Question 1

When a tax is imposed on a good or service, buyers respond only to the price that ________ the tax, and sellers respond to the price that ________ the tax.

Accepted Answer

A)  excludes; includes 
B)  includes; excludes 
C)  excludes; excludes 
D)  includes; includes 
A)  excludes; includes 
B)  includes; excludes 
C)  excludes; excludes 
D)  includes; includes

Question 2

Which of the following is a CORRECT statement about markets for prohibited goods?

Accepted Answer

A)  Penalizing sellers of an illegal good decreases supply and penalizing buyers decreases demand. 
B)  Penalizing either buyers or sellers of an illegal good decreases the quantity bought. 
C)  Taxing a good at a sufficiently high rate can achieve the same consumption level as prohibition. 
D)  All of the above are correct statements. 
A)  Penalizing sellers of an illegal good decreases supply and penalizing buyers decreases demand. 
B)  Penalizing either buyers or sellers of an illegal good decreases the quantity bought. 
C)  Taxing a good at a sufficiently high rate can achieve the same consumption level as prohibition. 
D)  All of the above are correct statements.

Question 3

One common effect of rent ceilings in big cities is

Accepted Answer

A)  that landlords build more apartments. 
B)  that landlords charge "key money," high payments charged to new tenants for new locks and keys. 
C)  to equalize the quantity of apartments demanded and the quantity supplied in neighborhoods. 
D)  to reduce the search activity by those seeking shelter. 
A)  that landlords build more apartments. 
B)  that landlords charge "key money," high payments charged to new tenants for new locks and keys. 
C)  to equalize the quantity of apartments demanded and the quantity supplied in neighborhoods. 
D)  to reduce the search activity by those seeking shelter.

Question 4

Most economists believe that raising the minimum wage decreases the employment opportunities for low-skilled workers.

Accepted Answer

A) True 
 B)False

Question 5

In order for a price ceiling to have an effect on the market, must it be set above or below the equilibrium price? Why?

Accepted Answer

In order to have an effect, the price ce

Question 6

The supply of oil is more elastic than the demand for oil. If oil is taxed $10 per barrel, how will the tax be divided between the buyers and sellers?

Accepted Answer

A)  The sellers will pay more of the tax than the buyers. 
B)  The buyers will pay more of the tax than the sellers. 
C)  The sellers and buyers will split the tax evenly. 
D)  The sellers will pay the entire tax. 
A)  The sellers will pay more of the tax than the buyers. 
B)  The buyers will pay more of the tax than the sellers. 
C)  The sellers and buyers will split the tax evenly. 
D)  The sellers will pay the entire tax.

Question 7

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, how many apartment units are rented?

Accepted Answer

A)  2,000 
B)  3,000 
C)  4,000 
D)  None of the above answers is correct. 
A)  2,000 
B)  3,000 
C)  4,000 
D)  None of the above answers is correct.

Question 8

-In the Village of Punjab, Sheryl owns a well, which is the only source of drinking water. The supply of water is perfectly inelastic at a quantity of 1,000 gallons of water per day. At a price of $2.00 per gallon, the quantity demanded per day is 1,000 gallons. The government imposes a $0.50 per gallon tax.
a) After the tax is imposed, what is the price paid by the villagers? What is the price received by Sheryl?
b) How much revenue does the government collect?
c) What fraction of the tax does Sheryl pay? What fraction is paid by the villagers?

Accepted Answer

a) Because the supply is perfectly inela

Question 9

The amount of a tax paid by the sellers will be smaller 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 10

One way to assure that poor people will have a plentiful supply of affordable housing available to them is by imposing rent ceilings.

Accepted Answer

A) True 
 B)False

Question 11

-The figure above shows the market for low-skilled labor in Midland city. The government sets a minimum wage at $6 per hour. With the minimum wage law enacted, at the quantity of labor employed, the value to the firm of last worker hired is ________ the wage rate for which that person is willing to work.

Accepted Answer

A)  the same as 
B)  $3 per hour less than 
C)  $3 per hour greater than 
D)  $1 per hour greater 
A)  the same as 
B)  $3 per hour less than 
C)  $3 per hour greater than 
D)  $1 per hour greater

Question 12

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the market price of salt is $0.40 per pound. The demand for salt is perfectly inelastic, and the elasticity of supply is 1.5. With the tax, the price that sellers of salt in Healthyland receive and keep is

Accepted Answer

A)  $0.40 per pound. 
B)  $0.35 per pound. 
C)  $0.45 per pound. 
D)  $0.50 per pound. 
A)  $0.40 per pound. 
B)  $0.35 per pound. 
C)  $0.45 per pound. 
D)  $0.50 per pound.

Question 13

In general, a fine on smoking cigarettes shifts the ________ curve of cigarettes ________.

Accepted Answer

A)  supply; rightward 
B)  supply; leftward 
C)  demand; rightward 
D)  demand; leftward 
A)  supply; rightward 
B)  supply; leftward 
C)  demand; rightward 
D)  demand; leftward

Question 14

-Which of the following leads to the suppliers paying all of a tax?

Accepted Answer

A)  The supply is perfectly elastic. 
B)  The supply is perfectly inelastic. 
C)  The demand is unit elastic. 
D)  The demand is perfectly inelastic. 
A)  The supply is perfectly elastic. 
B)  The supply is perfectly inelastic. 
C)  The demand is unit elastic. 
D)  The demand is perfectly inelastic.

Question 15

-The figure above shows the market for tickets to the Super Bowl the day of the game. Suppose the government imposes an entertainment tax of $100 per ticket.
a) What is the equilibrium price of a Super Bowl ticket before the tax? What is the price paid by buyers after the tax? What is the price received by sellers after the tax?
b) What is the equilibrium quantity of tickets before the tax? What is the equilibrium quantity after the tax?
c) Do buyers or sellers bear the largest incidence of the tax?

Accepted Answer

a) The equilibrium price before the tax

Question 16

-The above figure shows the labor market in an undeveloped nation. A minimum wage has an effect on the market for low-skilled labor if it is set at

Accepted Answer

A)  $2.00. 
B)  $3.00. 
C)  $4.00. 
D)  all of the above 
A)  $2.00. 
B)  $3.00. 
C)  $4.00. 
D)  all of the above

Question 17

-The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. Automobile owners would pay a larger part of this tax than what is shown in the figure if the

Accepted Answer

A)  demand were more elastic. 
B)  demand were more inelastic. 
C)  supply were more inelastic. 
D)  None of the above because the buyers always pay the entire amount of the tax. 
A)  demand were more elastic. 
B)  demand were more inelastic. 
C)  supply were more inelastic. 
D)  None of the above because the buyers always pay the entire amount of the tax.

Question 18

Explain how a price floor set above the equilibrium market price for a good can cause a surplus of that good.

Accepted Answer

At the market equilibrium price, the qua

Question 19

The incidence of the tax between buyers and sellers depends only on the elasticity of demand.

Accepted Answer

A) True 
 B)False

Question 20

The opportunity cost of buying a good includes I. the price of the good.
II) the value of time spent searching for the good.

Accepted Answer

A)  only I 
B)  only II 
C)  both I and II 
D)  neither I nor II 
A)  only I 
B)  only II 
C)  both I and II 
D)  neither I nor II

When a tax is imposed on a good or service, buyers respond only to the price that the tax, and sellers respond to the price that the tax.

Which of the following is a CORRECT statement about markets for prohibited goods?

One common effect of rent ceilings in big cities is

Most economists believe that raising the minimum wage decreases the employment opportunities for low-skilled workers.

In order for a price ceiling to have an effect on the market, must it be set above or below the equilibrium price? Why?

The supply of oil is more elastic than the demand for oil. If oil is taxed $10 per barrel, how will the tax be divided between the buyers and sellers?

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, how many apartment units are rented?

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

One way to assure that poor people will have a plentiful supply of affordable housing available to them is by imposing rent ceilings.

In general, a fine on smoking cigarettes shifts the curve of cigarettes .

-Which of the following leads to the suppliers paying all of a tax?

-The above figure shows the labor market in an undeveloped nation. A minimum wage has an effect on the market for low-skilled labor if it is set at

-The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. Automobile owners would pay a larger part of this tax than what is shown in the figure if the

Explain how a price floor set above the equilibrium market price for a good can cause a surplus of that good.

The incidence of the tax between buyers and sellers depends only on the elasticity of demand.

The opportunity cost of buying a good includes I. the price of the good. II) the value of time spent searching for the good.

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

When a tax is imposed on a good or service, buyers respond only to the price that ________ the tax, and sellers respond to the price that ________ the tax.

Which of the following is a CORRECT statement about markets for prohibited goods?

One common effect of rent ceilings in big cities is

Most economists believe that raising the minimum wage decreases the employment opportunities for low-skilled workers.

In order for a price ceiling to have an effect on the market, must it be set above or below the equilibrium price? Why?

The supply of oil is more elastic than the demand for oil. If oil is taxed $10 per barrel, how will the tax be divided between the buyers and sellers?

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, how many apartment units are rented?

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

One way to assure that poor people will have a plentiful supply of affordable housing available to them is by imposing rent ceilings.

In general, a fine on smoking cigarettes shifts the ________ curve of cigarettes ________.

-Which of the following leads to the suppliers paying all of a tax?

-The above figure shows the labor market in an undeveloped nation. A minimum wage has an effect on the market for low-skilled labor if it is set at

-The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. Automobile owners would pay a larger part of this tax than what is shown in the figure if the

Explain how a price floor set above the equilibrium market price for a good can cause a surplus of that good.

The incidence of the tax between buyers and sellers depends only on the elasticity of demand.

The opportunity cost of buying a good includes I. the price of the good. II) the value of time spent searching for the good.

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

When a tax is imposed on a good or service, buyers respond only to the price that the tax, and sellers respond to the price that the tax.

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

In general, a fine on smoking cigarettes shifts the curve of cigarettes .