Question 1

A price ceiling in the market for fuel oil that is below the equilibrium price will

Accepted Answer

A) lead to the quantity supplied of fuel oil exceeding the quantity demanded. 
B) lead to the quantity demanded of fuel oil exceeding the quantity supplied. 
C) decrease the demand for fuel oil. 
D) increase the supply of fuel oil. 
E) have no effect in the market for fuel oil. 
A) lead to the quantity supplied of fuel oil exceeding the quantity demanded. 
B) lead to the quantity demanded of fuel oil exceeding the quantity supplied. 
C) decrease the demand for fuel oil. 
D) increase the supply of fuel oil. 
E) have no effect in the market for fuel oil.

Question 2

-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 smallest 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 3

-The above figure shows a labor market with minimum wage equal to $16. In this figure, what area equals the firms' surplus?

Accepted Answer

A) area A 
B) area B 
C) area C 
D) area D 
E) area E 
A) area A 
B) area B 
C) area C 
D) area D 
E) area E

Question 4

Compare and contrast a price ceiling and a price floor.

Accepted Answer

A price ceiling is the maximum legal pri

Question 5

Suppose the equilibrium price of a gallon of milk is $4. If the government imposes a price floor of $5 per gallon of milk, the

Accepted Answer

A) quantity supplied of milk falls short of the quantity demanded. 
B) quantity supplied of milk exceeds the quantity demanded. 
C) supply increases. 
D) demand decreases. 
E) price of milk remains $4 per gallon. 
A) quantity supplied of milk falls short of the quantity demanded. 
B) quantity supplied of milk exceeds the quantity demanded. 
C) supply increases. 
D) demand decreases. 
E) price of milk remains $4 per gallon.

Question 6

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 deadweight loss is

Accepted Answer

A) $4,000 an hour. 
B) $2,000 an hour. 
C) $1,000 an hour. 
D) $5,000 an hour. 
E) zero. 
A) $4,000 an hour. 
B) $2,000 an hour. 
C) $1,000 an hour. 
D) $5,000 an hour. 
E) zero.

Question 7

In a housing market with a rent ceiling set below the equilibrium rent,

Accepted Answer

A) some people seeking an apartment to rent will not be able to find one. 
B) the total cost of renting an apartment will decrease for all those seeking housing. 
C) some landlords will not be able to find renters to fill available apartments. 
D) search will decrease because renters no longer need to search for less expensive apartments. 
E) None of the above answers are correct because to have an impact the rent ceiling must be set above the equilibrium rent. 
A) some people seeking an apartment to rent will not be able to find one. 
B) the total cost of renting an apartment will decrease for all those seeking housing. 
C) some landlords will not be able to find renters to fill available apartments. 
D) search will decrease because renters no longer need to search for less expensive apartments. 
E) None of the above answers are correct because to have an impact the rent ceiling must be set above the equilibrium rent.

Question 8

Which of the following results from a price ceiling?
I. increased search activity
Ii. surplus
Iii. black market

Accepted Answer

A) i only 
B) i and iii 
C) ii and iii 
D) i, ii, and iii 
E) ii only 
A) i only 
B) i and iii 
C) ii and iii 
D) i, ii, and iii 
E) ii only

Question 9

In the market for cotton, suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons. If the government then imposes a price support of $20 per ton,

Accepted Answer

A) the market price increases. 
B) the market price decreases. 
C) marginal cost decreases. 
D) consumer surplus increases. 
E) the deadweight loss is decreased. 
A) the market price increases. 
B) the market price decreases. 
C) marginal cost decreases. 
D) consumer surplus increases. 
E) the deadweight loss is decreased.

Question 10

When the minimum wage is raised, the ________ union labor ________.

Accepted Answer

A) demand for; increases 
B) demand for; decreases 
C) supply of; increases 
D) supply of; decreases 
E) demand for; does not change 
A) demand for; increases 
B) demand for; decreases 
C) supply of; increases 
D) supply of; decreases 
E) demand for; does not change

Question 11

-The graph shows the market for ski chalets in Aspen. The Aspen Tourist Board asks the local government to impose a rent ceiling on ski chalets. If the rent ceiling is set at $1,900 a week, then there is ________.

Accepted Answer

A) a shortage of 3,000 chalets a week 
B) a surplus of 3,000 chalets a week 
C) neither a shortage nor surplus of chalets 
D) a shortage of 6,000 chalets a week 
E) a surplus of 6,000 chalets a week 
A) a shortage of 3,000 chalets a week 
B) a surplus of 3,000 chalets a week 
C) neither a shortage nor surplus of chalets 
D) a shortage of 6,000 chalets a week 
E) a surplus of 6,000 chalets a week

Question 12

How does the elasticity of demand affect the incidence of a tax?

Accepted Answer

For a given elasticity of supp

Question 13

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Price } \
\text { (dollars per slice } \
\text { of pizza) }
\end{array} & \begin{array} { c } 
\text { Quantity supplied Quantity demanded } \
\text { (slices of pizza } \
\text { per week) }
\end{array} & \begin{array} { c } 
\text { (slices of pizza } \
\text { per week) }
\end{array} \
\hline 1 & 10 & 50 \
2 & 20 & 40 \
3 & 30 & 30 \
4 & 40 & 20 \
5 & 50 & 10 \
\hline
\end{array}$$
-The demand and supply schedules for pizza are in the table above. If the government sets a maximum legal price of $2 per slice of pizza, then

Accepted Answer

A) there is a shortage of 20 slices of pizza. 
B) this maximum price is an example of a price floor. 
C) this maximum price is an example of a price ceiling. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct. 
A) there is a shortage of 20 slices of pizza. 
B) this maximum price is an example of a price floor. 
C) this maximum price is an example of a price ceiling. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct.

Question 14

Suppose the equilibrium rent in Denver is $1,050. A rent ceiling of $755 per month leads to

Accepted Answer

A) a surplus of apartments in Denver. 
B) a shortage of apartments in Denver. 
C) no change in the Denver apartment market. 
D) fair prices in the Denver market. 
E) compared to the situation at the equilibrium rent, a decrease in the quantity of apartments demanded and an increase in the quantity of apartments supplied. 
A) a surplus of apartments in Denver. 
B) a shortage of apartments in Denver. 
C) no change in the Denver apartment market. 
D) fair prices in the Denver market. 
E) compared to the situation at the equilibrium rent, a decrease in the quantity of apartments demanded and an increase in the quantity of apartments supplied.

Question 15

For a given elasticity of demand, the less elastic the supply, the

Accepted Answer

A) larger the deadweight loss from a tax. 
B) larger the share of a tax paid by the sellers. 
C) greater the burden on the government from a tax. 
D) greater is the excess burden from a tax. 
E) larger the share of a tax paid by the buyers. 
A) larger the deadweight loss from a tax. 
B) larger the share of a tax paid by the sellers. 
C) greater the burden on the government from a tax. 
D) greater is the excess burden from a tax. 
E) larger the share of a tax paid by the buyers.

Question 16

Suppose the elasticity of supply of land is 0 and elasticity of demand is 2. If the government imposes a 10 percent tax on land, then

Accepted Answer

A) buyers and sellers each pay 5 percent of the tax. 
B) buyers pay all of the tax. 
C) sellers pay all of the tax. 
D) sellers pay a smaller share of the tax than do buyers but both buyers and sellers pay some of the tax. 
E) buyers pay 1/2 of the tax. 
A) buyers and sellers each pay 5 percent of the tax. 
B) buyers pay all of the tax. 
C) sellers pay all of the tax. 
D) sellers pay a smaller share of the tax than do buyers but both buyers and sellers pay some of the tax. 
E) buyers pay 1/2 of the tax.

Question 17

The size of the deadweight loss, or excess burden, of a tax depends on the

Accepted Answer

A) amount of producer surplus but not the amount of consumer surplus because it is the producers who send the tax revenues to the government. 
B) strength of demand. 
C) strength of supply. 
D) elasticities of demand and supply. 
E) number of demanders and the number of suppliers. 
A) amount of producer surplus but not the amount of consumer surplus because it is the producers who send the tax revenues to the government. 
B) strength of demand. 
C) strength of supply. 
D) elasticities of demand and supply. 
E) number of demanders and the number of suppliers.

Question 18

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

Accepted Answer

A) decreases consumer surplus. 
B) increases producer surplus. 
C) decreases deadweight loss. 
D) increases the quantity of housing rented. 
E) is efficient. 
A) decreases consumer surplus. 
B) increases producer surplus. 
C) decreases deadweight loss. 
D) increases the quantity of housing rented. 
E) is efficient.

Question 19

7.5 Chapter Figures
   
The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax. The government imposes a $10 per unit tax on buyers of MP3 players.
-The tax ________ the price received by the seller by ________ per MP3 player.

Accepted Answer

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

Question 20

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 government collects tax revenue of ________ a week.

Accepted Answer

A) $20,000 
B) $10,000 
C) $50,000 
D) $60,000 
E) $40,000 
A) $20,000 
B) $10,000 
C) $50,000 
D) $60,000 
E) $40,000

A price ceiling in the market for fuel oil that is below the equilibrium price will

-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 smallest amount of deadweight loss?

-The above figure shows a labor market with minimum wage equal to $16. In this figure, what area equals the firms' surplus?

Compare and contrast a price ceiling and a price floor.

Suppose the equilibrium price of a gallon of milk is $4. If the government imposes a price floor of $5 per gallon of milk, the

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 deadweight loss is

In a housing market with a rent ceiling set below the equilibrium rent,

Which of the following results from a price ceiling? I. increased search activity Ii. surplus Iii. black market

In the market for cotton, suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons. If the government then imposes a price support of $20 per ton,

When the minimum wage is raised, the union labor .

-The graph shows the market for ski chalets in Aspen. The Aspen Tourist Board asks the local government to impose a rent ceiling on ski chalets. If the rent ceiling is set at $1,900 a week, then there is ________.

How does the elasticity of demand affect the incidence of a tax?

Suppose the equilibrium rent in Denver is $1,050. A rent ceiling of $755 per month leads to

For a given elasticity of demand, the less elastic the supply, the

Suppose the elasticity of supply of land is 0 and elasticity of demand is 2. If the government imposes a 10 percent tax on land, then

The size of the deadweight loss, or excess burden, of a tax depends on 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

7.5 Chapter Figures The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax. The government imposes a $10 per unit tax on buyers of MP3 players. -The tax the price received by the seller by per MP3 player.

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

A price ceiling in the market for fuel oil that is below the equilibrium price will

-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 smallest amount of deadweight loss?

-The above figure shows a labor market with minimum wage equal to $16. In this figure, what area equals the firms' surplus?

Compare and contrast a price ceiling and a price floor.

Suppose the equilibrium price of a gallon of milk is $4. If the government imposes a price floor of $5 per gallon of milk, the

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 deadweight loss is

In a housing market with a rent ceiling set below the equilibrium rent,

Which of the following results from a price ceiling? I. increased search activity Ii. surplus Iii. black market

In the market for cotton, suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons. If the government then imposes a price support of $20 per ton,

When the minimum wage is raised, the ________ union labor ________.

-The graph shows the market for ski chalets in Aspen. The Aspen Tourist Board asks the local government to impose a rent ceiling on ski chalets. If the rent ceiling is set at $1,900 a week, then there is ________.

How does the elasticity of demand affect the incidence of a tax?

Suppose the equilibrium rent in Denver is $1,050. A rent ceiling of $755 per month leads to

For a given elasticity of demand, the less elastic the supply, the

Suppose the elasticity of supply of land is 0 and elasticity of demand is 2. If the government imposes a 10 percent tax on land, then

The size of the deadweight loss, or excess burden, of a tax depends on 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

7.5 Chapter Figures The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax. The government imposes a $10 per unit tax on buyers of MP3 players. -The tax ________ the price received by the seller by ________ per MP3 player.

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

When the minimum wage is raised, the union labor .

7.5 Chapter Figures The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax. The government imposes a $10 per unit tax on buyers of MP3 players. -The tax the price received by the seller by per MP3 player.