Question 1

The amount of a tax paid by the sellers will be larger the more ________ the demand and the more ________ the supply.

Accepted Answer

A)  elastic; inelastic 
B)  inelastic; elastic 
C)  inelastic; inelastic 
D)  elastic; elastic 
A)  elastic; inelastic 
B)  inelastic; elastic 
C)  inelastic; inelastic 
D)  elastic; elastic

Question 2

-After a $3 per-unit tax on seeing movies in theaters is imposed, attendance falls from 4,000 a week to 3,000 a week. The revenue from the tax is

Accepted Answer

A)  less than $9,000 a week. 
B)  $9,000 a week. 
C)  between $9,000 a week and $12,000 a week. 
D)  some amount that cannot be calculated without more information. 
A)  less than $9,000 a week. 
B)  $9,000 a week. 
C)  between $9,000 a week and $12,000 a week. 
D)  some amount that cannot be calculated without more information.

Question 3

Will an increase in the minimum wage create more unemployment if the supply and demand for labor are highly elastic or highly inelastic?

Accepted Answer

An increase in the minimum wage creates

Question 4

-The above figure shows the apartment market in Big City. If a government policy results in a shortage of 1,500 apartments in the Big City rental market, it is most likely that the Housing Authority has imposed

Accepted Answer

A)  a rent ceiling of $1500.00 monthly. 
B)  a rent ceiling of $1000.00 monthly. 
C)  a rent floor of $1500.00 monthly. 
D)  a rent floor of $1000.00 monthly. 
A)  a rent ceiling of $1500.00 monthly. 
B)  a rent ceiling of $1000.00 monthly. 
C)  a rent floor of $1500.00 monthly. 
D)  a rent floor of $1000.00 monthly.

Question 5

A minimum wage set above the equilibrium wage rate for low-skilled workers ________.

Accepted Answer

A)  creates more employment opportunities for low-skilled workers 
B)  creates more prosperity among younger people 
C)  creates unemployment among low-skilled workers 
D)  increases the number of good paying jobs available to young people 
A)  creates more employment opportunities for low-skilled workers 
B)  creates more prosperity among younger people 
C)  creates unemployment among low-skilled workers 
D)  increases the number of good paying jobs available to young people

Question 6

-The figure above shows the market for milk in Cowland. A subsidy paid to producers of $1 per gallon of milk is introduced. If there are no external costs and no external benefits, the marginal benefit of the last gallon of milk consumed is

Accepted Answer

A)  $3.50 a gallon. 
B)  $4.00 a gallon. 
C)  $4.50 a gallon. 
D)  $5.00 a gallon. 
A)  $3.50 a gallon. 
B)  $4.00 a gallon. 
C)  $4.50 a gallon. 
D)  $5.00 a gallon.

Question 7

The government raises the sales tax on shirts. The tax is imposed on sellers. As a result, the ________.

Accepted Answer

A)  supply curve of shirts shifts leftward 
B)  supply curve of shirts shifts rightward 
C)  demand curve for shirts becomes vertical 
D)  demand curve for shirts becomes horizontal 
A)  supply curve of shirts shifts leftward 
B)  supply curve of shirts shifts rightward 
C)  demand curve for shirts becomes vertical 
D)  demand curve for shirts becomes horizontal

Question 8

-In the table above, the market is in equilibrium. Then a minimum wage is set at $11 per hour. The number of workers who lose their jobs will be

Accepted Answer

A)  0. 
B)  1 million. 
C)  3 million. 
D)  5 million. 
A)  0. 
B)  1 million. 
C)  3 million. 
D)  5 million.

Question 9

Why do rent ceilings lead to shortages and black markets?

Accepted Answer

Rent ceilings that are set below the mar

Question 10

The CBS news correspondent Bill Whitaker discussed the high level of unemployment among teens, especially during the summer months. In 2011, unemployment among the population as a whole was 9.1 percent, but among teens it was close to 24 percent. Many of these teens were hoping to get entry level jobs as small businesses. (Source: CBS news, June 4, 2011) A minimum wage set above the equilibrium wage rate is called

Accepted Answer

A)  a price floor. 
B)  a price ceiling. 
C)  quota. 
D)  subsidy. 
A)  a price floor. 
B)  a price ceiling. 
C)  quota. 
D)  subsidy.

Question 11

Suppose the government has declared beer to be an illegal substance and has imposed equal penalties on any person caught buying a beer and on any person caught selling a beer. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by

Accepted Answer

A)  200 quarts. 
B)  300 quarts. 
C)  400 quarts. 
D)  500 quarts. 
A)  200 quarts. 
B)  300 quarts. 
C)  400 quarts. 
D)  500 quarts.

Question 12

-In the above figure, CBL is the cost of breaking the law. If the good in the figure is made illegal and penalties are imposed on both buyers and sellers, then its price per unit

Accepted Answer

A)  will be higher than if it was not illegal. 
B)  will be lower than if it was not illegal. 
C)  will be the same as when it was not illegal. 
D)  cannot be compared with its price when it was legal. 
A)  will be higher than if it was not illegal. 
B)  will be lower than if it was not illegal. 
C)  will be the same as when it was not illegal. 
D)  cannot be compared with its price when it was legal.

Question 13

-Using the above figure, CBL is the cost of breaking the law. What is the equilibrium price and quantity if beer is legal?

Accepted Answer

A)  $5 per quart and 300 quarts of beer 
B)  $3 per quart and 500 quarts of beer 
C)  $3 per quart and 100 quarts of beer 
D)  $1 per quart and 300 quarts of beer 
A)  $5 per quart and 300 quarts of beer 
B)  $3 per quart and 500 quarts of beer 
C)  $3 per quart and 100 quarts of beer 
D)  $1 per quart and 300 quarts of beer

Question 14

-You are in the business of producing and selling hamburgers, french fries, pizza, and ice cream. The mayor plans to impose a tax on one of these products. Based on the elasticities in the above table, as a profit-minded business person who seeks to avoid taxes whenever possible, which good would you least like to have taxed?

Accepted Answer

A)  hamburgers 
B)  pizza 
C)  French fries 
D)  ice cream 
A)  hamburgers 
B)  pizza 
C)  French fries 
D)  ice cream

Question 15

A student wrote: "A subsidy raises marginal social benefit above marginal social cost and eliminates the deadweight loss from underproduction." If you were the instructor, how would you correct this statement?

Accepted Answer

The student errs in several important re

Question 16

A production quota on tobacco lowers the price of tobacco and the marginal cost of producing it.

Accepted Answer

A) True 
 B)False

Question 17

One positive aspect of rent ceilings is that they help reduce the time and expense associated with apartment hunting.

Accepted Answer

A) True 
 B)False

Question 18

A price ceiling is a price

Accepted Answer

A)  below which a seller cannot legally sell. 
B)  above which a seller cannot legally sell. 
C)  that creates a surplus of the good. 
D)  Both answers A and C are correct. 
A)  below which a seller cannot legally sell. 
B)  above which a seller cannot legally sell. 
C)  that creates a surplus of the good. 
D)  Both answers A and C are correct.

Question 19

-The table gives the demand and supply schedules for cookies. The government now levies a $0.30 tax on cookies. As a result, the price of a packet of cookies increases by ________ and the tax revenue collected is ________ a week.

Accepted Answer

A)  $0.20; $24 
B)  $0.10; $9 
C)  $0.20; $20 
D)  $0.30; $30 
A)  $0.20; $24 
B)  $0.10; $9 
C)  $0.20; $20 
D)  $0.30; $30

Question 20

If supply is perfectly elastic, a sales tax imposed on sellers is paid by

Accepted Answer

A)  only the buyers. 
B)  only the sellers. 
C)  both the buyers and sellers. 
D)  None of the above answers is correct. 
A)  only the buyers. 
B)  only the sellers. 
C)  both the buyers and sellers. 
D)  None of the above answers is correct.

The amount of a tax paid by the sellers will be larger the more the demand and the more the supply.

-After a $3 per-unit tax on seeing movies in theaters is imposed, attendance falls from 4,000 a week to 3,000 a week. The revenue from the tax is

Will an increase in the minimum wage create more unemployment if the supply and demand for labor are highly elastic or highly inelastic?

-The above figure shows the apartment market in Big City. If a government policy results in a shortage of 1,500 apartments in the Big City rental market, it is most likely that the Housing Authority has imposed

A minimum wage set above the equilibrium wage rate for low-skilled workers ________.

-The figure above shows the market for milk in Cowland. A subsidy paid to producers of $1 per gallon of milk is introduced. If there are no external costs and no external benefits, the marginal benefit of the last gallon of milk consumed is

The government raises the sales tax on shirts. The tax is imposed on sellers. As a result, the ________.

-In the table above, the market is in equilibrium. Then a minimum wage is set at $11 per hour. The number of workers who lose their jobs will be

Why do rent ceilings lead to shortages and black markets?

Suppose the government has declared beer to be an illegal substance and has imposed equal penalties on any person caught buying a beer and on any person caught selling a beer. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by

-In the above figure, CBL is the cost of breaking the law. If the good in the figure is made illegal and penalties are imposed on both buyers and sellers, then its price per unit

-Using the above figure, CBL is the cost of breaking the law. What is the equilibrium price and quantity if beer is legal?

A student wrote: "A subsidy raises marginal social benefit above marginal social cost and eliminates the deadweight loss from underproduction." If you were the instructor, how would you correct this statement?

A production quota on tobacco lowers the price of tobacco and the marginal cost of producing it.

One positive aspect of rent ceilings is that they help reduce the time and expense associated with apartment hunting.

A price ceiling is a price

-The table gives the demand and supply schedules for cookies. The government now levies a $0.30 tax on cookies. As a result, the price of a packet of cookies increases by and the tax revenue collected is a week.

If supply is perfectly elastic, a sales tax imposed on sellers is paid by

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 6: Government Actions in Markets

The amount of a tax paid by the sellers will be larger the more ________ the demand and the more ________ the supply.

-After a $3 per-unit tax on seeing movies in theaters is imposed, attendance falls from 4,000 a week to 3,000 a week. The revenue from the tax is

Will an increase in the minimum wage create more unemployment if the supply and demand for labor are highly elastic or highly inelastic?

-The above figure shows the apartment market in Big City. If a government policy results in a shortage of 1,500 apartments in the Big City rental market, it is most likely that the Housing Authority has imposed

A minimum wage set above the equilibrium wage rate for low-skilled workers ________.

-The figure above shows the market for milk in Cowland. A subsidy paid to producers of $1 per gallon of milk is introduced. If there are no external costs and no external benefits, the marginal benefit of the last gallon of milk consumed is

The government raises the sales tax on shirts. The tax is imposed on sellers. As a result, the ________.

-In the table above, the market is in equilibrium. Then a minimum wage is set at $11 per hour. The number of workers who lose their jobs will be

Why do rent ceilings lead to shortages and black markets?

Suppose the government has declared beer to be an illegal substance and has imposed equal penalties on any person caught buying a beer and on any person caught selling a beer. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by

-In the above figure, CBL is the cost of breaking the law. If the good in the figure is made illegal and penalties are imposed on both buyers and sellers, then its price per unit

-Using the above figure, CBL is the cost of breaking the law. What is the equilibrium price and quantity if beer is legal?

A student wrote: "A subsidy raises marginal social benefit above marginal social cost and eliminates the deadweight loss from underproduction." If you were the instructor, how would you correct this statement?

A production quota on tobacco lowers the price of tobacco and the marginal cost of producing it.

One positive aspect of rent ceilings is that they help reduce the time and expense associated with apartment hunting.

A price ceiling is a price

-The table gives the demand and supply schedules for cookies. The government now levies a $0.30 tax on cookies. As a result, the price of a packet of cookies increases by ________ and the tax revenue collected is ________ a week.

If supply is perfectly elastic, a sales tax imposed on sellers is paid by

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

The amount of a tax paid by the sellers will be larger the more the demand and the more the supply.

-The table gives the demand and supply schedules for cookies. The government now levies a $0.30 tax on cookies. As a result, the price of a packet of cookies increases by and the tax revenue collected is a week.