Question 1

Tax incidence is the

Accepted Answer

A) dollar amount of a tax, expressed as a percentage of the purchase price. 
B) dollar amount of a tax per unit sold. 
C) division of a tax burden between the buyer and seller. 
D) amount of revenue collected by government on a specific good. 
E) deadweight loss from the tax. 
A) dollar amount of a tax, expressed as a percentage of the purchase price. 
B) dollar amount of a tax per unit sold. 
C) division of a tax burden between the buyer and seller. 
D) amount of revenue collected by government on a specific good. 
E) deadweight loss from the tax.

Question 2

-The figure above illustrates the market for antifreeze. Suppose the government decides to impose an $8 sales tax on every gallon of antifreeze sold.
a. In the figure, illustrate the effect the tax has on the market for antifreeze.
b. What is the equilibrium price of a gallon of antifreeze before the tax?
 What is the price paid by buyers after the tax?
c. What is the equilibrium quantity of antifreeze before the tax?
 What is the equilibrium quantity after the tax?
d. What is the revenue collected by the government from this tax?
e. Do buyers or sellers bear the largest burden of the tax?
f. Illustrate the deadweight loss created by the tax.

Accepted Answer

@#IMG-DLM& 
a. The tax shifts the supply curve, as

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, unemployment equals ________ workers .

Accepted Answer

A) 100 
B) 300 
C) 400 
D) 500 
E) 200 
A) 100 
B) 300 
C) 400 
D) 500 
E) 200

Question 4

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 paid by the buyer by ________ per MP3 player.

Accepted Answer

A) raises; $5 
B) lowers; $5 
C) raises; $10 
D) lowers; $10 
E) raises; $7.50 
A) raises; $5 
B) lowers; $5 
C) raises; $10 
D) lowers; $10 
E) raises; $7.50

Question 5

-The figure above shows the labor market in a region. For a minimum wage to change the wage rate and amount of employment, it must be

Accepted Answer

A) left to the forces of supply and demand. 
B) set above $6 an hour. 
C) set equal to $6 an hour. 
D) set below $6 an hour. 
E) set at $12 per hour. 
A) left to the forces of supply and demand. 
B) set above $6 an hour. 
C) set equal to $6 an hour. 
D) set below $6 an hour. 
E) set at $12 per hour.

Question 6

With a price support program, who receives a subsidy?

Accepted Answer

A) only consumers 
B) only producers 
C) the government 
D) importers 
E) Both consumers and producers receive a subsidy. 
A) only consumers 
B) only producers 
C) the government 
D) importers 
E) Both consumers and producers receive a subsidy.

Question 7

Suppose the equilibrium wage rate for apricot pickers is $9.00 per hour in California and at that wage rate the equilibrium quantity of apricot pickers is 14,000. If the minimum wage is set at $7.50 per hour, then

Accepted Answer

A) the quantity of apricot pickers employed increases. 
B) the quantity of apricot pickers employed decreases. 
C) the quantity of apricot pickers employed does not change. 
D) the wage rate for apricot pickers increases. 
E) some apricot pickers are unemployed. 
A) the quantity of apricot pickers employed increases. 
B) the quantity of apricot pickers employed decreases. 
C) the quantity of apricot pickers employed does not change. 
D) the wage rate for apricot pickers increases. 
E) some apricot pickers are unemployed.

Question 8

Imposing a sales tax on sellers of a product has an effect that is similar to which of the following?

Accepted Answer

A) a decrease in consumers' preferences for the good 
B) an increase in the costs of production 
C) an increase in demand for the good 
D) a decrease in people's willingness to work 
E) Anything that decreases the demand and shifts the demand curve leftward. 
A) a decrease in consumers' preferences for the good 
B) an increase in the costs of production 
C) an increase in demand for the good 
D) a decrease in people's willingness to work 
E) Anything that decreases the demand and shifts the demand curve leftward.

Question 9

Suppose that the elasticity of demand for insulin is 0.1, the elasticity of demand for oranges is 1.2, and the elasticity of supply for insulin and oranges is 0.4. If the government imposes a 10 percent tax on both insulin and oranges, the decrease in the quantity of oranges is ________ the decrease in the quantity of insulin.

Accepted Answer

A) larger than 
B) smaller than 
C) equal to 
D) not comparable to 
E) More information is needed to determine how the decrease in the quantity of oranges compares to the decrease in the quantity of insulin. 
A) larger than 
B) smaller than 
C) equal to 
D) not comparable to 
E) More information is needed to determine how the decrease in the quantity of oranges compares to the decrease in the quantity of insulin.

Question 10

Suppose the government decides to tax salt. The demand for salt is inelastic and the supply is quite elastic. Who bears most of the tax incidence and pays most of this tax?

Accepted Answer

Buyers of salt pay m

Question 11

-The graph shows the labor market for teenagers in Atlanta. If the government sets a minimum wage of $6 an hour, then the maximum amount that a teenager would be willing to spend on job search is ________ an hour.

Accepted Answer

A) $2 
B) $4 
C) $5 
D) $6 
E) $3 
A) $2 
B) $4 
C) $5 
D) $6 
E) $3

Question 12

If a good has a tax levied on it, sellers respond to the price that excludes the tax and not the price with the tax because

Accepted Answer

A) the tax is handed over to the state directly by buyers. 
B) sellers do not get to keep the tax revenue. 
C) the demand for the good has decreased. 
D) the quantity supplied of the good increases. 
E) demanders pay none of the tax. 
A) the tax is handed over to the state directly by buyers. 
B) sellers do not get to keep the tax revenue. 
C) the demand for the good has decreased. 
D) the quantity supplied of the good increases. 
E) demanders pay none of the tax.

Question 13

Suppose the elasticity of demand for Mexican food is 3.00 and the elasticity of supply is 1.20. If the government imposes a sales tax on Mexican food, which of the following occurs?
I. Less Mexican food is purchased by buyers.
Ii. Less Mexican food is produced by sellers.
Iii. The government receives the excess burden as revenue.
Iv. Both the consumer and the producer surplus decrease.

Accepted Answer

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

Question 14

-The above figure shows the market for winter jackets. In an effort to keep the nation warm, the president places a price ceiling of $100 in the market for winter jackets. As a result, there is a

Accepted Answer

A) shortage equal to 150,000 jackets. 
B) surplus equal to 150,000 jackets. 
C) surplus equal to 300,000 jackets. 
D) shortage equal to 250,000 jackets. 
E) shortage equal to 100,000 jackets. 
A) shortage equal to 150,000 jackets. 
B) surplus equal to 150,000 jackets. 
C) surplus equal to 300,000 jackets. 
D) shortage equal to 250,000 jackets. 
E) shortage equal to 100,000 jackets.

Question 15

Which of the following can create a deadweight loss?
i. price supports
ii. price floor
iii. price ceiling

Accepted Answer

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

Question 16

Neither the demand nor the supply of gasoline is perfectly elastic or inelastic. When the government increases the federal tax on gasoline, the effect on buyers is that the price of gasoline

Accepted Answer

A) rises. 
B) falls. 
C) does not change. 
D) rises if the demand is inelastic and falls if the demand is elastic. 
E) rises if the supply is inelastic and falls if the supply is elastic. 
A) rises. 
B) falls. 
C) does not change. 
D) rises if the demand is inelastic and falls if the demand is elastic. 
E) rises if the supply is inelastic and falls if the supply is elastic.

Question 17

-The figure above illustrates the current market for apartments in Washington, D.C.
a. If the local government imposes a price ceiling of $1,500 per month, is there a shortage?
 If so, how much, if not, why not?
b. If the local government imposes a price ceiling of $900 per month, is there a shortage?
 If so, how much, if not, why not?

Accepted Answer

a. There is not a shortage. The equilibr

Question 18

Suppose the equilibrium rent in Boston is $1,500. A rent ceiling of $1,600 per month leads to

Accepted Answer

A) a surplus of apartments in Boston. 
B) a shortage of apartments in Boston. 
C) no change in the Boston apartment market. 
D) fair prices in the Boston apartment 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 Boston. 
B) a shortage of apartments in Boston. 
C) no change in the Boston apartment market. 
D) fair prices in the Boston apartment 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 19

To calculate the revenue government receives when a tax is imposed on a good, multiply the

Accepted Answer

A) pre-tax equilibrium price by the pre-tax quantity. 
B) after-tax equilibrium price by the after-tax quantity. 
C) tax by the pre-tax quantity. 
D) tax by the after-tax quantity. 
E) after-tax equilibrium price by the after-tax quantity and then subtract the pre-tax equilibrium price multiplied by the pre-tax quantity. 
A) pre-tax equilibrium price by the pre-tax quantity. 
B) after-tax equilibrium price by the after-tax quantity. 
C) tax by the pre-tax quantity. 
D) tax by the after-tax quantity. 
E) after-tax equilibrium price by the after-tax quantity and then subtract the pre-tax equilibrium price multiplied by the pre-tax quantity.

Question 20

The figure above shows the supply and demand curves in the market for rental housing. A rent ceiling is set at $400 per month.
-In the figure above, with the rent ceiling

Accepted Answer

A) there is a shortage of 3,000 units. 
B) there is a surplus of 3,000 units. 
C) there is a surplus of 2,000 units. 
D) there is a shortage of 1,000 units. 
E) the market is in equilibrium. 
A) there is a shortage of 3,000 units. 
B) there is a surplus of 3,000 units. 
C) there is a surplus of 2,000 units. 
D) there is a shortage of 1,000 units. 
E) the market is in equilibrium.

Tax incidence is the

-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, unemployment equals ________ workers .

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 paid by the buyer by per MP3 player.

-The figure above shows the labor market in a region. For a minimum wage to change the wage rate and amount of employment, it must be

With a price support program, who receives a subsidy?

Suppose the equilibrium wage rate for apricot pickers is $9.00 per hour in California and at that wage rate the equilibrium quantity of apricot pickers is 14,000. If the minimum wage is set at $7.50 per hour, then

Imposing a sales tax on sellers of a product has an effect that is similar to which of the following?

Suppose the government decides to tax salt. The demand for salt is inelastic and the supply is quite elastic. Who bears most of the tax incidence and pays most of this tax?

-The graph shows the labor market for teenagers in Atlanta. If the government sets a minimum wage of $6 an hour, then the maximum amount that a teenager would be willing to spend on job search is ________ an hour.

If a good has a tax levied on it, sellers respond to the price that excludes the tax and not the price with the tax because

-The above figure shows the market for winter jackets. In an effort to keep the nation warm, the president places a price ceiling of $100 in the market for winter jackets. As a result, there is a

Which of the following can create a deadweight loss? i. price supports ii. price floor iii. price ceiling

Neither the demand nor the supply of gasoline is perfectly elastic or inelastic. When the government increases the federal tax on gasoline, the effect on buyers is that the price of gasoline

Suppose the equilibrium rent in Boston is $1,500. A rent ceiling of $1,600 per month leads to

To calculate the revenue government receives when a tax is imposed on a good, multiply 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. -In the figure above, with the rent ceiling

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

Tax incidence is the

-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, unemployment equals ________ workers .

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 paid by the buyer by ________ per MP3 player.

-The figure above shows the labor market in a region. For a minimum wage to change the wage rate and amount of employment, it must be

With a price support program, who receives a subsidy?

Suppose the equilibrium wage rate for apricot pickers is $9.00 per hour in California and at that wage rate the equilibrium quantity of apricot pickers is 14,000. If the minimum wage is set at $7.50 per hour, then

Imposing a sales tax on sellers of a product has an effect that is similar to which of the following?

Suppose the government decides to tax salt. The demand for salt is inelastic and the supply is quite elastic. Who bears most of the tax incidence and pays most of this tax?

-The graph shows the labor market for teenagers in Atlanta. If the government sets a minimum wage of $6 an hour, then the maximum amount that a teenager would be willing to spend on job search is ________ an hour.

If a good has a tax levied on it, sellers respond to the price that excludes the tax and not the price with the tax because

-The above figure shows the market for winter jackets. In an effort to keep the nation warm, the president places a price ceiling of $100 in the market for winter jackets. As a result, there is a

Which of the following can create a deadweight loss? i. price supports ii. price floor iii. price ceiling

Neither the demand nor the supply of gasoline is perfectly elastic or inelastic. When the government increases the federal tax on gasoline, the effect on buyers is that the price of gasoline

Suppose the equilibrium rent in Boston is $1,500. A rent ceiling of $1,600 per month leads to

To calculate the revenue government receives when a tax is imposed on a good, multiply 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. -In the figure above, with the rent ceiling

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

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 paid by the buyer by per MP3 player.