Question 1

Why would an increase in the minimum wage to $15 per hour lead to more unemployment for teenage and low-skilled workers?

Accepted Answer

Many teenage and low-skilled workers ear

Question 2

-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, the potential loss from job search in Midland city is

Accepted Answer

A)  $60 million. 
B)  $120 million. 
C)  $40 million. 
D)  zero. 
A)  $60 million. 
B)  $120 million. 
C)  $40 million. 
D)  zero.

Question 3

-The above figure illustrates the labor market for fast food restaurants in a small city in Peru. What would be the effects of a minimum wage imposed at $4 per hour?

Accepted Answer

A)  a shortage of 200 hours 
B)  a shortage of 100 hours 
C)  a surplus of 200 hours 
D)  nothing because the minimum wage has no effect on the equilibrium price and quantity 
A)  a shortage of 200 hours 
B)  a shortage of 100 hours 
C)  a surplus of 200 hours 
D)  nothing because the minimum wage has no effect on the equilibrium price and quantity

Question 4

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. How much producer surplus is lost?

Accepted Answer

A)  $10,000 
B)  $20,000 
C)  $25,000 
D)  $40,000 
A)  $10,000 
B)  $20,000 
C)  $25,000 
D)  $40,000

Question 5

-The table gives the demand and supply schedules for fireworks on the Island of Big Bang. In the past, because many deaths have resulted from accidents involving fireworks, the government has banned fireworks and is enforcing the ban. A $6 a firework penalty on buyers of fireworks and no penalty on sellers will reduce the number of fireworks bought to ________ a week and decrease the price kept by suppliers to ________ a firework.

Accepted Answer

A)  80; $5 
B)  40; $8 
C)  0; an unknown amount 
D)  140; $3 
A)  80; $5 
B)  40; $8 
C)  0; an unknown amount 
D)  140; $3

Question 6

If buyers of illegal goods are punished but sellers are not, then the price ________ and the equilibrium quantity ________.

Accepted Answer

A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases 
A)  rises; increases 
B)  rises; decreases 
C)  falls; increases 
D)  falls; decreases

Question 7

-If the government decreases the tax on cell phones, ________.

Accepted Answer

A)  the deadweight loss decreases 
B)  the consumer surplus does not change because sellers will not lower the price of a cell phone 
C)  the number of cell phones purchased does not change 
D)  the market becomes less efficient because the government collects less tax revenue 
A)  the deadweight loss decreases 
B)  the consumer surplus does not change because sellers will not lower the price of a cell phone 
C)  the number of cell phones purchased does not change 
D)  the market becomes less efficient because the government collects less tax revenue

Question 8

Suppose the equilibrium wage is $10 per hour. A minimum wage is a ________ and affects employment if it is set at ________.

Accepted Answer

A)  price floor; $12 per hour 
B)  price floor; $8 per hour 
C)  price ceiling; $10 per hour 
D)  price ceiling; $12 per hour 
A)  price floor; $12 per hour 
B)  price floor; $8 per hour 
C)  price ceiling; $10 per hour 
D)  price ceiling; $12 per hour

Question 9

Governments often intervene in agricultural markets by

Accepted Answer

A)  granting subsidies. 
B)  setting production quotas that will increase production. 
C)  setting price floors that reduce prices for buyers. 
D)  imposing heavy taxes on farm products. 
A)  granting subsidies. 
B)  setting production quotas that will increase production. 
C)  setting price floors that reduce prices for buyers. 
D)  imposing heavy taxes on farm products.

Question 10

-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 cost of the last gallon of milk produced is

Accepted Answer

A)  $3.00 a gallon. 
B)  $3.50 a gallon. 
C)  $4.00 a gallon. 
D)  $4.50 a gallon. 
A)  $3.00 a gallon. 
B)  $3.50 a gallon. 
C)  $4.00 a gallon. 
D)  $4.50 a gallon.

Question 11

-The above figure shows the market for neckties after the government has imposed a tax. How much deadweight loss results from this tax?

Accepted Answer

A)  $250.00 
B)  $200.00 
C)  $150.00 
D)  $50.00 
A)  $250.00 
B)  $200.00 
C)  $150.00 
D)  $50.00

Question 12

-The above figure shows the apartment rental market in Bigtown. If the market is in equilibrium and then the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, which of the following would occur?

Accepted Answer

A)  a decrease in the search time and expense of finding an apartment 
B)  an increase in the search time and expense of finding an apartment 
C)  an increase in producer surplus but a decrease in consumer surplus 
D)  an increase in efficiency 
A)  a decrease in the search time and expense of finding an apartment 
B)  an increase in the search time and expense of finding an apartment 
C)  an increase in producer surplus but a decrease in consumer surplus 
D)  an increase in efficiency

Question 13

Suppose that the government wants the burden of the cigarette tax to fall equally on buyers and sellers and declares that a $1.00 tax be imposed on each. Is the burden of the tax shared equally? Why or why not?

Accepted Answer

Not necessarily. A tax has the same effe

Question 14

-Suppose the government wants to discourage the use of cigarettes. If it imposes a tax on cigarettes, the equilibrium quantity falls the most when the elasticity of demand equals

Accepted Answer

A)  2.00. 
B)  1.00. 
C)  0.50. 
D)  0. 
A)  2.00. 
B)  1.00. 
C)  0.50. 
D)  0.

Question 15

A rent ceiling set below the equilibrium rent will

Accepted Answer

A)  increase search activity. 
B)  decrease search activity. 
C)  have no effect on search activity. 
D)  shift the housing supply curve rightward. 
A)  increase search activity. 
B)  decrease search activity. 
C)  have no effect on search activity. 
D)  shift the housing supply curve rightward.

Question 16

A sales tax on sellers of a good shifts the supply curve leftward because the tax is like a cost of production.

Accepted Answer

A) True 
 B)False

Question 17

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, the area that equals the lost consumer surplus from this tax on sports equipment is

Accepted Answer

A)  bcd. 
B)  P1P2cd. 
C)  P2P3ec. 
D)  ced. 
A)  bcd. 
B)  P1P2cd. 
C)  P2P3ec. 
D)  ced.

Question 18

A rent ceiling set above the equilibrium rent

Accepted Answer

A)  decreases the quantity demanded but not the quantity supplied. 
B)  decreases the quantity supplied but not the quantity demanded. 
C)  decreases both the quantity demanded and the quantity supplied. 
D)  has no effect on the market outcome. 
A)  decreases the quantity demanded but not the quantity supplied. 
B)  decreases the quantity supplied but not the quantity demanded. 
C)  decreases both the quantity demanded and the quantity supplied. 
D)  has no effect on the market outcome.

Question 19

-The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $5 per hour is imposed. Unemployment will equal

Accepted Answer

A)  0 hours. 
B)  10 million hours per year. 
C)  20 million hours per year. 
D)  30 million hours per year. 
A)  0 hours. 
B)  10 million hours per year. 
C)  20 million hours per year. 
D)  30 million hours per year.

Question 20

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. The sports equipment consumers' share of this tax would be greater than that shown in the above figure

Accepted Answer

A)  only if the demand was more elastic. 
B)  only if the demand was more inelastic. 
C)  only if the supply was more elastic. 
D)  if either the demand was more inelastic or the supply more elastic. 
A)  only if the demand was more elastic. 
B)  only if the demand was more inelastic. 
C)  only if the supply was more elastic. 
D)  if either the demand was more inelastic or the supply more elastic.

Why would an increase in the minimum wage to $15 per hour lead to more unemployment for teenage and low-skilled workers?

-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, the potential loss from job search in Midland city is

-The above figure illustrates the labor market for fast food restaurants in a small city in Peru. What would be the effects of a minimum wage imposed at $4 per hour?

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. How much producer surplus is lost?

If buyers of illegal goods are punished but sellers are not, then the price and the equilibrium quantity .

-If the government decreases the tax on cell phones, ________.

Suppose the equilibrium wage is $10 per hour. A minimum wage is a and affects employment if it is set at .

Governments often intervene in agricultural markets by

-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 cost of the last gallon of milk produced is

-The above figure shows the market for neckties after the government has imposed a tax. How much deadweight loss results from this tax?

-The above figure shows the apartment rental market in Bigtown. If the market is in equilibrium and then the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, which of the following would occur?

Suppose that the government wants the burden of the cigarette tax to fall equally on buyers and sellers and declares that a $1.00 tax be imposed on each. Is the burden of the tax shared equally? Why or why not?

-Suppose the government wants to discourage the use of cigarettes. If it imposes a tax on cigarettes, the equilibrium quantity falls the most when the elasticity of demand equals

A rent ceiling set below the equilibrium rent will

A sales tax on sellers of a good shifts the supply curve leftward because the tax is like a cost of production.

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, the area that equals the lost consumer surplus from this tax on sports equipment is

A rent ceiling set above the equilibrium rent

-The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $5 per hour is imposed. Unemployment will equal

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. The sports equipment consumers' share of this tax would be greater than that shown in the above figure

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

Why would an increase in the minimum wage to $15 per hour lead to more unemployment for teenage and low-skilled workers?

-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, the potential loss from job search in Midland city is

-The above figure illustrates the labor market for fast food restaurants in a small city in Peru. What would be the effects of a minimum wage imposed at $4 per hour?

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. How much producer surplus is lost?

If buyers of illegal goods are punished but sellers are not, then the price ________ and the equilibrium quantity ________.

-If the government decreases the tax on cell phones, ________.

Suppose the equilibrium wage is $10 per hour. A minimum wage is a ________ and affects employment if it is set at ________.

Governments often intervene in agricultural markets by

-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 cost of the last gallon of milk produced is

-The above figure shows the market for neckties after the government has imposed a tax. How much deadweight loss results from this tax?

-The above figure shows the apartment rental market in Bigtown. If the market is in equilibrium and then the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, which of the following would occur?

Suppose that the government wants the burden of the cigarette tax to fall equally on buyers and sellers and declares that a $1.00 tax be imposed on each. Is the burden of the tax shared equally? Why or why not?

-Suppose the government wants to discourage the use of cigarettes. If it imposes a tax on cigarettes, the equilibrium quantity falls the most when the elasticity of demand equals

A rent ceiling set below the equilibrium rent will

A sales tax on sellers of a good shifts the supply curve leftward because the tax is like a cost of production.

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, the area that equals the lost consumer surplus from this tax on sports equipment is

A rent ceiling set above the equilibrium rent

-The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $5 per hour is imposed. Unemployment will equal

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. The sports equipment consumers' share of this tax would be greater than that shown in the above figure

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

If buyers of illegal goods are punished but sellers are not, then the price and the equilibrium quantity .

Suppose the equilibrium wage is $10 per hour. A minimum wage is a and affects employment if it is set at .