Question 1

A subsidy

Accepted Answer

A) lowers the price received by farmers. 
B) decreases the quantity supplied in the market. 
C) raises the price received by farmers. 
D) prevents the deadweight loss from underproduction. 
E) decreases total revenue received by farmers. 
A) lowers the price received by farmers. 
B) decreases the quantity supplied in the market. 
C) raises the price received by farmers. 
D) prevents the deadweight loss from underproduction. 
E) decreases total revenue received by farmers. C

Question 2

Use the table below to answer the following questions.
Table 6.4.1
  
-Refer to Table 6.4.1. The table shows the demand and supply schedules for rice. With a production quota of 2,000 boxes a week, the price of a box of rice is ________, the marginal cost of producing rice is ________ a box, and the quantity of rice produced is ________ boxes a week.

Accepted Answer

A) $1.30; $1.60; 2,000 
B) $1.60; $1.30; 2,000 
C) $1.40; $1.40; 2,500 
D) $1.40; $1.40; 2,000 
E) $1.60; $1.30; 2,500 
A) $1.30; $1.60; 2,000 
B) $1.60; $1.30; 2,000 
C) $1.40; $1.40; 2,500 
D) $1.40; $1.40; 2,000 
E) $1.60; $1.30; 2,500 B

Question 3

Use the figure below to answer the following questions.
   
Figure 6.3.1
-Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed. The tax on each frisbee is

Accepted Answer

A) $0.40. 
B) $0.60. 
C) $1.00. 
D) $5.60. 
E) $6.60. 
A) $0.40. 
B) $0.60. 
C) $1.00. 
D) $5.60. 
E) $6.60. C

Question 4

First-come, first-served allocates housing to those

Accepted Answer

A) whose names are on waiting lists. 
B) who share similar views to the owner of the housing. 
C) who are rich. 
D) who are poor. 
E) who are lucky. 
A) whose names are on waiting lists. 
B) who share similar views to the owner of the housing. 
C) who are rich. 
D) who are poor. 
E) who are lucky.

Question 5

Use the table below to answer the following questions.
Table 6.5.1
The Market for a Prohibited Good
  
-Refer to Table 6.5.1. If a $2-per-unit cost of breaking the law is imposed on sellers, the price received by sellers (net of the cost of breaking the law)would be

Accepted Answer

A) $8. 
B) $7. 
C) $9. 
D) $10. 
E) $6. 
A) $8. 
B) $7. 
C) $9. 
D) $10. 
E) $6.

Question 6

A subsidy is a

Accepted Answer

A) tax imposed by the government on imported goods. 
B) payment made by the government to a producer. 
C) tax imposed by the government on a producer. 
D) payment made by a consumer to a producer. 
E) payment made by foreign governments to domestic farmers. 
A) tax imposed by the government on imported goods. 
B) payment made by the government to a producer. 
C) tax imposed by the government on a producer. 
D) payment made by a consumer to a producer. 
E) payment made by foreign governments to domestic farmers.

Question 7

According to the fair result view of fairness, a fair outcome in the housing market

Accepted Answer

A) is the one that blocks voluntary exchange of housing. 
B) cannot be created in the housing industry. 
C) is one that allocates scarce housing resources to those who are willing and able to pay. 
D) is one that allocates scarce housing resources by lottery. 
E) is one that allocates scarce housing resources to the poorest. 
A) is the one that blocks voluntary exchange of housing. 
B) cannot be created in the housing industry. 
C) is one that allocates scarce housing resources to those who are willing and able to pay. 
D) is one that allocates scarce housing resources by lottery. 
E) is one that allocates scarce housing resources to the poorest.

Question 8

If the government imposes a maximum rent for housing that is above the equilibrium price, then you predict that

Accepted Answer

A) the law will have no effect in the market for housing. 
B) the law will generate a shortage of housing. 
C) the law will create a surplus of housing. 
D) the demand curve for housing shifts rightward. 
E) the supply curve of housing shifts leftward. 
A) the law will have no effect in the market for housing. 
B) the law will generate a shortage of housing. 
C) the law will create a surplus of housing. 
D) the demand curve for housing shifts rightward. 
E) the supply curve of housing shifts leftward.

Question 9

Suppose that buying and selling a certain good is made illegal. In the market for this good, the demand curve shifts ________ and the supply curve shifts ________.

Accepted Answer

A) rightward; rightward 
B) leftward; leftward 
C) rightward; leftward 
D) leftward; rightward 
E) None of the above; neither the demand curve nor the supply curve shifts. 
A) rightward; rightward 
B) leftward; leftward 
C) rightward; leftward 
D) leftward; rightward 
E) None of the above; neither the demand curve nor the supply curve shifts.

Question 10

If the demand for a good is perfectly inelastic, then a tax on the good will be paid

Accepted Answer

A) completely by the buyers. 
B) completely by the sellers. 
C) equally by the buyers and sellers. 
D) mostly but not completely by the buyers. 
E) mostly but not completely by the sellers. 
A) completely by the buyers. 
B) completely by the sellers. 
C) equally by the buyers and sellers. 
D) mostly but not completely by the buyers. 
E) mostly but not completely by the sellers.

Question 11

If the supply of a good is perfectly elastic, then a tax on the good will be paid

Accepted Answer

A) completely by the buyers. 
B) completely by the sellers. 
C) equally by the buyers and sellers. 
D) mostly but not completely by the buyers. 
E) mostly but not completely by the sellers. 
A) completely by the buyers. 
B) completely by the sellers. 
C) equally by the buyers and sellers. 
D) mostly but not completely by the buyers. 
E) mostly but not completely by the sellers.

Question 12

The ________ principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by government. The ________ principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.

Accepted Answer

A) benefits; ability-to-pay 
B) equality; fairness 
C) services; burden 
D) ability-to-pay; benefits 
E) efficient; inefficient 
A) benefits; ability-to-pay 
B) equality; fairness 
C) services; burden 
D) ability-to-pay; benefits 
E) efficient; inefficient

Question 13

A $10 per-unit tax on MP₃ players raises the equilibrium price paid by consumers by $5. The quantity sold before the tax was 5,000 per year. The revenue from the tax is

Accepted Answer

A) zero. 
B) positive but less than $50,000 per year. 
C) $50,000 per year. 
D) more than $50,000 per year. 
E) greater the more elastic is demand. 
A) zero. 
B) positive but less than $50,000 per year. 
C) $50,000 per year. 
D) more than $50,000 per year. 
E) greater the more elastic is demand.

Question 14

Use the figure below to answer the following question.
   
Figure 6.4.1
-Refer to Figure 6.4.1. The graph shows the market for tomatoes. When the government introduces a subsidy for tomatoes at $4 a kilogram, the quantity produced is ________ because ________.

Accepted Answer

A) efficient; marginal social cost is less than marginal social benefit 
B) efficient; marginal social benefit equals marginal social cost 
C) inefficient; marginal social cost is less than marginal social benefit 
D) inefficient; marginal social benefit is less than marginal social cost 
E) inefficient; marginal social cost is zero 
A) efficient; marginal social cost is less than marginal social benefit 
B) efficient; marginal social benefit equals marginal social cost 
C) inefficient; marginal social cost is less than marginal social benefit 
D) inefficient; marginal social benefit is less than marginal social cost 
E) inefficient; marginal social cost is zero

Question 15

If enforcement is aimed at buyers of an illegal good, the

Accepted Answer

A) price and quantity bought decrease. 
B) price and quantity bought increase. 
C) price rises and quantity bought decreases. 
D) price falls and quantity bought increases. 
E) price change is uncertain and quantity bought decreases. 
A) price and quantity bought decrease. 
B) price and quantity bought increase. 
C) price rises and quantity bought decreases. 
D) price falls and quantity bought increases. 
E) price change is uncertain and quantity bought decreases.

Question 16

Use the figure below to answer the following questions.
   
Figure 6.3.2
-Refer to Figure 6.3.2. The buyers' share of the tax is

Accepted Answer

A) zero. 
B) $0.50. 
C) $1.00. 
D) $1.50. 
E) $2.00. 
A) zero. 
B) $0.50. 
C) $1.00. 
D) $1.50. 
E) $2.00.

Question 17

Use the figure below to answer the following questions.
   
Figure 6.2.1
-Refer to Figure 6.2.1. What is the equilibrium wage rate per hour in an unregulated market?

Accepted Answer

A) $2 
B) $3 
C) $4 
D) $5 
E) $30 
A) $2 
B) $3 
C) $4 
D) $5 
E) $30

Question 18

The government sets a price floor for corn, which is above the equilibrium price of corn. As a result

Accepted Answer

A) the market for corn is efficient. 
B) a shortage of corn occurs. 
C) consumer surplus is maximized. 
D) a deadweight loss is created. 
E) the sum of consumer surplus and producer surplus is maximized. 
A) the market for corn is efficient. 
B) a shortage of corn occurs. 
C) consumer surplus is maximized. 
D) a deadweight loss is created. 
E) the sum of consumer surplus and producer surplus is maximized.

Question 19

Use the figure below to answer the following questions.
   
Figure 6.1.2
-Refer to Figure 6.1.2. If a rigorously enforced price ceiling is set at $10, then

Accepted Answer

A) 100 units will be sold at a price of $20 each. 
B) 100 units will be sold at a price of $15 each. 
C) 150 units will be sold at a price of $15 each. 
D) 200 units will be sold at a price of $10 each. 
E) 100 units will be sold at a price of $10 each. 
A) 100 units will be sold at a price of $20 each. 
B) 100 units will be sold at a price of $15 each. 
C) 150 units will be sold at a price of $15 each. 
D) 200 units will be sold at a price of $10 each. 
E) 100 units will be sold at a price of $10 each.

Question 20

A rent ceiling

Accepted Answer

A) results in a shortage of housing if the rent ceiling is below the equilibrium rent. 
B) results in a surplus of housing if the rent ceiling is above the equilibrium rent. 
C) always results in a shortage of housing. 
D) always results in a surplus of housing. 
E) Both A and B are correct. 
A) results in a shortage of housing if the rent ceiling is below the equilibrium rent. 
B) results in a surplus of housing if the rent ceiling is above the equilibrium rent. 
C) always results in a shortage of housing. 
D) always results in a surplus of housing. 
E) Both A and B are correct.

Exam 6: Governments Actions in Markets

A subsidy

Use the figure below to answer the following questions. Figure 6.3.1 -Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed. The tax on each frisbee is

First-come, first-served allocates housing to those

Use the table below to answer the following questions. Table 6.5.1 The Market for a Prohibited Good -Refer to Table 6.5.1. If a $2-per-unit cost of breaking the law is imposed on sellers, the price received by sellers (net of the cost of breaking the law)would be

A subsidy is a

According to the fair result view of fairness, a fair outcome in the housing market

If the government imposes a maximum rent for housing that is above the equilibrium price, then you predict that

Suppose that buying and selling a certain good is made illegal. In the market for this good, the demand curve shifts ________ and the supply curve shifts ________.

If the demand for a good is perfectly inelastic, then a tax on the good will be paid

If the supply of a good is perfectly elastic, then a tax on the good will be paid

The ________ principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by government. The ________ principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.

A $10 per-unit tax on MP₃ players raises the equilibrium price paid by consumers by $5. The quantity sold before the tax was 5,000 per year. The revenue from the tax is

Use the figure below to answer the following question. Figure 6.4.1 -Refer to Figure 6.4.1. The graph shows the market for tomatoes. When the government introduces a subsidy for tomatoes at $4 a kilogram, the quantity produced is ________ because ________.

If enforcement is aimed at buyers of an illegal good, the

Use the figure below to answer the following questions. Figure 6.3.2 -Refer to Figure 6.3.2. The buyers' share of the tax is

Use the figure below to answer the following questions. Figure 6.2.1 -Refer to Figure 6.2.1. What is the equilibrium wage rate per hour in an unregulated market?

The government sets a price floor for corn, which is above the equilibrium price of corn. As a result

Use the figure below to answer the following questions. Figure 6.1.2 -Refer to Figure 6.1.2. If a rigorously enforced price ceiling is set at $10, then

A rent ceiling

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

Filters

Suppose that buying and selling a certain good is made illegal. In the market for this good, the demand curve shifts and the supply curve shifts .

The principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by government. The principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.

Use the figure below to answer the following question. Figure 6.4.1 -Refer to Figure 6.4.1. The graph shows the market for tomatoes. When the government introduces a subsidy for tomatoes at $4 a kilogram, the quantity produced is because .