Question 1

Which of the following is not a consequence of minimum wage laws?

Accepted Answer

A)  Low skilled workers are hurt because minimum wage reduces the number of jobs providing low skilled workers with training. 
B)  Employers will be reluctant to offer low-skill workers jobs with training. 
C)  Producers have an incentive to offer workers non-wage benefits such as health care benefits and convenient working hours rather than a higher wage. 
D)  Some workers benefit when the minimum wage is increased. 
A)  Low skilled workers are hurt because minimum wage reduces the number of jobs providing low skilled workers with training. 
B)  Employers will be reluctant to offer low-skill workers jobs with training. 
C)  Producers have an incentive to offer workers non-wage benefits such as health care benefits and convenient working hours rather than a higher wage. 
D)  Some workers benefit when the minimum wage is increased.

Question 2

The actual division of the burden of a tax between buyers and sellers in a market is called

Accepted Answer

A)  tax incidence. 
B)  tax liability. 
C)  tax bearer. 
D)  tax parity. 
A)  tax incidence. 
B)  tax liability. 
C)  tax bearer. 
D)  tax parity.

Question 3

The sum of consumer surplus and producer surplus is called economic surplus.

Accepted Answer

A) True 
 B)False

Question 4

In New York City,about 1 million apartments are subject to rent control by the local government.Rent control

Accepted Answer

A)  puts a legal limit on the rent that landlords can charge for an apartment. 
B)  is a price floor which sets a minimum rent for apartments. 
C)  only applies to those apartments which are owned and rented out by the local government. 
D)  is a government policy which limits apartment rental to those people whose incomes are less than $50,000 per year. 
A)  puts a legal limit on the rent that landlords can charge for an apartment. 
B)  is a price floor which sets a minimum rent for apartments. 
C)  only applies to those apartments which are owned and rented out by the local government. 
D)  is a government policy which limits apartment rental to those people whose incomes are less than $50,000 per year.

Question 5

The cities of Francistown and Nalady are five miles apart.Francistown enacts a rent control
law that puts a ceiling on rents well below their equilibrium market value.Predict the impact of this law on the competitive equilibrium rent in Nalady,which does not have a rent control law.
a.Illustrate your answer with one demand and supply graph for the apartment market in Francistown and another demand and supply graph for the apartment marketing Nalady.
b.Make sure that your graphs clearly show (1)the initial equilibrium before the rent control in both markets and (2)what happens after the imposition of rent control.
c.Clearly show any shifts in the demand or supply curves,and the movement along the curves for each market.
d.Label your graphs fully and provide written explanation for your graphs.

Accepted Answer

See the figure below.The rent ceiling in

Question 6

Marginal cost is

Accepted Answer

A)  the total cost of producing one unit of a good or service. 
B)  the average cost of producing a good or service. 
C)  the difference between the lowest price a firm would have been willing to accept and the price it actually receives. 
D)  the additional cost to a firm of producing one more unit of a good or service. 
A)  the total cost of producing one unit of a good or service. 
B)  the average cost of producing a good or service. 
C)  the difference between the lowest price a firm would have been willing to accept and the price it actually receives. 
D)  the additional cost to a firm of producing one more unit of a good or service.

Question 7

The following equations represent the demand and supply for silver pendants.
QD = 50 - 2P
QS = -10 + 2P
What is the equilibrium price (P)and quantity (Q - in thousands)of pendants?

Accepted Answer

A)  P = $15; Q = 20 thousand 
B)  P = $50; Q = 10 thousand 
C)  P = $20; Q = 15 thousand 
D)  P = $10; Q = 30 thousand 
A)  P = $15; Q = 20 thousand 
B)  P = $50; Q = 10 thousand 
C)  P = $20; Q = 15 thousand 
D)  P = $10; Q = 30 thousand

Question 8

Table 4-3
   
Table 4-3 shows the demand and supply schedules for labor market in the city of Pixley.
-Refer to Table 4-3.If a minimum wage of $9.50 an hour is mandated,what is the quantity of labor demanded?

Accepted Answer

A)  40,000 
B)  570,000 
C)  610,000 
D)  1,180,000 
A)  40,000 
B)  570,000 
C)  610,000 
D)  1,180,000

Question 9

Economists have shown that the burden of a tax is the same whether the tax is collected from the buyer or the seller.Why,then,are gasoline and cigarette taxes imposed on sellers?

Accepted Answer

A)  Sellers are more honest than buyers. 
B)  The demand for both gasoline and cigarettes is very elastic. 
C)  The Equal Protection Clause of the U.S. Constitution prohibits the government from imposing taxes like these on buyers. 
D)  It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right of amount of tax revenue is collected. 
A)  Sellers are more honest than buyers. 
B)  The demand for both gasoline and cigarettes is very elastic. 
C)  The Equal Protection Clause of the U.S. Constitution prohibits the government from imposing taxes like these on buyers. 
D)  It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right of amount of tax revenue is collected.

Question 10

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

Accepted Answer

A)  the sum of consumer surplus and producer surplus is at a maximum. 
B)  economic surplus is minimized. 
C)  the sum of the benefits to firms is equal to the sum of the benefits to consumers. 
D)  the sum of consumer surplus and producer surplus is minimized. 
A)  the sum of consumer surplus and producer surplus is at a maximum. 
B)  economic surplus is minimized. 
C)  the sum of the benefits to firms is equal to the sum of the benefits to consumers. 
D)  the sum of consumer surplus and producer surplus is minimized.

Question 11

Assume the market price for lemon grass is $4.00 per pound,but most buyers are willing to pay more than the market price.At the market price of $4.00,the quantity of lemon grass demanded is 1,500 pounds per month,and quantity demanded does not reach zero until the price reaches $30.00 per pound.Construct a graph showing this data,calculate the total consumer surplus in the market for lemon grass,and show the consumer surplus on the graph.

Accepted Answer

@#IMG-DLM& The total consumer

Question 12

Suppose that in Canada the government places a $1,500 tax on the buyers of new snowmobiles.After the purchase of a new snowmobile,a buyer must pay the government $1,500.How would the imposition of the tax on buyers be illustrated in a graph?

Accepted Answer

A)  The tax will shift the supply curve to the left by $1,500. 
B)  The tax will shift the demand curve to the right by $1,500. 
C)  The tax will shift both the demand and supply curve to the right by $1,500. 
D)  The tax will shift the demand curve to the left by $1,500. 
A)  The tax will shift the supply curve to the left by $1,500. 
B)  The tax will shift the demand curve to the right by $1,500. 
C)  The tax will shift both the demand and supply curve to the right by $1,500. 
D)  The tax will shift the demand curve to the left by $1,500.

Question 13

If the price of hairspray is represented by equation P = 10 - 0.2 QD,then the corresponding quantity of hairspray demanded is represented by the equation

Accepted Answer

A)  QD = 5P - 2. 
B)  QD = 0.5P + 2. 
C)  QD = 50 -5P. 
D)  QD = -10 + 0.2P. 
A)  QD = 5P - 2. 
B)  QD = 0.5P + 2. 
C)  QD = 50 -5P. 
D)  QD = -10 + 0.2P.

Question 14

If equilibrium is achieved in a competitive market

Accepted Answer

A)  there is no deadweight loss. 
B)  the deadweight loss will be maximized. 
C)  the deadweight loss will equal the sum of consumer surplus and producer surplus. 
D)  the deadweight loss will be the same as the opportunity cost of the last unit of output sold. 
A)  there is no deadweight loss. 
B)  the deadweight loss will be maximized. 
C)  the deadweight loss will equal the sum of consumer surplus and producer surplus. 
D)  the deadweight loss will be the same as the opportunity cost of the last unit of output sold.

Question 15

Figure 4-1
   
Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $1.00,what is Arnold's consumer surplus?

Accepted Answer

A)  $1.00 
B)  $2.00 
C)  $6.00 
D)  $7.00 
A)  $1.00 
B)  $2.00 
C)  $6.00 
D)  $7.00

Question 16

Figure 4-6
   
Figure 4-6 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf.
-Refer to Figure 4-6.What is the area that represents producer surplus after the imposition of the price floor?

Accepted Answer

A)  A + B + E 
B)  B + E 
C)  B + E + F 
D)  B + C + D + E 
A)  A + B + E 
B)  B + E 
C)  B + E + F 
D)  B + C + D + E

Question 17

Table 4-5
  
-Refer to Table 4-5.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of consumer surplus?

Accepted Answer

A)  $100 thousand 
B)  $200 thousand 
C)  $600 thousand 
D)  $800 thousand 
A)  $100 thousand 
B)  $200 thousand 
C)  $600 thousand 
D)  $800 thousand

Question 18

Table 4-1
  
-Refer to Table 4-1.The table above lists the highest prices three consumers,Tom,Dick and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of the shirts falls from $28 to $20

Accepted Answer

A)  consumer surplus increases from $14 to $35. 
B)  Tom will buy two shirts; Dick and Harriet will each buy one shirt. 
C)  consumer surplus will increase from $70 to $95. 
D)  Harriet will receive more consumer surplus than Tom or Dick. 
A)  consumer surplus increases from $14 to $35. 
B)  Tom will buy two shirts; Dick and Harriet will each buy one shirt. 
C)  consumer surplus will increase from $70 to $95. 
D)  Harriet will receive more consumer surplus than Tom or Dick.

Question 19

Figure 4-8
   
Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market.
-Refer to Figure 4-8.How much of the tax is paid by buyers?

Accepted Answer

A)  $2 
B)  $5 
C)  $7 
D)  $12 
A)  $2 
B)  $5 
C)  $7 
D)  $12

Question 20

You are given the following market data for Venus automobiles in Saturnia.
Demand: P = 200 - 0.25Q
Supply: P = 130 + 0.10Q
where P = Price and Q = Quantity.
a.Calculate the equilibrium price and quantity.
b.Calculate the consumer surplus in this market.
c.Calculate the producer surplus in this market.

Accepted Answer

a.Price = $150; Quan

Which of the following is not a consequence of minimum wage laws?

The actual division of the burden of a tax between buyers and sellers in a market is called

The sum of consumer surplus and producer surplus is called economic surplus.

In New York City,about 1 million apartments are subject to rent control by the local government.Rent control

Marginal cost is

The following equations represent the demand and supply for silver pendants. QD = 50 - 2P QS = -10 + 2P What is the equilibrium price (P)and quantity (Q - in thousands)of pendants?

Table 4-3 Table 4-3 shows the demand and supply schedules for labor market in the city of Pixley. -Refer to Table 4-3.If a minimum wage of $9.50 an hour is mandated,what is the quantity of labor demanded?

Economists have shown that the burden of a tax is the same whether the tax is collected from the buyer or the seller.Why,then,are gasoline and cigarette taxes imposed on sellers?

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

Suppose that in Canada the government places a $1,500 tax on the buyers of new snowmobiles.After the purchase of a new snowmobile,a buyer must pay the government $1,500.How would the imposition of the tax on buyers be illustrated in a graph?

If the price of hairspray is represented by equation P = 10 - 0.2 QD,then the corresponding quantity of hairspray demanded is represented by the equation

If equilibrium is achieved in a competitive market

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $1.00,what is Arnold's consumer surplus?

Table 4-5 -Refer to Table 4-5.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of consumer surplus?

Table 4-1 -Refer to Table 4-1.The table above lists the highest prices three consumers,Tom,Dick and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of the shirts falls from $28 to $20

Figure 4-8 Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 4-8.How much of the tax is paid by buyers?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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Exam 4: Economic Efficiency,government Price Setting,and Taxes

Which of the following is not a consequence of minimum wage laws?

The actual division of the burden of a tax between buyers and sellers in a market is called

The sum of consumer surplus and producer surplus is called economic surplus.

In New York City,about 1 million apartments are subject to rent control by the local government.Rent control

Marginal cost is

The following equations represent the demand and supply for silver pendants. QD = 50 - 2P QS = -10 + 2P What is the equilibrium price (P)and quantity (Q - in thousands)of pendants?

Table 4-3 Table 4-3 shows the demand and supply schedules for labor market in the city of Pixley. -Refer to Table 4-3.If a minimum wage of $9.50 an hour is mandated,what is the quantity of labor demanded?

Economists have shown that the burden of a tax is the same whether the tax is collected from the buyer or the seller.Why,then,are gasoline and cigarette taxes imposed on sellers?

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

Suppose that in Canada the government places a $1,500 tax on the buyers of new snowmobiles.After the purchase of a new snowmobile,a buyer must pay the government $1,500.How would the imposition of the tax on buyers be illustrated in a graph?

If the price of hairspray is represented by equation P = 10 - 0.2 QD,then the corresponding quantity of hairspray demanded is represented by the equation

If equilibrium is achieved in a competitive market

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $1.00,what is Arnold's consumer surplus?

Table 4-5 -Refer to Table 4-5.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of consumer surplus?

Table 4-1 -Refer to Table 4-1.The table above lists the highest prices three consumers,Tom,Dick and Harriet,are willing to pay for a short-sleeved polo shirt.If the price of the shirts falls from $28 to $20

Figure 4-8 Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 4-8.How much of the tax is paid by buyers?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters