenue if it taxes a good with an rather than a good with an .

A sales tax is imposed on the sellers of gasoline. This tax shifts

When a tax is imposed on sellers of a good, the resulting rise in the equilibrium price is usually less than the amount of the tax itself. Why doesn't the equilibrium price rise by the full amount of the tax?

-In the table above, what is the equilibrium wage rate in an unregulated market?

When a tax is imposed on the suppliers of a good or service, then

-The market for unskilled labor is illustrated in the figure above. If a minimum wage of $10 per hour is imposed, an employer who breaks the law will be able to find a worker who is willing to work for

If the same fine is imposed on buyers and sellers of an illegal good so that the cost of breaking the law is the same for both, then

If the elasticities of demand for alcohol, tobacco and gasoline are low and the elasticities of supply are high, then the burden of these taxes (excise taxes) falls more heavily on buyers than on sellers.

-The above table gives the demand schedule and the supply schedule for housing in Anytown, U.S.A. If a rent ceiling of $600 was imposed in the housing market, then

-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 loss of producer surplus as a result of the price ceiling is

-In the above figure, if there is no minimum wage, the equilibrium employment is ; if the government imposed a minimum wage of $16 per hour, employment is .

A rent ceiling

-In the above figure, without a minimum wage, the equilibrium quantity of labor employed million hours, and the equilibrium wage rate is per hour.

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 figure above, D0 is the demand for labor curve. Imposing a minimum wage of $6 per hour will

A minimum wage is a government-imposed price ________ that is designed to be ________ the equilibrium wage rate.

If salt has a ________, then ________ pay most of any tax levied on salt.

The Volumetric Ethanol Excise Tax Credit (VEETC) is a tax credit (which acts like a subsidy) for registered ethanol-gasoline blenders. Qualified blenders receive $0.51 for each gallon of pure ethanol they blend into gasoline. What statement is TRUE?

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $8 per hour, how many hours of students' labor are unemployed?

The government wants to increase its tax revenue and plans to implement an additional sales tax. The government will raise more tax revenue if it taxes a good with an ________ rather than a good with an ________.

A sales tax is imposed on the sellers of gasoline. This tax shifts

When a tax is imposed on sellers of a good, the resulting rise in the equilibrium price is usually less than the amount of the tax itself. Why doesn't the equilibrium price rise by the full amount of the tax?

-In the table above, what is the equilibrium wage rate in an unregulated market?

When a tax is imposed on the suppliers of a good or service, then

-The market for unskilled labor is illustrated in the figure above. If a minimum wage of $10 per hour is imposed, an employer who breaks the law will be able to find a worker who is willing to work for

If the same fine is imposed on buyers and sellers of an illegal good so that the cost of breaking the law is the same for both, then

If the elasticities of demand for alcohol, tobacco and gasoline are low and the elasticities of supply are high, then the burden of these taxes (excise taxes) falls more heavily on buyers than on sellers.

-The above table gives the demand schedule and the supply schedule for housing in Anytown, U.S.A. If a rent ceiling of $600 was imposed in the housing market, then

-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 loss of producer surplus as a result of the price ceiling is

-In the above figure, if there is no minimum wage, the equilibrium employment is ________; if the government imposed a minimum wage of $16 per hour, employment is ________.

A rent ceiling

-In the above figure, without a minimum wage, the equilibrium quantity of labor employed ________ million hours, and the equilibrium wage rate is ________ per hour.

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 figure above, D₀ is the demand for labor curve. Imposing a minimum wage of $6 per hour will

A minimum wage is a government-imposed price that is designed to be the equilibrium wage rate.

If salt has a , then pay most of any tax levied on salt.

The government wants to increase its tax revenue and plans to implement an additional sales tax. The government will raise more tax revenue if it taxes a good with an rather than a good with an .

-In the above figure, if there is no minimum wage, the equilibrium employment is ; if the government imposed a minimum wage of $16 per hour, employment is .

-In the above figure, without a minimum wage, the equilibrium quantity of labor employed million hours, and the equilibrium wage rate is per hour.