Question 1

Sellers bear the entire incidence of a tax on a good. This outcome can occur if

Accepted Answer

A) supply is perfectly inelastic. 
B) the good is an inferior good. 
C) demand is perfectly inelastic. 
D) the demand curve is downward sloping and the supply curve is upward sloping. 
E) supply is perfectly elastic. 
A) supply is perfectly inelastic. 
B) the good is an inferior good. 
C) demand is perfectly inelastic. 
D) the demand curve is downward sloping and the supply curve is upward sloping. 
E) supply is perfectly elastic.

Question 2

A minimum wage law

Accepted Answer

A) lowers the wage rate of workers who are able to get a job. 
B) increases employment. 
C) increases the time spent searching by workers who cannot find a job. 
D) creates efficiency in the labor market. 
E) must be set below the equilibrium wage rate in order to have an impact. 
A) lowers the wage rate of workers who are able to get a job. 
B) increases employment. 
C) increases the time spent searching by workers who cannot find a job. 
D) creates efficiency in the labor market. 
E) must be set below the equilibrium wage rate in order to have an impact.

Question 3

The deadweight loss associated with a minimum wage occurs because

Accepted Answer

A) the minimum wage increases the quantity of labor demanded. 
B) the minimum wage decreases the quantity of labor supplied. 
C) the minimum wage falls below the equilibrium wage. 
D) employment after the minimum wage is less than employment at equilibrium and so the marginal benefit of more work exceeds the marginal cost. 
E) the minimum wage creates a shortage of labor because firms hire fewer workers. 
A) the minimum wage increases the quantity of labor demanded. 
B) the minimum wage decreases the quantity of labor supplied. 
C) the minimum wage falls below the equilibrium wage. 
D) employment after the minimum wage is less than employment at equilibrium and so the marginal benefit of more work exceeds the marginal cost. 
E) the minimum wage creates a shortage of labor because firms hire fewer workers.

Question 4

-The above figure shows the market for a prescription drug. What is the equilibrium price of the drug?
 How many doses are purchased?
 Suppose the government imposes a price ceiling of $1.50 a dose. How many doses are purchased after the price ceiling is imposed?

Accepted Answer

The equilibrium price is $2.50 per dose.

Question 5

Explain why low-skilled workers find that their employment opportunities are less with a minimum wage.

Accepted Answer

A minimum wage set above the equilibrium

Question 6

To determine who bears the greater share of a tax, we compare the

Accepted Answer

A) number of buyers to the number of sellers. 
B) elasticity of supply to the elasticity of demand. 
C) size of the tax to the price of the good. 
D) government tax revenue to the revenue collected by the suppliers. 
E) pre-tax quantity to the post-tax quantity. 
A) number of buyers to the number of sellers. 
B) elasticity of supply to the elasticity of demand. 
C) size of the tax to the price of the good. 
D) government tax revenue to the revenue collected by the suppliers. 
E) pre-tax quantity to the post-tax quantity.

Question 7

If the government eliminates a tax on a good with a perfectly elastic supply, who benefits most?

Accepted Answer

A) buyers 
B) sellers 
C) buyers if the demand is also perfectly elastic, otherwise sellers 
D) buyers if the demand is unit elastic, otherwise sellers 
E) buyers and sellers benefit equally 
A) buyers 
B) sellers 
C) buyers if the demand is also perfectly elastic, otherwise sellers 
D) buyers if the demand is unit elastic, otherwise sellers 
E) buyers and sellers benefit equally

Question 8

The demand for gasoline is inelastic and the supply of gasoline is elastic. Therefore,

Accepted Answer

A) sellers bear most of the incidence of a tax on gasoline. 
B) buyers bear most of the incidence of a tax on gasoline. 
C) the government bears most of the incidence of a tax on gasoline. 
D) the incidence of a tax on gasoline depends if the tax is imposed on sellers or on buyers. 
E) None of the above answers is correct. 
A) sellers bear most of the incidence of a tax on gasoline. 
B) buyers bear most of the incidence of a tax on gasoline. 
C) the government bears most of the incidence of a tax on gasoline. 
D) the incidence of a tax on gasoline depends if the tax is imposed on sellers or on buyers. 
E) None of the above answers is correct.

Question 9

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 price (including the tax)paid by the buyer is ________ per MP3 player.

Accepted Answer

A) $105 
B) $100 
C) $95 
D) $110 
E) $90 
A) $105 
B) $100 
C) $95 
D) $110 
E) $90

Question 10

Neither the demand nor the supply of sugar is perfectly elastic or inelastic. If the government imposes a 5 percent tax on sugar, the

Accepted Answer

A) price of sugar falls by 5 percent. 
B) price of sugar increases by less then 5 percent. 
C) price of sugar does not change. 
D) quantity of sugar increases. 
E) price of sugar rises by 5 percent. 
A) price of sugar falls by 5 percent. 
B) price of sugar increases by less then 5 percent. 
C) price of sugar does not change. 
D) quantity of sugar increases. 
E) price of sugar rises by 5 percent.

Question 11

Rent ceilings set below the equilibrium rent i. create a deadweight loss.
Ii. increase search activity.
Iii. encourage landlords to charge a high price for new locks and keys, called "key money."

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 12

A regulation that sets the highest price at which it is legal to trade a good is a

Accepted Answer

A) production quota. 
B) price floor. 
C) price support. 
D) price ceiling. 
E) subsidy. 
A) production quota. 
B) price floor. 
C) price support. 
D) price ceiling. 
E) subsidy.

Question 13

-The above figure shows the market for finish carpenters in Bozeman. There is a minimum wage set at $18. Compared to the initial equilibrium without the minimum wage, once the minimum wage is in place and after taking account of job search, the total workers' surplus ________ and the total firms' surplus ________.

Accepted Answer

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

Question 14

Rent ceilings

Accepted Answer

A) eliminate the problem of scarcity. 
B) allocate resources efficiently. 
C) ensure that housing goes to the poorer people. 
D) benefit renters living in rent-controlled apartments. 
E) benefit all landlords because the landlords know what rent to charge their renters. 
A) eliminate the problem of scarcity. 
B) allocate resources efficiently. 
C) ensure that housing goes to the poorer people. 
D) benefit renters living in rent-controlled apartments. 
E) benefit all landlords because the landlords know what rent to charge their renters.

Question 15

-The above figure shows a housing market with a rent ceiling equal to $1,000. In this figure, what area is equal to the resources lost due to search?

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 16

An increase in the minimum wage to $15 per hour would lead to

Accepted Answer

A) an increase in search activity for many workers. 
B) a decrease in search activity for many workers. 
C) a decrease in unemployment. 
D) no change in unemployment. 
E) no change in employment. 
A) an increase in search activity for many workers. 
B) a decrease in search activity for many workers. 
C) a decrease in unemployment. 
D) no change in unemployment. 
E) no change in employment.

Question 17

A black market

Accepted Answer

A) is legal only when it is associated with government price ceilings. 
B) is defined as the deadweight loss associated with taxes. 
C) benefits no one. 
D) is a potential outcome of a price ceiling. 
E) is always legal. 
A) is legal only when it is associated with government price ceilings. 
B) is defined as the deadweight loss associated with taxes. 
C) benefits no one. 
D) is a potential outcome of a price ceiling. 
E) is always legal.

Question 18

A price support set above the equilibrium price does which of the following?
I. decreases producer surplus
Ii. decreases consumer surplus
Iii. decreases the marginal cost of the last unit produced

Accepted Answer

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

Question 19

A stated goal of a minimum wage is to

Accepted Answer

A) increase government tax revenue. 
B) stabilize production costs. 
C) boost the incomes of low-wage earners. 
D) decrease business profits. 
E) increase business profits by making the labor market more efficient. 
A) increase government tax revenue. 
B) stabilize production costs. 
C) boost the incomes of low-wage earners. 
D) decrease business profits. 
E) increase business profits by making the labor market more efficient.

Question 20

-The figure above shows the labor market in a region. If a minimum wage of $8 an hour is imposed, then the quantity of labor supplied is ________ and the quantity of labor demanded is ________.

Accepted Answer

A) 60,000; 60,000 
B) 80,000; 40,000 
C) 40,000; 60,000 
D) 60,000; 40,000 
E) 40,000; 40,000 
A) 60,000; 60,000 
B) 80,000; 40,000 
C) 40,000; 60,000 
D) 60,000; 40,000 
E) 40,000; 40,000

Sellers bear the entire incidence of a tax on a good. This outcome can occur if

A minimum wage law

The deadweight loss associated with a minimum wage occurs because

-The above figure shows the market for a prescription drug. What is the equilibrium price of the drug? How many doses are purchased? Suppose the government imposes a price ceiling of $1.50 a dose. How many doses are purchased after the price ceiling is imposed?

Explain why low-skilled workers find that their employment opportunities are less with a minimum wage.

To determine who bears the greater share of a tax, we compare the

If the government eliminates a tax on a good with a perfectly elastic supply, who benefits most?

The demand for gasoline is inelastic and the supply of gasoline is elastic. Therefore,

Neither the demand nor the supply of sugar is perfectly elastic or inelastic. If the government imposes a 5 percent tax on sugar, the

Rent ceilings set below the equilibrium rent i. create a deadweight loss. Ii. increase search activity. Iii. encourage landlords to charge a high price for new locks and keys, called "key money."

A regulation that sets the highest price at which it is legal to trade a good is a

-The above figure shows the market for finish carpenters in Bozeman. There is a minimum wage set at $18. Compared to the initial equilibrium without the minimum wage, once the minimum wage is in place and after taking account of job search, the total workers' surplus and the total firms' surplus .

Rent ceilings

-The above figure shows a housing market with a rent ceiling equal to $1,000. In this figure, what area is equal to the resources lost due to search?

An increase in the minimum wage to $15 per hour would lead to

A black market

A price support set above the equilibrium price does which of the following? I. decreases producer surplus Ii. decreases consumer surplus Iii. decreases the marginal cost of the last unit produced

A stated goal of a minimum wage is to

-The figure above shows the labor market in a region. If a minimum wage of $8 an hour is imposed, then the quantity of labor supplied is and the quantity of labor demanded 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

Sellers bear the entire incidence of a tax on a good. This outcome can occur if

A minimum wage law

The deadweight loss associated with a minimum wage occurs because

-The above figure shows the market for a prescription drug. What is the equilibrium price of the drug? How many doses are purchased? Suppose the government imposes a price ceiling of $1.50 a dose. How many doses are purchased after the price ceiling is imposed?

Explain why low-skilled workers find that their employment opportunities are less with a minimum wage.

To determine who bears the greater share of a tax, we compare the

If the government eliminates a tax on a good with a perfectly elastic supply, who benefits most?

The demand for gasoline is inelastic and the supply of gasoline is elastic. Therefore,

Neither the demand nor the supply of sugar is perfectly elastic or inelastic. If the government imposes a 5 percent tax on sugar, the

Rent ceilings set below the equilibrium rent i. create a deadweight loss. Ii. increase search activity. Iii. encourage landlords to charge a high price for new locks and keys, called "key money."

A regulation that sets the highest price at which it is legal to trade a good is a

Rent ceilings

-The above figure shows a housing market with a rent ceiling equal to $1,000. In this figure, what area is equal to the resources lost due to search?

An increase in the minimum wage to $15 per hour would lead to

A black market

A price support set above the equilibrium price does which of the following? I. decreases producer surplus Ii. decreases consumer surplus Iii. decreases the marginal cost of the last unit produced

A stated goal of a minimum wage is to

-The figure above shows the labor market in a region. If a minimum wage of $8 an hour is imposed, then the quantity of labor supplied is ________ and the quantity of labor demanded 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

-The figure above shows the labor market in a region. If a minimum wage of $8 an hour is imposed, then the quantity of labor supplied is and the quantity of labor demanded is .