Question 1

-In the above figure, if the minimum wage is set at $6 per hour, what quantity of labor is employed?

Accepted Answer

A)  100 million hours 
B)  200 million hours 
C)  300 million hours 
D)  400 million hours 
A)  100 million hours 
B)  200 million hours 
C)  300 million hours 
D)  400 million hours

Question 2

What occurs if a price floor is set above the equilibrium price? What occurs if a price ceiling is set below the equilibrium price?

Accepted Answer

A price floor set above the equilibrium

Question 3

-The figure above shows the market for cotton in Georgestan. The government regulates the market with a production quota set at 8 million pounds per year. The introduction of the quota has

Accepted Answer

A)  not affected the level of cotton production in Georgestan. 
B)  increased the production of cotton in Georgestan by 8 million pounds. 
C)  decreased the production of cotton in Georgestan by 4 million pounds. 
D)  decreased the production of cotton in Georgestan by 8 million pounds. 
A)  not affected the level of cotton production in Georgestan. 
B)  increased the production of cotton in Georgestan by 8 million pounds. 
C)  decreased the production of cotton in Georgestan by 4 million pounds. 
D)  decreased the production of cotton in Georgestan by 8 million pounds.

Question 4

The federal government pays airlines to service small cities in the United States through a subsidy program called Essential Air Service which was established in 1978 when the airline industry was deregulated. Most subsidies can't exceed $200 per passenger. What is NOT an effect of this subsidy?

Accepted Answer

A)  an increase in price and an increase in quantity produced 
B)  an increase in supply 
C)  an increase in marginal cost 
D)  inefficient overproduction 
A)  an increase in price and an increase in quantity produced 
B)  an increase in supply 
C)  an increase in marginal cost 
D)  inefficient overproduction

Question 5

The more elastic the demand for a good, the

Accepted Answer

A)  less a sales tax lowers the price paid by buyers. 
B)  more a sales tax lowers the price paid by buyers. 
C)  less a sales tax raises the price paid by buyers. 
D)  more a sales tax raises the price paid by buyers. 
A)  less a sales tax lowers the price paid by buyers. 
B)  more a sales tax lowers the price paid by buyers. 
C)  less a sales tax raises the price paid by buyers. 
D)  more a sales tax raises the price paid by buyers.

Question 6

A sales tax will be divided so that

Accepted Answer

A)  the buyers pay the full amount if supply is perfectly inelastic. 
B)  the sellers pay the full amount if supply is perfectly inelastic. 
C)  the sellers pay the full amount if supply is perfectly elastic. 
D)  both buyers and sellers pay some of the tax if supply is perfectly elastic. 
A)  the buyers pay the full amount if supply is perfectly inelastic. 
B)  the sellers pay the full amount if supply is perfectly inelastic. 
C)  the sellers pay the full amount if supply is perfectly elastic. 
D)  both buyers and sellers pay some of the tax if supply is perfectly elastic.

Question 7

-The above figure shows the demand and supply curves for housing in City B. What would be the effects of a rent ceiling equal to $1000 per month?

Accepted Answer

A)  a surplus equal to 3000 apartments 
B)  a surplus equal to 250 apartments 
C)  a shortage equal to 3000 apartments 
D)  nothing because the rent ceiling has no effect on the equilibrium price and quantity 
A)  a surplus equal to 3000 apartments 
B)  a surplus equal to 250 apartments 
C)  a shortage equal to 3000 apartments 
D)  nothing because the rent ceiling has no effect on the equilibrium price and quantity

Question 8

As long as the supply curve for a good is upward sloping and the demand curve is downward sloping, a sales tax imposed on sellers shifts the supply curve

Accepted Answer

A)  leftward and definitely raises the equilibrium price. 
B)  leftward and possibly raises the equilibrium price. 
C)  rightward and possibly increases the equilibrium quantity. 
D)  rightward and definitely decreases the equilibrium quantity. 
A)  leftward and definitely raises the equilibrium price. 
B)  leftward and possibly raises the equilibrium price. 
C)  rightward and possibly increases the equilibrium quantity. 
D)  rightward and definitely decreases the equilibrium quantity.

Question 9

-The figure shows the market for books before and after a sales tax is introduced. Each week, the tax creates a deadweight loss of ________, decreases consumer surplus by ________, and decreases producer surplus by ________.

Accepted Answer

A)  $15; $10; $5 
B)  $12; $8; $4 
C)  $3; $10; $5 
D)  $3; $2; $1 
A)  $15; $10; $5 
B)  $12; $8; $4 
C)  $3; $10; $5 
D)  $3; $2; $1

Question 10

The more ________, the larger is the amount of the tax on the good that the ________ pays.

Accepted Answer

A)  elastic the demand for a good; buyers 
B)  inelastic the demand for a good; buyers 
C)  inelastic the supply of a good; buyers 
D)  elastic the supply of a good; sellers 
A)  elastic the demand for a good; buyers 
B)  inelastic the demand for a good; buyers 
C)  inelastic the supply of a good; buyers 
D)  elastic the supply of a good; sellers

Question 11

-The market for unskilled labor is illustrated in the figure above. If a minimum wage of $5 per hour is imposed, an employer who breaks the law will be able to find a worker who is willing to work for

Accepted Answer

A)  less than or equal to $4 per hour. 
B)  between $4 and $5 per hour. 
C)  more than or equal to $5 per hour. 
D)  None of the above because workers are not willing to supply labor for wage rates less than $5 per hour. 
A)  less than or equal to $4 per hour. 
B)  between $4 and $5 per hour. 
C)  more than or equal to $5 per hour. 
D)  None of the above because workers are not willing to supply labor for wage rates less than $5 per hour.

Question 12

-The figure shows the market for books before and after a sales tax is introduced. The tax on books is ________ a book, buyers pay ________ of tax per book, and the government's tax revenue is ________ a week.

Accepted Answer

A)  $1.20; $0.80; $128 
B)  $0.80; $1.20; $12 
C)  $0.40; $0.40; $4 
D)  $1.20; $0.80; $12 
A)  $1.20; $0.80; $128 
B)  $0.80; $1.20; $12 
C)  $0.40; $0.40; $4 
D)  $1.20; $0.80; $12

Question 13

-In the above figure, the amount of the tax per unit imposed on the sellers is

Accepted Answer

A)  $0.50. 
B)  $1.00. 
C)  $1.50. 
D)  $2.00. 
A)  $0.50. 
B)  $1.00. 
C)  $1.50. 
D)  $2.00.

Question 14

-In the above figure, a price ceiling of $2 would

Accepted Answer

A)  create a shortage. 
B)  create a surplus. 
C)  have no effect. 
D)  cause the demand curve to shift leftward. 
A)  create a shortage. 
B)  create a surplus. 
C)  have no effect. 
D)  cause the demand curve to shift leftward.

Question 15

The amount of a tax paid by the buyers will be larger the

Accepted Answer

A)  more elastic the demand and the more inelastic the supply. 
B)  more inelastic the demand and the more elastic the supply. 
C)  more inelastic are both the supply and demand. 
D)  more elastic are both the supply and demand. 
A)  more elastic the demand and the more inelastic the supply. 
B)  more inelastic the demand and the more elastic the supply. 
C)  more inelastic are both the supply and demand. 
D)  more elastic are both the supply and demand.

Question 16

Good A has a perfectly inelastic demand and an upward-sloping supply curve. Good B has a perfectly inelastic supply and a downward-sloping demand curve. If the same sales tax is imposed on the sellers of both good A and good B, the price paid by

Accepted Answer

A)  buyers of good A rises by more than the price paid by buyers of good B. 
B)  buyers of good B rises by more than the price paid by buyers of good A. 
C)  buyers of good A rises by the same amount as the price paid by buyers of good B. 
D)  More information is needed to determine whether the price paid by buyers of good A rises by more than, less than, or the same amount as the price paid by buyers of good B. 
A)  buyers of good A rises by more than the price paid by buyers of good B. 
B)  buyers of good B rises by more than the price paid by buyers of good A. 
C)  buyers of good A rises by the same amount as the price paid by buyers of good B. 
D)  More information is needed to determine whether the price paid by buyers of good A rises by more than, less than, or the same amount as the price paid by buyers of good B.

Question 17

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. How is the salt tax burden shared between buyers and sellers in Healthyland?

Accepted Answer

A)  Sellers pay the whole tax. 
B)  Buyers pay the whole tax. 
C)  Most of the tax is paid by buyers. 
D)  Most of the tax is paid by sellers. 
A)  Sellers pay the whole tax. 
B)  Buyers pay the whole tax. 
C)  Most of the tax is paid by buyers. 
D)  Most of the tax is paid by sellers.

Question 18

Suppose the price elasticity of demand for Mexican food is 1.23 and the price elasticity of supply is 0.47. If the government imposes a tax on Mexican food, do buyers or sellers pay most of the tax? Why?

Accepted Answer

Sellers pay most of the tax because supp

Question 19

-In the above figure, a minimum wage of ________ would result in employment of ________.

Accepted Answer

A)  W2; L1 
B)  W2; L2 
C)  W1; L1 
D)  W1; L2 
A)  W2; L1 
B)  W2; L2 
C)  W1; L1 
D)  W1; L2

Question 20

When the government passes a law making a particular good illegal, does it matter for the black market price and quantity if the penalties for breaking the law are imposed on the buyers or on the sellers?

Accepted Answer

Yes, it matters. Imposing penalties on t

-In the above figure, if the minimum wage is set at $6 per hour, what quantity of labor is employed?

What occurs if a price floor is set above the equilibrium price? What occurs if a price ceiling is set below the equilibrium price?

-The figure above shows the market for cotton in Georgestan. The government regulates the market with a production quota set at 8 million pounds per year. The introduction of the quota has

The federal government pays airlines to service small cities in the United States through a subsidy program called Essential Air Service which was established in 1978 when the airline industry was deregulated. Most subsidies can't exceed $200 per passenger. What is NOT an effect of this subsidy?

The more elastic the demand for a good, the

A sales tax will be divided so that

-The above figure shows the demand and supply curves for housing in City B. What would be the effects of a rent ceiling equal to $1000 per month?

As long as the supply curve for a good is upward sloping and the demand curve is downward sloping, a sales tax imposed on sellers shifts the supply curve

-The figure shows the market for books before and after a sales tax is introduced. Each week, the tax creates a deadweight loss of , decreases consumer surplus by , and decreases producer surplus by .

The more , the larger is the amount of the tax on the good that the pays.

-The market for unskilled labor is illustrated in the figure above. If a minimum wage of $5 per hour is imposed, an employer who breaks the law will be able to find a worker who is willing to work for

-The figure shows the market for books before and after a sales tax is introduced. The tax on books is a book, buyers pay of tax per book, and the government's tax revenue is a week.

-In the above figure, the amount of the tax per unit imposed on the sellers is

-In the above figure, a price ceiling of $2 would

The amount of a tax paid by the buyers will be larger the

Good A has a perfectly inelastic demand and an upward-sloping supply curve. Good B has a perfectly inelastic supply and a downward-sloping demand curve. If the same sales tax is imposed on the sellers of both good A and good B, the price paid by

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. How is the salt tax burden shared between buyers and sellers in Healthyland?

Suppose the price elasticity of demand for Mexican food is 1.23 and the price elasticity of supply is 0.47. If the government imposes a tax on Mexican food, do buyers or sellers pay most of the tax? Why?

-In the above figure, a minimum wage of would result in employment of .

When the government passes a law making a particular good illegal, does it matter for the black market price and quantity if the penalties for breaking the law are imposed on the buyers or on the sellers?

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

-In the above figure, if the minimum wage is set at $6 per hour, what quantity of labor is employed?

What occurs if a price floor is set above the equilibrium price? What occurs if a price ceiling is set below the equilibrium price?

-The figure above shows the market for cotton in Georgestan. The government regulates the market with a production quota set at 8 million pounds per year. The introduction of the quota has

The federal government pays airlines to service small cities in the United States through a subsidy program called Essential Air Service which was established in 1978 when the airline industry was deregulated. Most subsidies can't exceed $200 per passenger. What is NOT an effect of this subsidy?

The more elastic the demand for a good, the

A sales tax will be divided so that

-The above figure shows the demand and supply curves for housing in City B. What would be the effects of a rent ceiling equal to $1000 per month?

As long as the supply curve for a good is upward sloping and the demand curve is downward sloping, a sales tax imposed on sellers shifts the supply curve

-The figure shows the market for books before and after a sales tax is introduced. Each week, the tax creates a deadweight loss of ________, decreases consumer surplus by ________, and decreases producer surplus by ________.

The more ________, the larger is the amount of the tax on the good that the ________ pays.

-The market for unskilled labor is illustrated in the figure above. If a minimum wage of $5 per hour is imposed, an employer who breaks the law will be able to find a worker who is willing to work for

-The figure shows the market for books before and after a sales tax is introduced. The tax on books is ________ a book, buyers pay ________ of tax per book, and the government's tax revenue is ________ a week.

-In the above figure, the amount of the tax per unit imposed on the sellers is

-In the above figure, a price ceiling of $2 would

The amount of a tax paid by the buyers will be larger the

Good A has a perfectly inelastic demand and an upward-sloping supply curve. Good B has a perfectly inelastic supply and a downward-sloping demand curve. If the same sales tax is imposed on the sellers of both good A and good B, the price paid by

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. How is the salt tax burden shared between buyers and sellers in Healthyland?

Suppose the price elasticity of demand for Mexican food is 1.23 and the price elasticity of supply is 0.47. If the government imposes a tax on Mexican food, do buyers or sellers pay most of the tax? Why?

-In the above figure, a minimum wage of ________ would result in employment of ________.

When the government passes a law making a particular good illegal, does it matter for the black market price and quantity if the penalties for breaking the law are imposed on the buyers or on the sellers?

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 figure shows the market for books before and after a sales tax is introduced. Each week, the tax creates a deadweight loss of , decreases consumer surplus by , and decreases producer surplus by .

The more , the larger is the amount of the tax on the good that the pays.

-The figure shows the market for books before and after a sales tax is introduced. The tax on books is a book, buyers pay of tax per book, and the government's tax revenue is a week.

-In the above figure, a minimum wage of would result in employment of .