Question 1

The deadweight loss of a tax

Accepted Answer

A) is the transfer of income from households to the government. 
B) determines the incidence of a tax. 
C) is part of the total burden of a tax. 
D) is greater than the total burden of a tax. 
E) equals the tax revenue collected by the government. 
A) is the transfer of income from households to the government. 
B) determines the incidence of a tax. 
C) is part of the total burden of a tax. 
D) is greater than the total burden of a tax. 
E) equals the tax revenue collected by the government.

Question 2

-The figure above shows the market for tires. The government has imposed a tax on tires, and the buyers pay ________ of the tax.

Accepted Answer

A) $10 
B) $20 
C) $50 
D) $60 
E) $30 
A) $10 
B) $20 
C) $50 
D) $60 
E) $30

Question 3

-The graph shows the market for cell phones. The government imposes a sales tax on cell phones at $10 a cell phone. The excess burden of the sales tax on cell phones is ________.

Accepted Answer

A) $20,000 
B) $15,000 
C) $35,000 
D) $7,500 
E) $30,000 
A) $20,000 
B) $15,000 
C) $35,000 
D) $7,500 
E) $30,000

Question 4

The deadweight loss from a tax

Accepted Answer

A) is the tax revenue the government collects when people die. 
B) is the split of a tax between the amount paid and the amount collected. 
C) equals the amount collected as revenue from the tax. 
D) is called the excess burden of the tax. 
E) equals the amount collected as revenue from the tax plus the excess burden of the tax. 
A) is the tax revenue the government collects when people die. 
B) is the split of a tax between the amount paid and the amount collected. 
C) equals the amount collected as revenue from the tax. 
D) is called the excess burden of the tax. 
E) equals the amount collected as revenue from the tax plus the excess burden of the tax.

Question 5

-The figure above shows the market for tickets to the Super Bowl the day of the game. Suppose the government imposes an entertainment tax of $100 per ticket.
a. What is the equilibrium price of a Super Bowl ticket before the tax?
 What is the price paid by buyers after the tax?
 What is the price received by sellers after the tax?
b. What is the equilibrium quantity of tickets before the tax?
 What is the equilibrium quantity after the tax?
c. Do buyers or sellers bear most of the incidence of the tax?

Accepted Answer

a. The equilibrium price before the tax

Question 6

-The above figure shows the market for buckets of golf balls at the driving range. A new leisure time tax is placed on suppliers in this market, shifting the supply curve from S₀ to S₁. The total tax revenue is equal to

Accepted Answer

A) $1,800. 
B) $600. 
C) $1,200. 
D) $900. 
E) $5,600. 
A) $1,800. 
B) $600. 
C) $1,200. 
D) $900. 
E) $5,600.

Question 7

Which of the following is true?
I. A price ceiling is inefficient but fair.
Ii. A price floor is inefficient and unfair.
Iii. A price support increases the quantity produced.

Accepted Answer

A) Only i 
B) Only ii 
C) Only iii 
D) i and ii 
E) ii and iii 
A) Only i 
B) Only ii 
C) Only iii 
D) i and ii 
E) ii and iii

Question 8

Which of the following is true?
I. A price ceiling set above the equilibrium price has no effects.
Ii. A price ceiling set below the equilibrium price creates a surplus.
Iii. A price floor set above the equilibrium price has no effects.

Accepted Answer

A) Only i 
B) Only ii 
C) Only iii 
D) i and ii 
E) ii and iii 
A) Only i 
B) Only ii 
C) Only iii 
D) i and ii 
E) ii and iii

Question 9

When a product is taxed,

Accepted Answer

A) part of the initial consumer surplus goes to the government as revenue. 
B) part of the initial consumer surplus becomes a deadweight loss. 
C) the producer surplus never changes because consumers pay taxes, not producers. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct. 
A) part of the initial consumer surplus goes to the government as revenue. 
B) part of the initial consumer surplus becomes a deadweight loss. 
C) the producer surplus never changes because consumers pay taxes, not producers. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct.

Question 10

How does the elasticity of demand for labor affect the deadweight loss from an increase in the minimum wage?
 Why?

Accepted Answer

The more elastic the demand for labor, t

Question 11

Suppose the demand for saline solution is perfectly inelastic for contact lens wearers. If the government imposes a tax on saline solution, what occurs?
 Be sure to tell what happens to the price paid by the buyers and discuss the incidence of the tax.

Accepted Answer

If demand is perfectly inelastic, then n

Question 12

An effective price support ________ producers and ________ a deadweight loss.

Accepted Answer

A) has no effect on; does not create 
B) benefits; creates 
C) harms; creates 
D) benefits; does not create 
E) harms; does not create 
A) has no effect on; does not create 
B) benefits; creates 
C) harms; creates 
D) benefits; does not create 
E) harms; does not create

Question 13

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.
-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

Question 14

A price floor set above the equilibrium price

Accepted Answer

A) creates a surplus. 
B) creates a shortage. 
C) creates excess demand. 
D) balances supply and demand. 
E) has no effect. 
A) creates a surplus. 
B) creates a shortage. 
C) creates excess demand. 
D) balances supply and demand. 
E) has no effect.

Question 15

-The above figure shows the market for buckets of golf balls at the driving range. A new leisure time tax is placed on suppliers in this market, shifting the supply curve from S₀ to S₁. The quantity of buckets without the tax is ________ and the quantity with the tax is ________.

Accepted Answer

A) 400; 600 
B) 600; 400 
C) 400; 400 
D) 800; 500 
E) 600; 500 
A) 400; 600 
B) 600; 400 
C) 400; 400 
D) 800; 500 
E) 600; 500

Question 16

Suppose the equilibrium wage rate for apricot pickers is $7.00 per hour and at that wage rate the equilibrium quantity of apricot pickers employed is 14,000. If the minimum wage is set at $7.50 per hour, then the

Accepted Answer

A) quantity of apricot pickers employed increases. 
B) quantity of apricot pickers employed decreases. 
C) quantity of apricot pickers employed does not change. 
D) wage rate for apricot pickers decreases. 
E) quantity of apricot pickers demanded does not change and the quantity of apricot pickers supplied does not change. 
A) quantity of apricot pickers employed increases. 
B) quantity of apricot pickers employed decreases. 
C) quantity of apricot pickers employed does not change. 
D) wage rate for apricot pickers decreases. 
E) quantity of apricot pickers demanded does not change and the quantity of apricot pickers supplied does not change.

Question 17

To have an effective price support program, the government must i. isolate the domestic market from the world market
Ii. pay the farmers a subsidy
Iii. introduce a price floor

Accepted Answer

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

Question 18

If a rent ceiling is below the equilibrium rent, some allocation scheme must be used. The allocation methods include all of the following EXCEPT

Accepted Answer

A) charging the equilibrium rent. 
B) refusing to rent to individuals on the basis of sex, race, or some other attribute. 
C) requiring a payment, such as key money, in addition to the rent. 
D) the creation of a black market. 
E) increased search activity. 
A) charging the equilibrium rent. 
B) refusing to rent to individuals on the basis of sex, race, or some other attribute. 
C) requiring a payment, such as key money, in addition to the rent. 
D) the creation of a black market. 
E) increased search activity.

Question 19

Rent controls

Accepted Answer

A) create a deadweight loss. 
B) increase maintenance by landlords. 
C) benefit people who live in rent controlled apartments. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct. 
A) create a deadweight loss. 
B) increase maintenance by landlords. 
C) benefit people who live in rent controlled apartments. 
D)  Both answers A and C are correct. 
E)  Both answers B and C are correct.

Question 20

$$\begin{array} { c c c } 
\begin{array} { c } 
\text { Wage rate } \
\text { (dollars per hour) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Quantity supplied } \
\text { (workers) }
\end{array} \
\hline 12 & 400 & 1000 \
11 & 600 & 900 \
10 & 800 & 800 \
9 & 1000 & 700 \
8 & 1200 & 500 \
\hline
\end{array}$$
-The labor demand and labor supply schedules are given in the table above. If a minimum wage of $11 per hour is imposed,

Accepted Answer

A) a surplus of 300 workers occurs. 
B) there is no shortage or surplus of workers. 
C) 900 workers are employed. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct. 
A) a surplus of 300 workers occurs. 
B) there is no shortage or surplus of workers. 
C) 900 workers are employed. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct.

The deadweight loss of a tax

-The figure above shows the market for tires. The government has imposed a tax on tires, and the buyers pay ________ of the tax.

-The graph shows the market for cell phones. The government imposes a sales tax on cell phones at $10 a cell phone. The excess burden of the sales tax on cell phones is ________.

The deadweight loss from a tax

-The above figure shows the market for buckets of golf balls at the driving range. A new leisure time tax is placed on suppliers in this market, shifting the supply curve from S₀ to S₁. The total tax revenue is equal to

Which of the following is true? I. A price ceiling is inefficient but fair. Ii. A price floor is inefficient and unfair. Iii. A price support increases the quantity produced.

Which of the following is true? I. A price ceiling set above the equilibrium price has no effects. Ii. A price ceiling set below the equilibrium price creates a surplus. Iii. A price floor set above the equilibrium price has no effects.

When a product is taxed,

How does the elasticity of demand for labor affect the deadweight loss from an increase in the minimum wage? Why?

Suppose the demand for saline solution is perfectly inelastic for contact lens wearers. If the government imposes a tax on saline solution, what occurs? Be sure to tell what happens to the price paid by the buyers and discuss the incidence of the tax.

An effective price support producers and a deadweight loss.

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. -After the tax is imposed, the government collects tax revenue of ________ a week.

A price floor set above the equilibrium price

-The above figure shows the market for buckets of golf balls at the driving range. A new leisure time tax is placed on suppliers in this market, shifting the supply curve from S₀ to S₁. The quantity of buckets without the tax is and the quantity with the tax is .

Suppose the equilibrium wage rate for apricot pickers is $7.00 per hour and at that wage rate the equilibrium quantity of apricot pickers employed is 14,000. If the minimum wage is set at $7.50 per hour, then the

To have an effective price support program, the government must i. isolate the domestic market from the world market Ii. pay the farmers a subsidy Iii. introduce a price floor

If a rent ceiling is below the equilibrium rent, some allocation scheme must be used. The allocation methods include all of the following EXCEPT

Rent controls

Wage rate (dollars per hour) Quantity demanded (workers) Quantity supplied (workers) 12 400 1000 11 600 900 10 800 800 9 1000 700 8 1200 500 -The labor demand and labor supply schedules are given in the table above. If a minimum wage of $11 per hour is imposed,

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 deadweight loss of a tax

-The figure above shows the market for tires. The government has imposed a tax on tires, and the buyers pay ________ of the tax.

-The graph shows the market for cell phones. The government imposes a sales tax on cell phones at $10 a cell phone. The excess burden of the sales tax on cell phones is ________.

The deadweight loss from a tax

-The above figure shows the market for buckets of golf balls at the driving range. A new leisure time tax is placed on suppliers in this market, shifting the supply curve from S₀ to S₁. The total tax revenue is equal to

Which of the following is true? I. A price ceiling is inefficient but fair. Ii. A price floor is inefficient and unfair. Iii. A price support increases the quantity produced.

Which of the following is true? I. A price ceiling set above the equilibrium price has no effects. Ii. A price ceiling set below the equilibrium price creates a surplus. Iii. A price floor set above the equilibrium price has no effects.

When a product is taxed,

How does the elasticity of demand for labor affect the deadweight loss from an increase in the minimum wage? Why?

Suppose the demand for saline solution is perfectly inelastic for contact lens wearers. If the government imposes a tax on saline solution, what occurs? Be sure to tell what happens to the price paid by the buyers and discuss the incidence of the tax.

An effective price support ________ producers and ________ a deadweight loss.

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. -After the tax is imposed, the government collects tax revenue of ________ a week.

A price floor set above the equilibrium price

-The above figure shows the market for buckets of golf balls at the driving range. A new leisure time tax is placed on suppliers in this market, shifting the supply curve from S₀ to S₁. The quantity of buckets without the tax is ________ and the quantity with the tax is ________.

Suppose the equilibrium wage rate for apricot pickers is $7.00 per hour and at that wage rate the equilibrium quantity of apricot pickers employed is 14,000. If the minimum wage is set at $7.50 per hour, then the

To have an effective price support program, the government must i. isolate the domestic market from the world market Ii. pay the farmers a subsidy Iii. introduce a price floor

If a rent ceiling is below the equilibrium rent, some allocation scheme must be used. The allocation methods include all of the following EXCEPT

Rent controls

Wage rate (dollars per hour) Quantity demanded (workers) Quantity supplied (workers) 12 400 1000 11 600 900 10 800 800 9 1000 700 8 1200 500 -The labor demand and labor supply schedules are given in the table above. If a minimum wage of $11 per hour is imposed,

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

An effective price support producers and a deadweight loss.

-The above figure shows the market for buckets of golf balls at the driving range. A new leisure time tax is placed on suppliers in this market, shifting the supply curve from S₀ to S₁. The quantity of buckets without the tax is and the quantity with the tax is .