Question 1

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

Accepted Answer

A) is one that does not block voluntary exchanges of housing. 
B) cannot be created in 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 one that does not block voluntary exchanges of housing. 
B) cannot be created in 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 2

If a rent ceiling imposed by the government is greater than the equilibrium rent for housing, then

Accepted Answer

A) the supply of rental housing will increase. 
B) a shortage of housing will occur. 
C) a surplus of housing will occur. 
D) the equilibrium rent will prevail as long as all else remains constant. 
E) the equilibrium rent will rise. 
A) the supply of rental housing will increase. 
B) a shortage of housing will occur. 
C) a surplus of housing will occur. 
D) the equilibrium rent will prevail as long as all else remains constant. 
E) the equilibrium rent will rise.

Question 3

Use the table below to answer the following questions.
Table 6.3.2
  
-Refer to Table 6.3.2. You are in the business of producing and selling hamburgers, French fries, pizza, and ice cream. The mayor of your city plans to impose a sales tax on one of these products. Based on the elasticities in the table, on which of these goods would your customers prefer to be taxed?

Accepted Answer

A) hamburgers 
B) French fries 
C) pizza 
D) ice cream 
E) Your customers are indifferent about which good is taxed. 
A) hamburgers 
B) French fries 
C) pizza 
D) ice cream 
E) Your customers are indifferent about which good is taxed.

Question 4

When an effective production quota is applied in the market for wheat, the quantity produced ________ and the price ________. The marginal social benefit ________ marginal social cost.

Accepted Answer

A) increases; rises; exceeds 
B) decreases; falls; is less than 
C) decreases; rises; exceeds 
D) increases; falls; is less than 
E) decreases; rises; is less than 
A) increases; rises; exceeds 
B) decreases; falls; is less than 
C) decreases; rises; exceeds 
D) increases; falls; is less than 
E) decreases; rises; is less than

Question 5

Suppose the equilibrium wage is $10 an hour. A minimum wage is a price ________ that will change the quantity of employment if it is set at ________ an hour.

Accepted Answer

A) floor; $12 
B) ceiling; $12 
C) floor; $8 
D) ceiling; $8 
E) floor; $10 
A) floor; $12 
B) ceiling; $12 
C) floor; $8 
D) ceiling; $8 
E) floor; $10

Question 6

An effective rent ceiling

Accepted Answer

A) increases producer surplus. 
B) results in a producer surplus of zero. 
C) sometimes increases producer surplus and sometimes decreases producer surplus. 
D) decreases producer surplus. 
E) decreases the supply of housing. 
A) increases producer surplus. 
B) results in a producer surplus of zero. 
C) sometimes increases producer surplus and sometimes decreases producer surplus. 
D) decreases producer surplus. 
E) decreases the supply of housing.

Question 7

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 new price is ________ and the new equilibrium quantity is ________ units.

Accepted Answer

A) $8; 400 
B) $8; 300 
C) $7; 300 
D) $9; 300 
E) $8; 200 
A) $8; 400 
B) $8; 300 
C) $7; 300 
D) $9; 300 
E) $8; 200

Question 8

An illegal market in which the equilibrium price exceeds the price ceiling is

Accepted Answer

A) a rental market. 
B) a capital market. 
C) a black market. 
D) an efficient market. 
E) a housing market. 
A) a rental market. 
B) a capital market. 
C) a black market. 
D) an efficient market. 
E) a housing market.

Question 9

The demand for a good and the supply of a good are each neither perfectly elastic nor perfectly inelastic. If a sales tax on sellers of the good is imposed, the tax is paid by

Accepted Answer

A) the buyers only. 
B) both the buyers and the sellers. 
C) the sellers only. 
D) the buyers only if demand for the good increases. 
E) the suppliers only if the supply of the good increases. 
A) the buyers only. 
B) both the buyers and the sellers. 
C) the sellers only. 
D) the buyers only if demand for the good increases. 
E) the suppliers only if the supply of the good increases.

Question 10

Suppose your province raises the provincial sales tax by 1 percent. You predict that the prices of taxed goods (including the tax)will

Accepted Answer

A) rise by 1 percent. 
B) rise by more than 1 percent. 
C) rise by an amount between zero and 1 percent. 
D) not change at all. 
E) fall by an amount between zero and 1 percent. 
A) rise by 1 percent. 
B) rise by more than 1 percent. 
C) rise by an amount between zero and 1 percent. 
D) not change at all. 
E) fall by an amount between zero and 1 percent.

Question 11

Use the table below to answer the following questions.
Table 6.3.1
  
-Refer to Table 6.3.1. Suppose a sales tax of $2 a unit is imposed on the good described in the table. Government revenue from the tax is

Accepted Answer

A) $1,200. 
B) $1,000. 
C) $800. 
D) $600. 
E) zero. 
A) $1,200. 
B) $1,000. 
C) $800. 
D) $600. 
E) zero.

Question 12

Consider a market for an illegal good. If the government imposes the cost of breaking the law on the buyer of the good, then price will be

Accepted Answer

A) higher and quantity lower compared to imposing the same cost on the seller. 
B) higher and quantity higher compared to imposing the same cost on the seller. 
C) lower and quantity lower compared to imposing the same cost on the seller. 
D) lower and quantity the same compared to imposing the same cost on the seller. 
E) higher and quantity the same compared to imposing the same cost on the seller. 
A) higher and quantity lower compared to imposing the same cost on the seller. 
B) higher and quantity higher compared to imposing the same cost on the seller. 
C) lower and quantity lower compared to imposing the same cost on the seller. 
D) lower and quantity the same compared to imposing the same cost on the seller. 
E) higher and quantity the same compared to imposing the same cost on the seller.

Question 13

Use the figure below to answer the following questions.
   
Figure 6.1.1
-Refer to Figure 6.1.1. Suppose the demand for rental housing is shown by demand curve D₁, and there is a rent ceiling of $150 per room. What is the highest amount that would be expended on search activity?

Accepted Answer

A) $200 
B) $150 
C) $100 
D) $50 
E) $0 
A) $200 
B) $150 
C) $100 
D) $50 
E) $0

Question 14

Which one of the following is not likely to be an outcome of a rent ceiling?

Accepted Answer

A) a black market for rent-controlled housing 
B) long waiting lists of potential renters for rent-controlled housing 
C) a short-run shortage of housing 
D) a black market price below the rent ceiling 
E) increased search activity for rent-controlled housing 
A) a black market for rent-controlled housing 
B) long waiting lists of potential renters for rent-controlled housing 
C) a short-run shortage of housing 
D) a black market price below the rent ceiling 
E) increased search activity for rent-controlled housing

Question 15

Use the table below to answer the following questions.
Table 6.2.2
  
-Refer to Table 6.2.2. What is the equilibrium wage rate in an unregulated market?

Accepted Answer

A) $5.00 per hour 
B) $5.50 per hour 
C) $6.00 per hour 
D) $6.50 per hour 
E) $7.50 per hour 
A) $5.00 per hour 
B) $5.50 per hour 
C) $6.00 per hour 
D) $6.50 per hour 
E) $7.50 per hour

Question 16

An effective rent ceiling

Accepted Answer

A) increases consumer surplus. 
B) increases producer surplus. 
C) creates a deadweight loss. 
D) decreases the supply of housing. 
E) increases the supply of housing. 
A) increases consumer surplus. 
B) increases producer surplus. 
C) creates a deadweight loss. 
D) decreases the supply of housing. 
E) increases the supply of housing.

Question 17

In an unregulated housing market with no rent ceiling,

Accepted Answer

A) marginal social cost is greater than marginal social benefit. 
B) marginal social benefit is greater than marginal social cost. 
C) marginal social benefit equals marginal social cost. 
D) marginal social benefit is negative. 
E) marginal social cost is negative. 
A) marginal social cost is greater than marginal social benefit. 
B) marginal social benefit is greater than marginal social cost. 
C) marginal social benefit equals marginal social cost. 
D) marginal social benefit is negative. 
E) marginal social cost is negative.

Question 18

The seller pays most of a tax if demand is relatively elastic because

Accepted Answer

A) the buyer can easily substitute to other markets. 
B) the seller can easily substitute to other markets. 
C) the government forces the seller to bear the burden of the tax. 
D) there is a black market for this good. 
E) the seller cannot easily substitute to other goods. 
A) the buyer can easily substitute to other markets. 
B) the seller can easily substitute to other markets. 
C) the government forces the seller to bear the burden of the tax. 
D) there is a black market for this good. 
E) the seller cannot easily substitute to other goods.

Question 19

In an unregulated housing market with no rent ceiling,

Accepted Answer

A) scarce housing resources are allocated inefficiently. 
B) scarce housing resources are allocated efficiently. 
C) tenants pay a lower rent compared to what they pay in a market with an effective rent ceiling. 
D) landlords receive less compared to what they receive in a market with an effective rent ceiling. 
E) consumer surplus equals producer surplus. 
A) scarce housing resources are allocated inefficiently. 
B) scarce housing resources are allocated efficiently. 
C) tenants pay a lower rent compared to what they pay in a market with an effective rent ceiling. 
D) landlords receive less compared to what they receive in a market with an effective rent ceiling. 
E) consumer surplus equals producer surplus.

Question 20

A price ceiling set below the equilibrium price will result in

Accepted Answer

A) excess supply. 
B) excess demand. 
C) the equilibrium price. 
D) an increase in supply. 
E) a decrease in demand. 
A) excess supply. 
B) excess demand. 
C) the equilibrium price. 
D) an increase in supply. 
E) a decrease in demand.

Exam 6: Governments Actions in Markets

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

If a rent ceiling imposed by the government is greater than the equilibrium rent for housing, then

When an effective production quota is applied in the market for wheat, the quantity produced ________ and the price ________. The marginal social benefit ________ marginal social cost.

Suppose the equilibrium wage is $10 an hour. A minimum wage is a price ________ that will change the quantity of employment if it is set at ________ an hour.

An effective rent ceiling

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 new price is ________ and the new equilibrium quantity is ________ units.

An illegal market in which the equilibrium price exceeds the price ceiling is

The demand for a good and the supply of a good are each neither perfectly elastic nor perfectly inelastic. If a sales tax on sellers of the good is imposed, the tax is paid by

Suppose your province raises the provincial sales tax by 1 percent. You predict that the prices of taxed goods (including the tax)will

Use the table below to answer the following questions. Table 6.3.1 -Refer to Table 6.3.1. Suppose a sales tax of $2 a unit is imposed on the good described in the table. Government revenue from the tax is

Consider a market for an illegal good. If the government imposes the cost of breaking the law on the buyer of the good, then price will be

Use the figure below to answer the following questions. Figure 6.1.1 -Refer to Figure 6.1.1. Suppose the demand for rental housing is shown by demand curve D₁, and there is a rent ceiling of $150 per room. What is the highest amount that would be expended on search activity?

Which one of the following is not likely to be an outcome of a rent ceiling?

Use the table below to answer the following questions. Table 6.2.2 -Refer to Table 6.2.2. What is the equilibrium wage rate in an unregulated market?

An effective rent ceiling

In an unregulated housing market with no rent ceiling,

The seller pays most of a tax if demand is relatively elastic because

In an unregulated housing market with no rent ceiling,

A price ceiling set below the equilibrium price will result in

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

When an effective production quota is applied in the market for wheat, the quantity produced and the price . The marginal social benefit marginal social cost.

Suppose the equilibrium wage is $10 an hour. A minimum wage is a price that will change the quantity of employment if it is set at an hour.

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 new price is and the new equilibrium quantity is units.