Question 1

The supply of sand is perfectly inelastic and the demand curve for sand is downward sloping. Hence, if a tax on sand is imposed,

Accepted Answer

A) sand buyers pay the entire tax. 
B) sand sellers pay the entire tax. 
C) the tax is split evenly between the buyers and sellers. 
D) the government pays the entire tax. 
E) the government collects no tax revenue because the supply is perfectly inelastic. 
A) sand buyers pay the entire tax. 
B) sand sellers pay the entire tax. 
C) the tax is split evenly between the buyers and sellers. 
D) the government pays the entire tax. 
E) the government collects no tax revenue because the supply is perfectly inelastic.

Question 2

Discuss the inefficiencies created by a price floor.

Accepted Answer

A price floor prevents the efficient all

Question 3

-The above figure shows the market for biologists. The government decides to set a minimum wage for biologists of $18 per hour. After this minimum wage is in effect, the deadweight loss equals ________.

Accepted Answer

A) $400 
B) $200 
C) $800 
D) $1600 
E) $100 
A) $400 
B) $200 
C) $800 
D) $1600 
E) $100

Question 4

-The above figure shows the market for finish carpenters in Bozeman. If there is a minimum wage set at $18, what is true?

Accepted Answer

A) The lowest wage for which someone is willing to work is $18 an hour. 
B) The quantity of jobs increases to 400. 
C) The lowest wage for which someone is willing to work is $20 an hour. 
D) 200 workers are employed. 
E) The quantity of jobs demanded is more than the quantity supplied. 
A) The lowest wage for which someone is willing to work is $18 an hour. 
B) The quantity of jobs increases to 400. 
C) The lowest wage for which someone is willing to work is $20 an hour. 
D) 200 workers are employed. 
E) The quantity of jobs demanded is more than the quantity supplied.

Question 5

The figure above shows supply and demand in the market for labor. The government introduces a minimum wage of $7 per hour.
-In the figure above, the number of unemployed workers is

Accepted Answer

A) 4,000. 
B) 3,000. 
C) 2,000. 
D) 5,000. 
E) zero. 
A) 4,000. 
B) 3,000. 
C) 2,000. 
D) 5,000. 
E) zero.

Question 6

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping. A tax is imposed on specialty license plates. Which of the following is true?

Accepted Answer

A) Drivers pay the smallest share of the tax. 
B) Drivers pay none of the tax. 
C) Drivers pay all of the tax. 
D) The government pays all of the tax. 
E) The government collects nothing in tax revenues. 
A) Drivers pay the smallest share of the tax. 
B) Drivers pay none of the tax. 
C) Drivers pay all of the tax. 
D) The government pays all of the tax. 
E) The government collects nothing in tax revenues.

Question 7

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.
-In the figure above, at the market equilibrium with the tax, marginal benefit ________ marginal cost, and the quantity of MP3 players sold is ________.

Accepted Answer

A) exceeds; inefficient 
B) is below; inefficient 
C) is below; efficient 
D) exceeds; efficient 
E) equals; efficient 
A) exceeds; inefficient 
B) is below; inefficient 
C) is below; efficient 
D) exceeds; efficient 
E) equals; efficient

Question 8

-If the minimum wage is above the equilibrium wage rate, then an increase in the minimum wage ________ employment and ________ unemployment.

Accepted Answer

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

Question 9

A regulation that sets the lowest price at which it is legal to trade a good is a

Accepted Answer

A) search ceiling. 
B) price floor. 
C) production ceiling. 
D) price ceiling. 
E) subsidy. 
A) search ceiling. 
B) price floor. 
C) production ceiling. 
D) price ceiling. 
E) subsidy.

Question 10

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

Accepted Answer

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

Question 11

In the 1980s, one of the most common sights in the socialist countries, such as the former Soviet Union and North Korea, were long lines for bread, sugar, and other necessities. These countries had price ceilings on these necessities. Some of the socialist nations, such as the former Soviet Union, have moved to a market economy by lifting the price ceilings, while others, such as North Korea, have retained their price ceilings. What prediction do you make about the presence (or absence)of long lines today in the former Soviet Union and North Korea?
 Explain your answer.

Accepted Answer

The long lines have disappeared in the f

Question 12

The loss to society resulting from a tax includes the

Accepted Answer

A) deadweight loss. 
B) consumer surplus paid to the government in the form of tax revenue. 
C) producer surplus paid to the government in the form of tax revenue. 
D) deadweight loss plus the consumer surplus and producer surplus paid to the government as tax revenue. 
E) deadweight loss minus the tax revenue collected by the government. 
A) deadweight loss. 
B) consumer surplus paid to the government in the form of tax revenue. 
C) producer surplus paid to the government in the form of tax revenue. 
D) deadweight loss plus the consumer surplus and producer surplus paid to the government as tax revenue. 
E) deadweight loss minus the tax revenue collected by the government.

Question 13

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month.
-As shown in the figure above, the rent ceiling ________ consumer surplus and ________ producer surplus.

Accepted Answer

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

Question 14

When a price ceiling is set below the equilibrium price, the quantity supplied ________ the quantity demanded and ________ exists.

Accepted Answer

A) is less than; a surplus 
B) is less than; a shortage 
C) is greater than; a surplus 
D) is greater than; a shortage 
E) equals; an equilibrium 
A) is less than; a surplus 
B) is less than; a shortage 
C) is greater than; a surplus 
D) is greater than; a shortage 
E) equals; an equilibrium

Question 15

A price support leads to inefficiency because

Accepted Answer

A) output is more than the efficient, equilibrium quantity. 
B) the marginal benefit of the last unit produced is larger than the marginal cost. 
C) the price charged is less than the equilibrium price. 
D) producer surplus is less than consumer surplus. 
E) producers must pay a subsidy to the government. 
A) output is more than the efficient, equilibrium quantity. 
B) the marginal benefit of the last unit produced is larger than the marginal cost. 
C) the price charged is less than the equilibrium price. 
D) producer surplus is less than consumer surplus. 
E) producers must pay a subsidy to the government.

Question 16

-The above figure shows the market for finish carpenters in Bozeman. If there is a minimum wage set at $18, then there will be

Accepted Answer

A) unemployment of 200 workers. 
B) a surplus of 200 workers. 
C) unemployment of 400 workers. 
D) a surplus of 400 workers. 
E) no unemployment of workers and no surplus of workers. 
A) unemployment of 200 workers. 
B) a surplus of 200 workers. 
C) unemployment of 400 workers. 
D) a surplus of 400 workers. 
E) no unemployment of workers and no surplus of workers.

Question 17

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 burden of the tax

Accepted Answer

A) is split equally between the buyer and the seller. 
B) falls mostly on buyers. 
C) falls mostly on sellers. 
D) falls entirely on buyers. 
E) falls entirely on sellers. 
A) is split equally between the buyer and the seller. 
B) falls mostly on buyers. 
C) falls mostly on sellers. 
D) falls entirely on buyers. 
E) falls entirely on sellers.

Question 18

-The graph shows the market for textbooks. If the government introduces a tax of $20 a textbook, then the price paid by buyers ________.

Accepted Answer

A) increases by $20 
B) increases to $80 a textbook 
C) decreases to $60 a textbook 
D) is $70 a textbook 
E) does not change because the demand for textbooks is perfectly elastic 
A) increases by $20 
B) increases to $80 a textbook 
C) decreases to $60 a textbook 
D) is $70 a textbook 
E) does not change because the demand for textbooks is perfectly elastic

Question 19

Explain why a price floor set below the equilibrium price is ineffective.

Accepted Answer

Price floors are legal minimums; it is l

Question 20

The opportunity cost of an apartment in a rent controlled market is equal to

Accepted Answer

A) the rent charged for the apartment. 
B) the opportunity cost of searching for the apartment. 
C) the rent charged for the apartment plus the opportunity cost of searching for the apartment. 
D) nothing because of the surplus of apartments when there are rent controls. 
E) the rent charged for the apartment minus the opportunity cost of searching for the apartment. 
A) the rent charged for the apartment. 
B) the opportunity cost of searching for the apartment. 
C) the rent charged for the apartment plus the opportunity cost of searching for the apartment. 
D) nothing because of the surplus of apartments when there are rent controls. 
E) the rent charged for the apartment minus the opportunity cost of searching for the apartment.

The supply of sand is perfectly inelastic and the demand curve for sand is downward sloping. Hence, if a tax on sand is imposed,

Discuss the inefficiencies created by a price floor.

-The above figure shows the market for biologists. The government decides to set a minimum wage for biologists of $18 per hour. After this minimum wage is in effect, the deadweight loss equals ________.

-The above figure shows the market for finish carpenters in Bozeman. If there is a minimum wage set at $18, what is true?

The figure above shows supply and demand in the market for labor. The government introduces a minimum wage of $7 per hour. -In the figure above, the number of unemployed workers is

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping. A tax is imposed on specialty license plates. Which of the following is true?

-If the minimum wage is above the equilibrium wage rate, then an increase in the minimum wage employment and unemployment.

A regulation that sets the lowest price at which it is legal to trade a good is a

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

The loss to society resulting from a tax includes the

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month. -As shown in the figure above, the rent ceiling consumer surplus and producer surplus.

When a price ceiling is set below the equilibrium price, the quantity supplied the quantity demanded and exists.

A price support leads to inefficiency because

-The above figure shows the market for finish carpenters in Bozeman. If there is a minimum wage set at $18, then there will be

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 burden of the tax

-The graph shows the market for textbooks. If the government introduces a tax of $20 a textbook, then the price paid by buyers ________.

Explain why a price floor set below the equilibrium price is ineffective.

The opportunity cost of an apartment in a rent controlled market is equal to

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 supply of sand is perfectly inelastic and the demand curve for sand is downward sloping. Hence, if a tax on sand is imposed,

Discuss the inefficiencies created by a price floor.

-The above figure shows the market for biologists. The government decides to set a minimum wage for biologists of $18 per hour. After this minimum wage is in effect, the deadweight loss equals ________.

-The above figure shows the market for finish carpenters in Bozeman. If there is a minimum wage set at $18, what is true?

The figure above shows supply and demand in the market for labor. The government introduces a minimum wage of $7 per hour. -In the figure above, the number of unemployed workers is

Suppose the demand for specialty car license plates is perfectly inelastic and the supply curve for specialty license plates is upward sloping. A tax is imposed on specialty license plates. Which of the following is true?

-If the minimum wage is above the equilibrium wage rate, then an increase in the minimum wage ________ employment and ________ unemployment.

A regulation that sets the lowest price at which it is legal to trade a good is a

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

The loss to society resulting from a tax includes the

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month. -As shown in the figure above, the rent ceiling ________ consumer surplus and ________ producer surplus.

When a price ceiling is set below the equilibrium price, the quantity supplied ________ the quantity demanded and ________ exists.

A price support leads to inefficiency because

-The above figure shows the market for finish carpenters in Bozeman. If there is a minimum wage set at $18, then there will be

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 burden of the tax

-The graph shows the market for textbooks. If the government introduces a tax of $20 a textbook, then the price paid by buyers ________.

Explain why a price floor set below the equilibrium price is ineffective.

The opportunity cost of an apartment in a rent controlled market is equal to

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

-If the minimum wage is above the equilibrium wage rate, then an increase in the minimum wage employment and unemployment.

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month. -As shown in the figure above, the rent ceiling consumer surplus and producer surplus.

When a price ceiling is set below the equilibrium price, the quantity supplied the quantity demanded and exists.