Question 1

-The minimum wage is set above the equilibrium wage rate. Does the minimum wage create inefficiency?

Accepted Answer

A) Yes 
B) No 
C) Only if the supply of labor is perfectly inelastic 
D) Only if the supply of labor is perfectly elastic 
E) Only if employment exceeds the efficient amount 
A) Yes 
B) No 
C) Only if the supply of labor is perfectly inelastic 
D) Only if the supply of labor is perfectly elastic 
E) Only if employment exceeds the efficient amount A

Question 2

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton.
-The figure above shows that the government subsidy accounts for ________ percent of the farmers' revenue.

Accepted Answer

A) 33 
B) 67 
C) 50 
D) 100 
E) 25 
A) 33 
B) 67 
C) 50 
D) 100 
E) 25 A

Question 3

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is ________ and the supply of housing is ________.

Accepted Answer

A) elastic; elastic 
B) elastic; inelastic 
C) inelastic; elastic 
D) inelastic; inelastic 
E) unit elastic; unit elastic 
A) elastic; elastic 
B) elastic; inelastic 
C) inelastic; elastic 
D) inelastic; inelastic 
E) unit elastic; unit elastic D

Question 4

The incidence of a tax refers to

Accepted Answer

A) the division of the burden of a tax between buyers and sellers. 
B) the deadweight loss that a tax generates. 
C) the inefficiency of a tax. 
D) the revenue collected by government because of a tax. 
E) the division of the burden of a tax between the public and the government. 
A) the division of the burden of a tax between buyers and sellers. 
B) the deadweight loss that a tax generates. 
C) the inefficiency of a tax. 
D) the revenue collected by government because of a tax. 
E) the division of the burden of a tax between the public and the government.

Question 5

A rent ceiling in a housing market

Accepted Answer

A) makes all rents lower than the ceiling illegal to charge. 
B) is set above the equilibrium rent in order to have an effect. 
C) increases the time people spend searching for housing. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct. 
A) makes all rents lower than the ceiling illegal to charge. 
B) is set above the equilibrium rent in order to have an effect. 
C) increases the time people spend searching for housing. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct.

Question 6

If the minimum wage is set above the equilibrium wage, after taking into account the resources lost in job search, the firms' surplus ________ and the workers' surplus ________.

Accepted Answer

A) increases; increases 
B) increases; decreases. 
C) decreases; increases 
D) decreases; decreases 
E) does not change; decreases 
A) increases; increases 
B) increases; decreases. 
C) decreases; increases 
D) decreases; decreases 
E) does not change; decreases

Question 7

The excess burden of a tax refers to the fact that

Accepted Answer

A) the benefits from a tax exceed the tax revenue. 
B) the deadweight loss from a tax exceeds the remaining consumer surplus. 
C) marginal cost is greater than marginal benefit after the tax. 
D) a tax creates a deadweight loss. 
E) taxes are split between buyers and sellers. 
A) the benefits from a tax exceed the tax revenue. 
B) the deadweight loss from a tax exceeds the remaining consumer surplus. 
C) marginal cost is greater than marginal benefit after the tax. 
D) a tax creates a deadweight loss. 
E) taxes are split between buyers and sellers.

Question 8

A rent ceiling creates a deadweight loss

Accepted Answer

A) if it is set below the equilibrium rent. 
B) if it is set equal to the equilibrium rent. 
C) if it set above the equilibrium rent. 
D) if it decreases the taxes the government collects in the housing market. 
E) never, because if it did create a deadweight loss, the government would not impose it. 
A) if it is set below the equilibrium rent. 
B) if it is set equal to the equilibrium rent. 
C) if it set above the equilibrium rent. 
D) if it decreases the taxes the government collects in the housing market. 
E) never, because if it did create a deadweight loss, the government would not impose it.

Question 9

An efficient allocation of labor occurs when the

Accepted Answer

A) marginal benefit to workers exceeds the marginal benefit to firms. 
B) marginal benefit to firms exceeds the marginal benefit to workers. 
C) marginal cost to workers is equal to the marginal benefit to firms. 
D) marginal cost and marginal benefit of both workers and the firms are equal to zero. 
E) marginal benefit of workers exceeds the marginal cost to firms by as much as possible. 
A) marginal benefit to workers exceeds the marginal benefit to firms. 
B) marginal benefit to firms exceeds the marginal benefit to workers. 
C) marginal cost to workers is equal to the marginal benefit to firms. 
D) marginal cost and marginal benefit of both workers and the firms are equal to zero. 
E) marginal benefit of workers exceeds the marginal cost to firms by as much as possible.

Question 10

The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax is imposed. The government imposes a $10 per unit tax on sellers of MP3 players.
-Based on the figure above, after the tax is imposed, the price received (and kept)by the seller is ________ per MP3 player.

Accepted Answer

A) $95 
B) $105 
C) $100 
D) $110 
E) $90 
A) $95 
B) $105 
C) $100 
D) $110 
E) $90

Question 11

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Rent } \
\text { (dollars per } \
\text { month) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { demanded }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { supplied }
\end{array} \
\hline 1,000 & 150 & 350 \
900 & 200 & 300 \
800 & 250 & 250 \
700 & 300 & 200 \
600 & 350 & 150
\end{array}$$
-The table above gives the demand and supply schedules for the housing market in a small town. If a rent ceiling of $600 a month is imposed, what is the quantity demanded, the quantity supplied, and the shortage of housing?

Accepted Answer

The quantity demanded is 350 u

Question 12

The demand curve for pizza is downward sloping and the supply curve is upward sloping. If the government imposes a $2 tax on a pizza, ________ the tax.

Accepted Answer

A) only consumers pay 
B) only producers pay 
C) both producers and consumers pay 
D) neither producers nor consumers pay 
E) the government pays 
A) only consumers pay 
B) only producers pay 
C) both producers and consumers pay 
D) neither producers nor consumers pay 
E) the government pays

Question 13

The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax is imposed. The government imposes a $10 per unit tax on sellers of MP3 players.
-Based on the figure above, the tax ________ the price received (and kept)by the seller by ________ per MP3 player.

Accepted Answer

A) lowers; $5 
B) raises; $5 
C) raises; $10 
D) lowers; $10 
E) lowers; $2.50 
A) lowers; $5 
B) raises; $5 
C) raises; $10 
D) lowers; $10 
E) lowers; $2.50

Question 14

A price floor in an agricultural market is called

Accepted Answer

A) an agricultural floor. 
B) a farm support. 
C) a price support. 
D) a farm subsidy. 
E) a farm support price. 
A) an agricultural floor. 
B) a farm support. 
C) a price support. 
D) a farm subsidy. 
E) a farm support price.

Question 15

-The above figure shows the supply curves in four different markets. If each of the markets has an identical downward sloping demand curve and the same tax is levied on suppliers, which market would produce the smallest amount of deadweight loss?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
E) A and D 
A) A 
B) B 
C) C 
D) D 
E) A and D

Question 16

-The graph shows the labor market for teenagers in Atlanta. If the government sets a minimum wage of $6 an hour, the number of teenagers employed is ________.

Accepted Answer

A) 7,000 
B) 5,000 
C) 4,000 
D) 3,000 
E) less than 3,000 
A) 7,000 
B) 5,000 
C) 4,000 
D) 3,000 
E) less than 3,000

Question 17

-The graph shows the market for holiday condos in West Palm Beach. The equilibrium rent is ________ a week.

Accepted Answer

A) any amount less than $1,550 
B) any amount greater than $1,550 
C) $1,550 
D) $4,000 
E) None of the above answers is correct. 
A) any amount less than $1,550 
B) any amount greater than $1,550 
C) $1,550 
D) $4,000 
E) None of the above answers is correct.

Question 18

-The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the producer surplus?

Accepted Answer

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

Question 19

A price floor is a price

Accepted Answer

A) below which a seller cannot legally sell. 
B) above which a seller cannot legally sell. 
C) that creates a shortage of the good if it is set above the equilibrium price. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct. 
A) below which a seller cannot legally sell. 
B) above which a seller cannot legally sell. 
C) that creates a shortage of the good if it is set above the equilibrium price. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct.

Question 20

-The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the deadweight loss?

Accepted Answer

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

-The minimum wage is set above the equilibrium wage rate. Does the minimum wage create inefficiency?

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton. -The figure above shows that the government subsidy accounts for ________ percent of the farmers' revenue.

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is and the supply of housing is .

The incidence of a tax refers to

A rent ceiling in a housing market

If the minimum wage is set above the equilibrium wage, after taking into account the resources lost in job search, the firms' surplus and the workers' surplus .

The excess burden of a tax refers to the fact that

A rent ceiling creates a deadweight loss

An efficient allocation of labor occurs when the

The demand curve for pizza is downward sloping and the supply curve is upward sloping. If the government imposes a $2 tax on a pizza, ________ the tax.

The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax is imposed. The government imposes a $10 per unit tax on sellers of MP3 players. -Based on the figure above, the tax the price received (and kept)by the seller by per MP3 player.

A price floor in an agricultural market is called

-The above figure shows the supply curves in four different markets. If each of the markets has an identical downward sloping demand curve and the same tax is levied on suppliers, which market would produce the smallest amount of deadweight loss?

-The graph shows the labor market for teenagers in Atlanta. If the government sets a minimum wage of $6 an hour, the number of teenagers employed is ________.

-The graph shows the market for holiday condos in West Palm Beach. The equilibrium rent is ________ a week.

-The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the producer surplus?

A price floor is a price

-The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the deadweight loss?

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 7: Government Actions in Markets

-The minimum wage is set above the equilibrium wage rate. Does the minimum wage create inefficiency?

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton. -The figure above shows that the government subsidy accounts for ________ percent of the farmers' revenue.

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is ________ and the supply of housing is ________.

The incidence of a tax refers to

A rent ceiling in a housing market

If the minimum wage is set above the equilibrium wage, after taking into account the resources lost in job search, the firms' surplus ________ and the workers' surplus ________.

The excess burden of a tax refers to the fact that

A rent ceiling creates a deadweight loss

An efficient allocation of labor occurs when the

The demand curve for pizza is downward sloping and the supply curve is upward sloping. If the government imposes a $2 tax on a pizza, ________ the tax.

A price floor in an agricultural market is called

-The above figure shows the supply curves in four different markets. If each of the markets has an identical downward sloping demand curve and the same tax is levied on suppliers, which market would produce the smallest amount of deadweight loss?

-The graph shows the labor market for teenagers in Atlanta. If the government sets a minimum wage of $6 an hour, the number of teenagers employed is ________.

-The graph shows the market for holiday condos in West Palm Beach. The equilibrium rent is ________ a week.

-The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the producer surplus?

A price floor is a price

-The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the deadweight loss?

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

The shortage created by a rent ceiling below the equilibrium rent is smallest when the demand for housing is and the supply of housing is .

If the minimum wage is set above the equilibrium wage, after taking into account the resources lost in job search, the firms' surplus and the workers' surplus .