Question 1

Suppose the equilibrium price of cotton is $100 per ton. A price support set at ________ than $100 per ton ________.

Accepted Answer

A) less; increases producer surplus 
B) less; increases consumer surplus 
C) more; increases consumer surplus 
D) more; decreases marginal cost 
E) more; creates a surplus that the government must buy 
A) less; increases producer surplus 
B) less; increases consumer surplus 
C) more; increases consumer surplus 
D) more; decreases marginal cost 
E) more; creates a surplus that the government must buy

Question 2

If a $1 sales tax is imposed on the sale of a CD, and neither the demand nor the supply is perfectly elastic or perfectly inelastic, then the price of a CD paid by consumers will

Accepted Answer

A) increase by $1 and fewer CDs will be bought. 
B) increase by less than $1 and fewer CDs will be bought. 
C) not change and the same number of CDs will be bought. 
D) increase by $1 and the same number of CDs will be bought. 
E) increase by more than $1 and fewer CDs will be bought. 
A) increase by $1 and fewer CDs will be bought. 
B) increase by less than $1 and fewer CDs will be bought. 
C) not change and the same number of CDs will be bought. 
D) increase by $1 and the same number of CDs will be bought. 
E) increase by more than $1 and fewer CDs will be bought.

Question 3

The elasticity of demand for a good is 1 and the elasticity of supply is 0.8. Thus, imposing a tax on the good ________ the price kept by sellers and ________ the price paid by buyers.

Accepted Answer

A) raises; raises 
B) raises; lowers 
C) lowers; raises 
D) lowers; lowers 
E) does not change; raises 
A) raises; raises 
B) raises; lowers 
C) lowers; raises 
D) lowers; lowers 
E) does not change; raises

Question 4

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 deadweight loss from the tax is

Accepted Answer

A) $15,000 per week. 
B) $20,000 per week. 
C) $35,000 per week. 
D) $17,500 per week. 
E) zero. 
A) $15,000 per week. 
B) $20,000 per week. 
C) $35,000 per week. 
D) $17,500 per week. 
E) zero.

Question 5

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 the quantity of housing supplied is ________ units, the quantity demanded is ________ units, and the quantity rented is ________ units.

Accepted Answer

A) 3,000; 6,000; 3,000 
B) 3,000; 6,000; 6,000 
C) 3,000; 6,000; 4,000 
D) 3,000; 3,000; 3,000 
E) 4,000; 4,000; 4,000 
A) 3,000; 6,000; 3,000 
B) 3,000; 6,000; 6,000 
C) 3,000; 6,000; 4,000 
D) 3,000; 3,000; 3,000 
E) 4,000; 4,000; 4,000

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 tax incidence is

Accepted Answer

A) split equally between consumers and producers, each paying $1 per bucket. 
B) split equally between consumers and producers, each paying $2 per bucket. 
C) such that consumers pay $2 per bucket and producers pay $1 per bucket. 
D) such that consumers pay $1 per bucket and producers pay $2 per bucket. 
E) such that producers pay all of the tax. 
A) split equally between consumers and producers, each paying $1 per bucket. 
B) split equally between consumers and producers, each paying $2 per bucket. 
C) such that consumers pay $2 per bucket and producers pay $1 per bucket. 
D) such that consumers pay $1 per bucket and producers pay $2 per bucket. 
E) such that producers pay all of the tax.

Question 7

-The above figure shows a labor market. Before the minimum wage of $8 an hour is imposed, employment equals ________ workers; after the minimum wage of $8 an hour is imposed, employment equals ________ workers.

Accepted Answer

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

Question 8

Which of the following is an example of a price floor?

Accepted Answer

A) a law passed in a city to lower apartment rents by setting the maximum price that can be charged for rent 
B) an equilibrium price 
C) a minimum wage law 
D) a law setting the highest price that can legally be charged for a gallon of gasoline. 
E) None of the above answers give examples of a price floor. 
A) a law passed in a city to lower apartment rents by setting the maximum price that can be charged for rent 
B) an equilibrium price 
C) a minimum wage law 
D) a law setting the highest price that can legally be charged for a gallon of gasoline. 
E) None of the above answers give examples of a price floor.

Question 9

-The above figure shows a labor market with minimum wage equal to $16. In this figure, what area equals the deadweight loss?

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 10

A rent ceiling below the equilibrium rent

Accepted Answer

A) increases the quantity of housing supplied. 
B) is an example of a price floor. 
C) has no effect on the housing market because the ceiling is below the equilibrium. 
D) can create a black market. 
E) limits search because people need no longer search for cheap apartments. 
A) increases the quantity of housing supplied. 
B) is an example of a price floor. 
C) has no effect on the housing market because the ceiling is below the equilibrium. 
D) can create a black market. 
E) limits search because people need no longer search for cheap apartments.

Question 11

-The figure above shows the market for tires. The government has imposed a tax on tires, and the sellers 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 12

For a given supply elasticity, the more inelastic the demand for a good, the larger the share of the tax paid by the

Accepted Answer

A) buyers. 
B) sellers. 
C) participants other than the buyers and sellers. 
D) government. 
E) None of the above answers is correct. 
A) buyers. 
B) sellers. 
C) participants other than the buyers and sellers. 
D) government. 
E) None of the above answers is correct.

Question 13

Sales taxes are usually collected from sellers, who view the tax as

Accepted Answer

A) resulting from a leftward of the demand curve. 
B) an additional cost of selling the good. 
C) an addition to the demand for the product. 
D) an addition to profit. 
E) the same as a rightward shift of the demand curve. 
A) resulting from a leftward of the demand curve. 
B) an additional cost of selling the good. 
C) an addition to the demand for the product. 
D) an addition to profit. 
E) the same as a rightward shift of the demand curve.

Question 14

Why do rent ceilings lead to shortages and black markets?

Accepted Answer

Rent ceilings that are set below the mar

Question 15

-The figure above shows the market for gasoline. The government has imposed a tax on gasoline.
a. What is the amount of the tax per gallon of gasoline?
b. How much tax revenue will government collect from this tax?
c. How much of the tax is paid by consumers?
 How much is paid by producers?
 Which is more elastic, the supply or demand for gasoline?

Accepted Answer

a. The tax is $1.50 per gallon, the amou

Question 16

-The graph shows the labor market for apple pickers in Ohio. If the government sets a minimum wage of $5 an hour, ________ apple pickers are unemployed.

Accepted Answer

A) 6,000 
B) 8,000 
C) 10,000 
D) 14,000 
E) more than 14,000 
A) 6,000 
B) 8,000 
C) 10,000 
D) 14,000 
E) more than 14,000

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. The quantity bought by domestic users once the price support is in place is

Accepted Answer

A) 300 million tons. 
B) 400 million tons. 
C) 250 million tons. 
D) 200 million tons. 
E) 100 million tons. 
A) 300 million tons. 
B) 400 million tons. 
C) 250 million tons. 
D) 200 million tons. 
E) 100 million tons.

Question 18

A rent ceiling set below the equilibrium rent decreases the quantity of housing supplied because

Accepted Answer

A) landlords of previously barely profitable apartments refuse to rent them. 
B) the supply of housing increases. 
C) fewer tenants will search for housing. 
D) demand for housing will increase. 
E) the supply curve of housing immediately shifts leftward. 
A) landlords of previously barely profitable apartments refuse to rent them. 
B) the supply of housing increases. 
C) fewer tenants will search for housing. 
D) demand for housing will increase. 
E) the supply curve of housing immediately shifts leftward.

Question 19

A price floor

Accepted Answer

A) changes the equilibrium price if it is imposed in black markets. 
B) changes the price and quantity if it is set below the equilibrium price. 
C) changes the price and quantity if it is set above the equilibrium price. 
D) does not create a black market if it is set above the equilibrium price. 
E) changes the price and quantity only if it equals the equilibrium price. 
A) changes the equilibrium price if it is imposed in black markets. 
B) changes the price and quantity if it is set below the equilibrium price. 
C) changes the price and quantity if it is set above the equilibrium price. 
D) does not create a black market if it is set above the equilibrium price. 
E) changes the price and quantity only if it equals the equilibrium price.

Question 20

-The above figure shows the market for 2 bedroom townhomes in San Diego. If a rent ceiling is set at $1,000 per month, what is true?

Accepted Answer

A) The quantity of townhomes demanded decreases to 100,000. 
B) Black market rents might be as high as $1,300 per month. 
C) The quantity of townhomes supplied increases to 250,000. 
D) More townhomes are rented after the rent ceiling that before. 
E) The quantity demanded of townhomes is less than the quantity supplied. 
A) The quantity of townhomes demanded decreases to 100,000. 
B) Black market rents might be as high as $1,300 per month. 
C) The quantity of townhomes supplied increases to 250,000. 
D) More townhomes are rented after the rent ceiling that before. 
E) The quantity demanded of townhomes is less than the quantity supplied.

Suppose the equilibrium price of cotton is $100 per ton. A price support set at than $100 per ton .

If a $1 sales tax is imposed on the sale of a CD, and neither the demand nor the supply is perfectly elastic or perfectly inelastic, then the price of a CD paid by consumers will

The elasticity of demand for a good is 1 and the elasticity of supply is 0.8. Thus, imposing a tax on the good the price kept by sellers and the price paid by buyers.

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 deadweight loss from the tax is

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 the quantity of housing supplied is units, the quantity demanded is units, and the quantity rented is units.

-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 tax incidence is

-The above figure shows a labor market. Before the minimum wage of $8 an hour is imposed, employment equals workers; after the minimum wage of $8 an hour is imposed, employment equals workers.

Which of the following is an example of a price floor?

-The above figure shows a labor market with minimum wage equal to $16. In this figure, what area equals the deadweight loss?

A rent ceiling below the equilibrium rent

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

For a given supply elasticity, the more inelastic the demand for a good, the larger the share of the tax paid by the

Sales taxes are usually collected from sellers, who view the tax as

Why do rent ceilings lead to shortages and black markets?

-The graph shows the labor market for apple pickers in Ohio. If the government sets a minimum wage of $5 an hour, ________ apple pickers are unemployed.

-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. The quantity bought by domestic users once the price support is in place is

A rent ceiling set below the equilibrium rent decreases the quantity of housing supplied because

A price floor

-The above figure shows the market for 2 bedroom townhomes in San Diego. If a rent ceiling is set at $1,000 per month, what is true?

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

Suppose the equilibrium price of cotton is $100 per ton. A price support set at ________ than $100 per ton ________.

If a $1 sales tax is imposed on the sale of a CD, and neither the demand nor the supply is perfectly elastic or perfectly inelastic, then the price of a CD paid by consumers will

The elasticity of demand for a good is 1 and the elasticity of supply is 0.8. Thus, imposing a tax on the good ________ the price kept by sellers and ________ the price paid by buyers.

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 deadweight loss from the tax is

-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 tax incidence is

-The above figure shows a labor market. Before the minimum wage of $8 an hour is imposed, employment equals ________ workers; after the minimum wage of $8 an hour is imposed, employment equals ________ workers.

Which of the following is an example of a price floor?

-The above figure shows a labor market with minimum wage equal to $16. In this figure, what area equals the deadweight loss?

A rent ceiling below the equilibrium rent

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

For a given supply elasticity, the more inelastic the demand for a good, the larger the share of the tax paid by the

Sales taxes are usually collected from sellers, who view the tax as

Why do rent ceilings lead to shortages and black markets?

-The graph shows the labor market for apple pickers in Ohio. If the government sets a minimum wage of $5 an hour, ________ apple pickers are unemployed.

-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. The quantity bought by domestic users once the price support is in place is

A rent ceiling set below the equilibrium rent decreases the quantity of housing supplied because

A price floor

-The above figure shows the market for 2 bedroom townhomes in San Diego. If a rent ceiling is set at $1,000 per month, what is true?

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

Suppose the equilibrium price of cotton is $100 per ton. A price support set at than $100 per ton .

The elasticity of demand for a good is 1 and the elasticity of supply is 0.8. Thus, imposing a tax on the good the price kept by sellers and the price paid by buyers.

-The above figure shows a labor market. Before the minimum wage of $8 an hour is imposed, employment equals workers; after the minimum wage of $8 an hour is imposed, employment equals workers.