Question 1

A rent ceiling set below the equilibrium rent

Accepted Answer

A) ensures the availability of enough low-rent apartments in a city. 
B) results in all renters and potential renters being better off. 
C) creates a situation in which the quantity demanded of housing is greater than quantity supplied. 
D) ensures that landlords earn a reasonable rate of profit on apartments. 
E) eliminates discrimination by landlords. 
A) ensures the availability of enough low-rent apartments in a city. 
B) results in all renters and potential renters being better off. 
C) creates a situation in which the quantity demanded of housing is greater than quantity supplied. 
D) ensures that landlords earn a reasonable rate of profit on apartments. 
E) eliminates discrimination by landlords.

Question 2

Which of the following is an example of the unfairness of rent control?

Accepted Answer

A) Voluntary exchange is encouraged by rent control. 
B) Racial discrimination in renting is discouraged by rent control. 
C) Newcomers have a more difficult time finding apartments. 
D) Rich people do not get apartments in these markets. 
E) Too many people rent apartments. 
A) Voluntary exchange is encouraged by rent control. 
B) Racial discrimination in renting is discouraged by rent control. 
C) Newcomers have a more difficult time finding apartments. 
D) Rich people do not get apartments in these markets. 
E) Too many people rent apartments.

Question 3

A minimum wage set above the equilibrium wage

Accepted Answer

A) decreases the deadweight loss in the market. 
B) decreases the workers' surplus because workers must spend resources looking for jobs. 
C) increases the firm's surplus. 
D) increases the market's efficiency. 
E) has no effect on the market. 
A) decreases the deadweight loss in the market. 
B) decreases the workers' surplus because workers must spend resources looking for jobs. 
C) increases the firm's surplus. 
D) increases the market's efficiency. 
E) has no effect on the market.

Question 4

When a tax is imposed on a good, at the after-tax equilibrium the marginal benefit of the last unit produced ________ the marginal cost.

Accepted Answer

A) equals 
B) is greater than 
C) is less than 
D) can be calculated but is not comparable to 
E) The premise of the question is incorrect because after a tax is imposed, it becomes impossible to determine the marginal benefit and the marginal cost. 
A) equals 
B) is greater than 
C) is less than 
D) can be calculated but is not comparable to 
E) The premise of the question is incorrect because after a tax is imposed, it becomes impossible to determine the marginal benefit and the marginal cost.

Question 5

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 value of the resources used in job-search activity can be as large as ________ per hour.

Accepted Answer

A) $12,000 
B) $8,000 
C) $6,000 
D) $4,000 
E) $2,000 
A) $12,000 
B) $8,000 
C) $6,000 
D) $4,000 
E) $2,000

Question 6

If a tax is placed on suppliers of a good, then the incidence of the tax

Accepted Answer

A) falls more on the suppliers if demand is elastic. 
B) falls more on the suppliers if demand is inelastic. 
C) is usually split equally between the consumers and the producers. 
D) usually falls more on the producers than the consumers. 
E) usually falls more on the consumers than the producers. 
A) falls more on the suppliers if demand is elastic. 
B) falls more on the suppliers if demand is inelastic. 
C) is usually split equally between the consumers and the producers. 
D) usually falls more on the producers than the consumers. 
E) usually falls more on the consumers than the producers.

Question 7

A price floor is

Accepted Answer

A) the highest possible legal price that can be charged for a good or service. 
B) usually equal to the equilibrium price established before the government imposed the price floor. 
C) the lowest legal price at which a good or service can be traded. 
D) a legal price of zero that can be charged for a good or service. 
E) almost always equal to the price ceiling. 
A) the highest possible legal price that can be charged for a good or service. 
B) usually equal to the equilibrium price established before the government imposed the price floor. 
C) the lowest legal price at which a good or service can be traded. 
D) a legal price of zero that can be charged for a good or service. 
E) almost always equal to the price ceiling.

Question 8

Why do some workers lose their job when a minimum wage level is increased?

Accepted Answer

A) The increase in labor costs decreases the supply of the product, thereby raising the price of the good so that the equilibrium quantity decreases to zero. 
B) The increase in the wage rate decreases the quantity of labor demanded. 
C) The demand for labor is perfectly inelastic. 
D) The supply of labor decreases. 
E) The demand for labor is perfectly elastic. 
A) The increase in labor costs decreases the supply of the product, thereby raising the price of the good so that the equilibrium quantity decreases to zero. 
B) The increase in the wage rate decreases the quantity of labor demanded. 
C) The demand for labor is perfectly inelastic. 
D) The supply of labor decreases. 
E) The demand for labor is perfectly elastic.

Question 9

When a tax is imposed on a good or a service, the marginal benefit of the last unit bought ________ the marginal cost of the last unit.

Accepted Answer

A) is equal to 
B) is greater than 
C) is less than 
D) None of the above answers is correct because there is no consistent relationship between the marginal benefit of the last unit and its marginal cost. 
E) is not able to be compared to 
A) is equal to 
B) is greater than 
C) is less than 
D) None of the above answers is correct because there is no consistent relationship between the marginal benefit of the last unit and its marginal cost. 
E) is not able to be compared to

Question 10

An illegal market in which the price exceeds a legally imposed price ceiling is called a

Accepted Answer

A) shortage market. 
B) surplus market. 
C) black market. 
D) fair market. 
E) subsidized market. 
A) shortage market. 
B) surplus market. 
C) black market. 
D) fair market. 
E) subsidized market.

Question 11

In a market with a rent ceiling set below the equilibrium rent, the producer and consumer surplus

Accepted Answer

A) both increase. 
B) both decrease but generally not to zero. 
C) do not change. 
D) are eliminated. 
E) are both totally converted into deadweight loss. 
A) both increase. 
B) both decrease but generally not to zero. 
C) do not change. 
D) are eliminated. 
E) are both totally converted into deadweight loss.

Question 12

-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. To keep the price at this level, the government will ________ million tons of wheat.

Accepted Answer

A) purchase 300 
B) sell 400 
C) purchase 100 
D) purchase 250 
E) sell 300 
A) purchase 300 
B) sell 400 
C) purchase 100 
D) purchase 250 
E) sell 300

Question 13

-The figure above shows the market for tires. According to the figure, the price elasticity of demand is ________ the price elasticity of supply.

Accepted Answer

A) greater than 
B) equal to 
C) less than 
D) not comparable to 
E) More information is needed to determine if the price elasticity of demand is greater than, equal to, less than, or comparable to the price elasticity of supply. 
A) greater than 
B) equal to 
C) less than 
D) not comparable to 
E) More information is needed to determine if the price elasticity of demand is greater than, equal to, less than, or comparable to the price elasticity of supply.

Question 14

Which would be a better source of tax revenue for the government, a good with elastic or a good with an inelastic demand?
 Explain your reasoning.

Accepted Answer

Inelastic goods are better sources of ta

Question 15

-The demand for apple pies is perfectly elastic. If the government taxes apple pies at $1 a pie, then ________.

Accepted Answer

A) the seller pays the entire tax 
B) the buyer pays the entire tax 
C) the seller and the buyer split the tax evenly 
D) the seller and the buyer split the tax but the seller pays more 
E) who pays the tax depends on whether the government imposes the tax on pie buyers or on pie sellers 
A) the seller pays the entire tax 
B) the buyer pays the entire tax 
C) the seller and the buyer split the tax evenly 
D) the seller and the buyer split the tax but the seller pays more 
E) who pays the tax depends on whether the government imposes the tax on pie buyers or on pie sellers

Question 16

Suppose the government imposes a price support that is above the equilibrium price. As a result,

Accepted Answer

A) total revenue increases. 
B) consumer surplus increases. 
C) the marginal cost of the last unit produced decreases. 
D) the government has effectively imposed a price ceiling. 
E) the subsidy the government pays decreases. 
A) total revenue increases. 
B) consumer surplus increases. 
C) the marginal cost of the last unit produced decreases. 
D) the government has effectively imposed a price ceiling. 
E) the subsidy the government pays decreases.

Question 17

Which of the following describes a difference between a price support and a price ceiling?

Accepted Answer

A) A price support creates a deadweight loss while a price ceiling does not. 
B) A price ceiling is a regulated price while a price support is a regulated quantity. 
C) A price support decreases the quantity while a price ceiling does not. 
D) A price ceiling increases the price above the equilibrium price while a price support does not. 
E) A price support attempts to raise the price above the equilibrium price while a price ceiling does not. 
A) A price support creates a deadweight loss while a price ceiling does not. 
B) A price ceiling is a regulated price while a price support is a regulated quantity. 
C) A price support decreases the quantity while a price ceiling does not. 
D) A price ceiling increases the price above the equilibrium price while a price support does not. 
E) A price support attempts to raise the price above the equilibrium price while a price ceiling does not.

Question 18

-The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the total subsidy paid to tomato farmers?

Accepted Answer

A) area E 
B) area B + area C + area D + area F 
C) area C + area D + area E + area G 
D) area A 
E) area F 
A) area E 
B) area B + area C + area D + area F 
C) area C + area D + area E + area G 
D) area A 
E) area F

Question 19

What is a price support program in an agricultural market?
 Explain its impact on a market.

Accepted Answer

A price support program is essentially a

Question 20

A price ceiling

Accepted Answer

A) is an illegal price. 
B) is the price that exists in a black market. 
C) is the maximum price that can legally be charged. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct. 
A) is an illegal price. 
B) is the price that exists in a black market. 
C) is the maximum price that can legally be charged. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct.

A rent ceiling set below the equilibrium rent

Which of the following is an example of the unfairness of rent control?

A minimum wage set above the equilibrium wage

When a tax is imposed on a good, at the after-tax equilibrium the marginal benefit of the last unit produced ________ the marginal cost.

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 value of the resources used in job-search activity can be as large as ________ per hour.

If a tax is placed on suppliers of a good, then the incidence of the tax

A price floor is

Why do some workers lose their job when a minimum wage level is increased?

When a tax is imposed on a good or a service, the marginal benefit of the last unit bought ________ the marginal cost of the last unit.

An illegal market in which the price exceeds a legally imposed price ceiling is called a

In a market with a rent ceiling set below the equilibrium rent, the producer and consumer surplus

-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. To keep the price at this level, the government will ________ million tons of wheat.

-The figure above shows the market for tires. According to the figure, the price elasticity of demand is ________ the price elasticity of supply.

Which would be a better source of tax revenue for the government, a good with elastic or a good with an inelastic demand? Explain your reasoning.

-The demand for apple pies is perfectly elastic. If the government taxes apple pies at $1 a pie, then ________.

Suppose the government imposes a price support that is above the equilibrium price. As a result,

Which of the following describes a difference between a price support and a price ceiling?

-The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the total subsidy paid to tomato farmers?

What is a price support program in an agricultural market? Explain its impact on a market.

A price 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

A rent ceiling set below the equilibrium rent

Which of the following is an example of the unfairness of rent control?

A minimum wage set above the equilibrium wage

When a tax is imposed on a good, at the after-tax equilibrium the marginal benefit of the last unit produced ________ the marginal cost.

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 value of the resources used in job-search activity can be as large as ________ per hour.

If a tax is placed on suppliers of a good, then the incidence of the tax

A price floor is

Why do some workers lose their job when a minimum wage level is increased?

When a tax is imposed on a good or a service, the marginal benefit of the last unit bought ________ the marginal cost of the last unit.

An illegal market in which the price exceeds a legally imposed price ceiling is called a

In a market with a rent ceiling set below the equilibrium rent, the producer and consumer surplus

-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. To keep the price at this level, the government will ________ million tons of wheat.

-The figure above shows the market for tires. According to the figure, the price elasticity of demand is ________ the price elasticity of supply.

Which would be a better source of tax revenue for the government, a good with elastic or a good with an inelastic demand? Explain your reasoning.

-The demand for apple pies is perfectly elastic. If the government taxes apple pies at $1 a pie, then ________.

Suppose the government imposes a price support that is above the equilibrium price. As a result,

Which of the following describes a difference between a price support and a price ceiling?

-The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the total subsidy paid to tomato farmers?

What is a price support program in an agricultural market? Explain its impact on a market.

A price 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