Question 1

If a rent ceiling is imposed that is less than the equilibrium rent, which of the following outcomes is most likely to occur?

Accepted Answer

A) reduced search activity 
B) black market activity 
C) a building boom 
D) a housing surplus 
E) None of the above answers is correct because to have an impact the rent ceiling must be above the equilibrium rent. 
A) reduced search activity 
B) black market activity 
C) a building boom 
D) a housing surplus 
E) None of the above answers is correct because to have an impact the rent ceiling must be above the equilibrium rent.

Question 2

Who loses and who gains from the minimum wage?

Accepted Answer

A) Losers are all workers and gainers are all firms. 
B) Losers are all firms and gainers are all workers. 
C) Losers are all firms and some workers, while gainers are other workers. 
D) Gainers are some firms and all workers, while losers are some firms. 
E) Gainers are some firms and some workers, while losers are other firms and other workers. 
A) Losers are all workers and gainers are all firms. 
B) Losers are all firms and gainers are all workers. 
C) Losers are all firms and some workers, while gainers are other workers. 
D) Gainers are some firms and all workers, while losers are some firms. 
E) Gainers are some firms and some workers, while losers are other firms and other workers.

Question 3

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton.
-The figure above shows that the deadweight loss from the government's policy is

Accepted Answer

A) about $350 million. 
B) about $25 million. 
C) about $50 million. 
D) about $100 million. 
E) zero. 
A) about $350 million. 
B) about $25 million. 
C) about $50 million. 
D) about $100 million. 
E) zero.

Question 4

-The above figure shows a labor market with a minimum wage of $8 an hour. How many people are employed when the minimum wage is in place?

Accepted Answer

A) 40,000 
B) 60,000 
C) 80,000 
D) fewer than 40,000 
E) more than 80,000 
A) 40,000 
B) 60,000 
C) 80,000 
D) fewer than 40,000 
E) more than 80,000

Question 5

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 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 6

When a tax is imposed on a good, the resulting rise in the equilibrium price is usually less than the amount of the tax itself. Why doesn't the equilibrium price rise by the full amount of the tax?

Accepted Answer

Because firms collect taxes from consume

Question 7

A price support directly sets the

Accepted Answer

A) amount of production. 
B) subsidy the government must receive from producers. 
C) equilibrium quantity. 
D) lowest price for which the good may be sold. 
E) highest price for which the good may be sold. 
A) amount of production. 
B) subsidy the government must receive from producers. 
C) equilibrium quantity. 
D) lowest price for which the good may be sold. 
E) highest price for which the good may be sold.

Question 8

If neither the demand nor supply of a good is perfectly elastic or inelastic, a tax on the good ________ consumer surplus and ________ producer surplus.

Accepted Answer

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

Question 9

-The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition. The with no government intervention, the equilibrium price is ________ and the equilibrium quantity is ________.

Accepted Answer

A) $15 per ton; 100 million tons 
B) $14 per ton; 250 million tons 
C) $12 per ton; 300 million tons 
D) $12 per ton; 250 million tons 
E) $15 per ton; 400 million tons 
A) $15 per ton; 100 million tons 
B) $14 per ton; 250 million tons 
C) $12 per ton; 300 million tons 
D) $12 per ton; 250 million tons 
E) $15 per ton; 400 million tons

Question 10

When a market has a price support set above the equilibrium price,

Accepted Answer

A) consumers gain. 
B) taxes on consumers decrease. 
C) marginal benefit exceeds marginal cost. 
D) the market is efficient. 
E) farmers gain. 
A) consumers gain. 
B) taxes on consumers decrease. 
C) marginal benefit exceeds marginal cost. 
D) the market is efficient. 
E) farmers gain.

Question 11

The figure above shows supply and demand in the market for labor. The government introduces a minimum wage of $7 per hour.
-The figure above shows that the lowest wage rate for which someone is willing to work is

Accepted Answer

A) $3 an hour. 
B) $5 an hour. 
C) $6 an hour. 
D) $7 an hour. 
E) $4 an hour. 
A) $3 an hour. 
B) $5 an hour. 
C) $6 an hour. 
D) $7 an hour. 
E) $4 an hour.

Question 12

-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. Which of the following statements is true?

Accepted Answer

A) After taking account of the resources lost in search, consumer surplus increases when the price ceiling is in place. 
B) There will be a surplus of jackets. 
C) Because the price of a jacket is lowered, consumers end up buying more jackets with the price ceiling than without it. 
D) Producer surplus decreases if there is a price ceiling. 
E) The quantity supplied of jackets is greater that quantity demanded when there is a price ceiling. 
A) After taking account of the resources lost in search, consumer surplus increases when the price ceiling is in place. 
B) There will be a surplus of jackets. 
C) Because the price of a jacket is lowered, consumers end up buying more jackets with the price ceiling than without it. 
D) Producer surplus decreases if there is a price ceiling. 
E) The quantity supplied of jackets is greater that quantity demanded when there is a price ceiling.

Question 13

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 consumer surplus

Accepted Answer

A) decreases by $17,500. 
B) increases by $17,500. 
C) decreases by $7,500. 
D) increases by $7,500. 
E) does not change. 
A) decreases by $17,500. 
B) increases by $17,500. 
C) decreases by $7,500. 
D) increases by $7,500. 
E) does not change.

Question 14

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 workers employed is ________, and the wage paid is ________.

Accepted Answer

A) 3,000; $7 per hour 
B) 7,000; $7 per hour 
C) 5,000; $5 per hour 
D) 5,000; $7 per hour 
E) 3,000; $5 per hour 
A) 3,000; $7 per hour 
B) 7,000; $7 per hour 
C) 5,000; $5 per hour 
D) 5,000; $7 per hour 
E) 3,000; $5 per hour

Question 15

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.
-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 16

If a tax is placed on tires, then i. the equilibrium quantity of tires will decrease.
Ii. a deadweight loss will be created.
Iii. the producer surplus will decrease.

Accepted Answer

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

Question 17

-The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton. As a result of this price support, the total subsidy paid to wheat farmers equals

Accepted Answer

A) $4 billion. 
B) $3 billion. 
C) $3.5 billion. 
D) $1.5 billion. 
E) $4.5 billion 
A) $4 billion. 
B) $3 billion. 
C) $3.5 billion. 
D) $1.5 billion. 
E) $4.5 billion

Question 18

When a price support is set below the equilibrium price, producers ________ the quantity supplied and consumers ________ the quantity demanded.

Accepted Answer

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

Question 19

Suppose the demand for barley is perfectly elastic. The supply curve of barley is upward sloping. If a tax is imposed on barley,

Accepted Answer

A) barley sellers pay the entire tax. 
B) barley buyers pay the entire tax. 
C) the government pays the entire tax. 
D) the tax is split evenly between barley buyers and sellers. 
E) who pays the tax depends on whether the government imposes the tax on barley sellers or on barley buyers. 
A) barley sellers pay the entire tax. 
B) barley buyers pay the entire tax. 
C) the government pays the entire tax. 
D) the tax is split evenly between barley buyers and sellers. 
E) who pays the tax depends on whether the government imposes the tax on barley sellers or on barley buyers.

Question 20

One of the consequences of a rent ceiling set below the equilibrium rent is

Accepted Answer

A) decreased search activity. 
B) increased search activity. 
C) the establishment of landlord unions. 
D) surpluses of apartments. 
E) the elimination of the deadweight loss that would otherwise exist in the housing market. 
A) decreased search activity. 
B) increased search activity. 
C) the establishment of landlord unions. 
D) surpluses of apartments. 
E) the elimination of the deadweight loss that would otherwise exist in the housing market.

If a rent ceiling is imposed that is less than the equilibrium rent, which of the following outcomes is most likely to occur?

Who loses and who gains from the minimum wage?

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton. -The figure above shows that the deadweight loss from the government's policy is

-The above figure shows a labor market with a minimum wage of $8 an hour. How many people are employed when the minimum wage is in place?

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 tax the price paid by the buyer by per MP3 player.

When a tax is imposed on a good, the resulting rise in the equilibrium price is usually less than the amount of the tax itself. Why doesn't the equilibrium price rise by the full amount of the tax?

A price support directly sets the

If neither the demand nor supply of a good is perfectly elastic or inelastic, a tax on the good consumer surplus and producer surplus.

-The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition. The with no government intervention, the equilibrium price is and the equilibrium quantity is .

When a market has a price support set above the equilibrium price,

The figure above shows supply and demand in the market for labor. The government introduces a minimum wage of $7 per hour. -The figure above shows that the lowest wage rate for which someone is willing to work is

-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. Which of the following statements is true?

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 consumer surplus

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 workers employed is , and the wage paid is .

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. -Based on the figure above, the burden of the tax

If a tax is placed on tires, then i. the equilibrium quantity of tires will decrease. Ii. a deadweight loss will be created. Iii. the producer surplus will decrease.

-The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton. As a result of this price support, the total subsidy paid to wheat farmers equals

When a price support is set below the equilibrium price, producers the quantity supplied and consumers the quantity demanded.

Suppose the demand for barley is perfectly elastic. The supply curve of barley is upward sloping. If a tax is imposed on barley,

One of the consequences of a rent ceiling set below the equilibrium rent is

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 rent ceiling is imposed that is less than the equilibrium rent, which of the following outcomes is most likely to occur?

Who loses and who gains from the minimum wage?

The figure above shows the market for sugar beets. The government intervenes in this market and sets a support price at $35 a ton. -The figure above shows that the deadweight loss from the government's policy is

-The above figure shows a labor market with a minimum wage of $8 an hour. How many people are employed when the minimum wage is in place?

When a tax is imposed on a good, the resulting rise in the equilibrium price is usually less than the amount of the tax itself. Why doesn't the equilibrium price rise by the full amount of the tax?

A price support directly sets the

If neither the demand nor supply of a good is perfectly elastic or inelastic, a tax on the good ________ consumer surplus and ________ producer surplus.

-The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition. The with no government intervention, the equilibrium price is ________ and the equilibrium quantity is ________.

When a market has a price support set above the equilibrium price,

The figure above shows supply and demand in the market for labor. The government introduces a minimum wage of $7 per hour. -The figure above shows that the lowest wage rate for which someone is willing to work is

-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. Which of the following statements is true?

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 consumer surplus

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 workers employed is ________, and the wage paid is ________.

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. -Based on the figure above, the burden of the tax

If a tax is placed on tires, then i. the equilibrium quantity of tires will decrease. Ii. a deadweight loss will be created. Iii. the producer surplus will decrease.

-The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton. As a result of this price support, the total subsidy paid to wheat farmers equals

When a price support is set below the equilibrium price, producers ________ the quantity supplied and consumers ________ the quantity demanded.

Suppose the demand for barley is perfectly elastic. The supply curve of barley is upward sloping. If a tax is imposed on barley,

One of the consequences of a rent ceiling set below the equilibrium rent is

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 neither the demand nor supply of a good is perfectly elastic or inelastic, a tax on the good consumer surplus and producer surplus.

-The above figure shows the domestic market for wheat. Suppose this market is isolated from global competition. The with no government intervention, the equilibrium price is and the equilibrium quantity is .

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 workers employed is , and the wage paid is .

When a price support is set below the equilibrium price, producers the quantity supplied and consumers the quantity demanded.