Question 1

If a price ceiling is introduced in the market for milk below the market equilibrium price, then the producer surplus made by dairy farmers ________.

Accepted Answer

A) will increase 
B) will decrease 
C) will not change 
D) might increase or decrease depending on whether the demand for milk increases or decreases 
E) might increase or decrease depending on whether the supply of milk decreases or increases 
A) will increase 
B) will decrease 
C) will not change 
D) might increase or decrease depending on whether the demand for milk increases or decreases 
E) might increase or decrease depending on whether the supply of milk decreases or increases

Question 2

A minimum wage set above the equilibrium wage will ________ the quantity of labor demanded and ________ the quantity of labor supplied.

Accepted Answer

A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
E) not change; not change 
A) increase; increase 
B) increase; decrease 
C) decrease; increase 
D) decrease; decrease 
E) not change; not change

Question 3

To keep the price at the level set by a price support, the government must

Accepted Answer

A) buy some of the good. 
B) sell some of the good. 
C) receive a subsidy from the producers. 
D) insure that imports are readily available. 
E) be careful to always set the price support below the equilibrium price. 
A) buy some of the good. 
B) sell some of the good. 
C) receive a subsidy from the producers. 
D) insure that imports are readily available. 
E) be careful to always set the price support below the equilibrium price.

Question 4

The buyer will pay the entire tax levied on a good when the demand for the good is ________ or when the supply of the good is ________.

Accepted Answer

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

Question 5

A price floor is considered

Accepted Answer

A) "fair" based only on the fair results view. 
B) "fair" based only on the fair rules view. 
C) "unfair" based on both the fair results and fair rules views. 
D) "unfair" based only on the fair results view. 
E) "fair" based on the fair results view and on the fair rules view. 
A) "fair" based only on the fair results view. 
B) "fair" based only on the fair rules view. 
C) "unfair" based on both the fair results and fair rules views. 
D) "unfair" based only on the fair results view. 
E) "fair" based on the fair results view and on the fair rules view.

Question 6

A price ceiling is

Accepted Answer

A) a maximum legal price. 
B) a minimum legal price. 
C) an equilibrium price. 
D) a market-determined price. 
E) the highest price at which the quantity demanded equals the quantity supplied. 
A) a maximum legal price. 
B) a minimum legal price. 
C) an equilibrium price. 
D) a market-determined price. 
E) the highest price at which the quantity demanded equals the quantity supplied.

Question 7

The inefficiency of a sales tax on a good is ultimately the result of the

Accepted Answer

A) low tax revenue earned by the government relative to the cost of collection. 
B) wedge between what buyers pay for the good and what sellers receive for the good. 
C) buyers being unable to avoid paying the tax. 
D) sellers being unable to avoid paying the tax. 
E) increase in the consumer surplus that is more than offset by the decrease in the producer surplus. 
A) low tax revenue earned by the government relative to the cost of collection. 
B) wedge between what buyers pay for the good and what sellers receive for the good. 
C) buyers being unable to avoid paying the tax. 
D) sellers being unable to avoid paying the tax. 
E) increase in the consumer surplus that is more than offset by the decrease in the producer surplus.

Question 8

Consider the market for dining at Mexican restaurants. Suppose the price elasticity of demand for Mexican food is 1.23 and the price elasticity of supply is 0.47. If the government imposes a tax on Mexican food, do consumers or producers pay most of the tax?
 Why?

Accepted Answer

Producers pay most of the tax because su

Question 9

A black market for housing exists because of a rent ceiling. The rent for housing in the black market is

Accepted Answer

A) the same as the equilibrium rent. 
B) lower than the ceiling rent. 
C) somewhere between the ceiling rent and the maximum rent a tenant is willing to pay. 
D) somewhere between zero and the equilibrium rent. 
E) not defined because the market is not legal. 
A) the same as the equilibrium rent. 
B) lower than the ceiling rent. 
C) somewhere between the ceiling rent and the maximum rent a tenant is willing to pay. 
D) somewhere between zero and the equilibrium rent. 
E) not defined because the market is not legal.

Question 10

Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock; $7.50 in St. Louis and $9.05 in Raleigh. An increase in the minimum wage to $7.50 per hour results in unemployment of landscapers in

Accepted Answer

A) Little Rock and St. Louis. 
B) only Raleigh. 
C) Little Rock, St. Louis, and Raleigh. 
D) only Little Rock. 
E) St. Louis and Raleigh. 
A) Little Rock and St. Louis. 
B) only Raleigh. 
C) Little Rock, St. Louis, and Raleigh. 
D) only Little Rock. 
E) St. Louis and Raleigh.

Question 11

-The above figure shows the market for gourmet ice cream. In effort to reduce obesity, government places a $2 tax per gallon on suppliers in this market, shifting the supply curve from S₀ to S₁. The quantity of ice cream consumed before the tax is ________ gallons and the quantity consumed after the tax is ________ gallons.

Accepted Answer

A) 300,000; 200,000 
B) 200,000; 250,000 
C) 250,000; 200,000 
D) 200,000; 300,000 
E) 200,000; 200,000 
A) 300,000; 200,000 
B) 200,000; 250,000 
C) 250,000; 200,000 
D) 200,000; 300,000 
E) 200,000; 200,000

Question 12

-A minimum wage set above the equilibrium wage rate creates

Accepted Answer

A) efficiency because it increases most workers' wages. 
B) efficiency because few workers lose their jobs. 
C) efficiency because workers can earn a living wage. 
D) inefficiency and a deadweight loss. 
E) inefficiency because it creates excessive employment. 
A) efficiency because it increases most workers' wages. 
B) efficiency because few workers lose their jobs. 
C) efficiency because workers can earn a living wage. 
D) inefficiency and a deadweight loss. 
E) inefficiency because it creates excessive employment.

Question 13

The deadweight loss from a tax is called the

Accepted Answer

A) marginal benefit of the tax. 
B) marginal cost of the tax. 
C) excess burden of the tax. 
D) net gain from taxation. 
E) net loss from taxation. 
A) marginal benefit of the tax. 
B) marginal cost of the tax. 
C) excess burden of the tax. 
D) net gain from taxation. 
E) net loss from taxation.

Question 14

-The above figure shows the market for gourmet ice cream. In effort to reduce obesity, government places a $2 tax per gallon on suppliers in this market, shifting the supply curve from S₀ to S₁. The tax incidence is

Accepted Answer

A) split equally between consumers and producers, each paying $1 per gallon. 
B) split equally between consumers and producers, each paying $2 per gallon. 
C) such that consumers pay $2 per gallon and producers pay $1 per gallon. 
D) such that consumers pay $1 per gallon and producers pay $2 per gallon. 
E) such that producers pay all of the tax. 
A) split equally between consumers and producers, each paying $1 per gallon. 
B) split equally between consumers and producers, each paying $2 per gallon. 
C) such that consumers pay $2 per gallon and producers pay $1 per gallon. 
D) such that consumers pay $1 per gallon and producers pay $2 per gallon. 
E) such that producers pay all of the tax.

Question 15

Explain under what conditions a sales tax on a specific good would be paid entirely by buyers.

Accepted Answer

Buyers pay all of a tax when t

Question 16

One of the reasons a minimum wage is unfair is because it

Accepted Answer

A) benefits all workers. 
B) blocks voluntary exchange. 
C) is imposed by government. 
D) is below the equilibrium wage rate. 
E) cannot be enforced. 
A) benefits all workers. 
B) blocks voluntary exchange. 
C) is imposed by government. 
D) is below the equilibrium wage rate. 
E) cannot be enforced.

Question 17

In a housing market with a rent ceiling set below the equilibrium rent, as time passes the supply of apartments

Accepted Answer

A) decreases. 
B) increases. 
C) does not change. 
D) becomes fixed by the government. 
E) increases while the demand for apartments decreases. 
A) decreases. 
B) increases. 
C) does not change. 
D) becomes fixed by the government. 
E) increases while the demand for apartments decreases.

Question 18

-The graph shows the labor market for fast-food workers in Sioux City. If the government sets a minimum wage of $7 an hour, then the labor market is ________ and marginal benefit ________ marginal cost.

Accepted Answer

A) inefficient; is less than 
B) inefficient; equals 
C) efficient; equals 
D) inefficient; is greater than 
E) inefficient; cannot be compared to 
A) inefficient; is less than 
B) inefficient; equals 
C) efficient; equals 
D) inefficient; is greater than 
E) inefficient; cannot be compared to

Question 19

Suppose that producers are richer than consumers. Is a price support program fair?
 Explain your answer.

Accepted Answer

A price support program is unfair. It is

Question 20

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1. If the government imposes a tax on the product, then

Accepted Answer

A) buyers and sellers pay exactly the same share of the tax. 
B) buyers pay all of the tax. 
C) sellers pay all of the tax. 
D) buyers pay a smaller share of the tax than do sellers but both buyers and sellers pay some of the tax. 
E) because the elasticity of demand is zero, the government collects no revenue from this tax. 
A) buyers and sellers pay exactly the same share of the tax. 
B) buyers pay all of the tax. 
C) sellers pay all of the tax. 
D) buyers pay a smaller share of the tax than do sellers but both buyers and sellers pay some of the tax. 
E) because the elasticity of demand is zero, the government collects no revenue from this tax.

If a price ceiling is introduced in the market for milk below the market equilibrium price, then the producer surplus made by dairy farmers ________.

A minimum wage set above the equilibrium wage will the quantity of labor demanded and the quantity of labor supplied.

To keep the price at the level set by a price support, the government must

The buyer will pay the entire tax levied on a good when the demand for the good is or when the supply of the good is .

A price floor is considered

A price ceiling is

The inefficiency of a sales tax on a good is ultimately the result of the

Consider the market for dining at Mexican restaurants. Suppose the price elasticity of demand for Mexican food is 1.23 and the price elasticity of supply is 0.47. If the government imposes a tax on Mexican food, do consumers or producers pay most of the tax? Why?

A black market for housing exists because of a rent ceiling. The rent for housing in the black market is

Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock; $7.50 in St. Louis and $9.05 in Raleigh. An increase in the minimum wage to $7.50 per hour results in unemployment of landscapers in

-A minimum wage set above the equilibrium wage rate creates

The deadweight loss from a tax is called the

-The above figure shows the market for gourmet ice cream. In effort to reduce obesity, government places a $2 tax per gallon on suppliers in this market, shifting the supply curve from S₀ to S₁. The tax incidence is

Explain under what conditions a sales tax on a specific good would be paid entirely by buyers.

One of the reasons a minimum wage is unfair is because it

In a housing market with a rent ceiling set below the equilibrium rent, as time passes the supply of apartments

-The graph shows the labor market for fast-food workers in Sioux City. If the government sets a minimum wage of $7 an hour, then the labor market is and marginal benefit marginal cost.

Suppose that producers are richer than consumers. Is a price support program fair? Explain your answer.

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1. If the government imposes a tax on the product, then

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

If a price ceiling is introduced in the market for milk below the market equilibrium price, then the producer surplus made by dairy farmers ________.

A minimum wage set above the equilibrium wage will ________ the quantity of labor demanded and ________ the quantity of labor supplied.

To keep the price at the level set by a price support, the government must

The buyer will pay the entire tax levied on a good when the demand for the good is ________ or when the supply of the good is ________.

A price floor is considered

A price ceiling is

The inefficiency of a sales tax on a good is ultimately the result of the

Consider the market for dining at Mexican restaurants. Suppose the price elasticity of demand for Mexican food is 1.23 and the price elasticity of supply is 0.47. If the government imposes a tax on Mexican food, do consumers or producers pay most of the tax? Why?

A black market for housing exists because of a rent ceiling. The rent for housing in the black market is

Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock; $7.50 in St. Louis and $9.05 in Raleigh. An increase in the minimum wage to $7.50 per hour results in unemployment of landscapers in

-A minimum wage set above the equilibrium wage rate creates

The deadweight loss from a tax is called the

-The above figure shows the market for gourmet ice cream. In effort to reduce obesity, government places a $2 tax per gallon on suppliers in this market, shifting the supply curve from S₀ to S₁. The tax incidence is

Explain under what conditions a sales tax on a specific good would be paid entirely by buyers.

One of the reasons a minimum wage is unfair is because it

In a housing market with a rent ceiling set below the equilibrium rent, as time passes the supply of apartments

-The graph shows the labor market for fast-food workers in Sioux City. If the government sets a minimum wage of $7 an hour, then the labor market is ________ and marginal benefit ________ marginal cost.

Suppose that producers are richer than consumers. Is a price support program fair? Explain your answer.

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1. If the government imposes a tax on the product, then

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

A minimum wage set above the equilibrium wage will the quantity of labor demanded and the quantity of labor supplied.

The buyer will pay the entire tax levied on a good when the demand for the good is or when the supply of the good is .

-The graph shows the labor market for fast-food workers in Sioux City. If the government sets a minimum wage of $7 an hour, then the labor market is and marginal benefit marginal cost.