Question 1

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $6 per hour, how many hours do students work?

Accepted Answer

A)  12,000 hours 
B)  9,000 hours 
C)  6,000 hours 
D)  None of the above answers is correct. 
A)  12,000 hours 
B)  9,000 hours 
C)  6,000 hours 
D)  None of the above answers is correct.

Question 2

A tax is imposed on the sale of a product. As long as neither the supply nor the demand is perfectly elastic or inelastic

Accepted Answer

A)  there is no change in the price paid by the consumers. 
B)  the price paid by the consumers increases by the full amount of the tax. 
C)  the price paid by the consumers increases by less than the amount of the tax. 
D)  the price paid by the consumers increases by more than the amount of the tax. 
A)  there is no change in the price paid by the consumers. 
B)  the price paid by the consumers increases by the full amount of the tax. 
C)  the price paid by the consumers increases by less than the amount of the tax. 
D)  the price paid by the consumers increases by more than the amount of the tax.

Question 3

-In the figure above, D0 is the demand for labor curve. Imposing a minimum wage of $6 per hour will initially

Accepted Answer

A)  increase employment from 20 to 40 million hours per year. 
B)  increase employment from 30 to 40 million hours per year. 
C)  decrease employment from 40 to 20 million hours per year. 
D)  decrease employment from 30 to 20 million hours per year. 
A)  increase employment from 20 to 40 million hours per year. 
B)  increase employment from 30 to 40 million hours per year. 
C)  decrease employment from 40 to 20 million hours per year. 
D)  decrease employment from 30 to 20 million hours per year.

Question 4

-The table above gives the supply and demand schedules for scooters. Because of increased injuries sustained by children riding scooters, Citizens Against Scooter Accidents successfully lobbies the government to impose a price floor of $80.00 on scooters.
a) What is the quantity demanded and supplied after the price floor has been imposed?
b) Is there any shortage or surplus at this price floor? If so, how much?
c) If the price floor is raised to $110.00, what is the quantity demanded and supplied?
d) At a price floor of $110.00, is there any shortage or surplus? If so, how much?

Accepted Answer

a) The quantity demanded and supplied is

Question 5

-The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be the new equilibrium price paid by consumers after the tax?

Accepted Answer

A)  less than $27 per game 
B)  $27 per game 
C)  more than $27 per game. 
D)  More information is needed to determine if the price is more than, less than, or equal to $27 per game. 
A)  less than $27 per game 
B)  $27 per game 
C)  more than $27 per game. 
D)  More information is needed to determine if the price is more than, less than, or equal to $27 per game.

Question 6

Compare and contrast a price ceiling and a price floor.

Accepted Answer

A price ceiling is the maximum legal pri

Question 7

A minimum wage set above the equilibrium wage rate has no effect.

Accepted Answer

A) True 
 B)False

Question 8

A price floor

Accepted Answer

A)  always results in a surplus. 
B)  always results in a shortage. 
C)  results in a surplus if the floor price is higher than the equilibrium price. 
D)  results in a shortage if the floor price is higher than the equilibrium price. 
A)  always results in a surplus. 
B)  always results in a shortage. 
C)  results in a surplus if the floor price is higher than the equilibrium price. 
D)  results in a shortage if the floor price is higher than the equilibrium price.

Question 9

-The above figure shows the market for neckties. Based on the graph, how much tax per necktie has been imposed by the government?

Accepted Answer

A)  $1.25 per tie 
B)  $1.00 per tie 
C)  $0.75 per tie 
D)  More information is needed to determine the tax that the government has imposed. 
A)  $1.25 per tie 
B)  $1.00 per tie 
C)  $0.75 per tie 
D)  More information is needed to determine the tax that the government has imposed.

Question 10

-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 most prefer 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 11

Suppose the local government places a sales tax on hotel rooms and that the demand for these rooms is elastic while the supply is perfectly inelastic. The tax incidence is such that the tax will be paid by

Accepted Answer

A)  only the consumers. 
B)  equally by the consumers and the producers. 
C)  only the producers. 
D)  the taxpayers. 
A)  only the consumers. 
B)  equally by the consumers and the producers. 
C)  only the producers. 
D)  the taxpayers.

Question 12

-The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be tax revenue?

Accepted Answer

A)  less than $18 
B)  $18 
C)  more than $18 
D)  More information is needed to determine if the tax revenue is more than, less than, or equal to $18. 
A)  less than $18 
B)  $18 
C)  more than $18 
D)  More information is needed to determine if the tax revenue is more than, less than, or equal to $18.

Question 13

-The figure above illustrates the current market for workers in Lima, Peru.
a) Without any government intervention, what is the equilibrium wage rate and amount of employment?
b) If the city government imposes a minimum wage of $3 an hour, what is the amount of employment? Does the minimum wage create any unemployment? Why or why not?
c) If the city government imposes a minimum wage of $6 an hour, what is the amount of employment? Does the minimum wage create any unemployment? Why or why not?

Accepted Answer

a) The equilibrium wage rate is $4 an ho

Question 14

-The above figure shows the apartment market in Big City. What could the Big City Housing Authority do if it wants to reduce the rents paid by its citizens?

Accepted Answer

A)  impose a rent floor above $1350 
B)  impose a rent floor below $1350 
C)  impose a rent ceiling above $1350 
D)  impose a rent ceiling below $1350 
A)  impose a rent floor above $1350 
B)  impose a rent floor below $1350 
C)  impose a rent ceiling above $1350 
D)  impose a rent ceiling below $1350

Question 15

Assume that your state government has placed a price ceiling of $.20 per kilowatt hour on electricity. The equilibrium price per kilowatt hour for electricity is $.25. The government's action will result in

Accepted Answer

A)  a surplus of electricity in the electricity market. 
B)  an increase in the price of electricity to $.25 per kilowatt hour. 
C)  an increase in producer surplus. 
D)  a deadweight loss. 
A)  a surplus of electricity in the electricity market. 
B)  an increase in the price of electricity to $.25 per kilowatt hour. 
C)  an increase in producer surplus. 
D)  a deadweight loss.

Question 16

Assuming the market of soda has a regular downward sloping demand curve and upward sloping supply curve, the tax will ________ the price paid by buyers and ________ the price received by sellers.

Accepted Answer

A)  decrease; increase 
B)  decrease; decrease 
C)  increase; increase 
D)  increase; decrease 
A)  decrease; increase 
B)  decrease; decrease 
C)  increase; increase 
D)  increase; decrease

Question 17

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 would happen if the government increased the subsidy to $400 per passenger?

Accepted Answer

A)  There would be a fall in price and increase in quantity produced. 
B)  Government payments to airlines would decrease. 
C)  Consumer surplus would decrease. 
D)  Supply would shift to the left. 
A)  There would be a fall in price and increase in quantity produced. 
B)  Government payments to airlines would decrease. 
C)  Consumer surplus would decrease. 
D)  Supply would shift to the left.

Question 18

Can the incidence of a sales tax ever be so that buyers pay all of the tax or so that sellers pay all of the tax?

Accepted Answer

Yes, each is possible. If demand is perf

Question 19

Do rent ceilings result in any deadweight loss?

Accepted Answer

Yes. Because the number of apartments re

Question 20

If penalties for trading illegal drugs are instituted on both buyers and sellers, the

Accepted Answer

A)  quantity might increase or decrease but the price will rise. 
B)  price might rise or fall, but the quantity will decrease. 
C)  price and the quantity will both decrease. 
D)  price and the quantity will both increase. 
A)  quantity might increase or decrease but the price will rise. 
B)  price might rise or fall, but the quantity will decrease. 
C)  price and the quantity will both decrease. 
D)  price and the quantity will both increase.

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $6 per hour, how many hours do students work?

A tax is imposed on the sale of a product. As long as neither the supply nor the demand is perfectly elastic or inelastic

-In the figure above, D₀ is the demand for labor curve. Imposing a minimum wage of $6 per hour will initially

-The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be the new equilibrium price paid by consumers after the tax?

Compare and contrast a price ceiling and a price floor.

A minimum wage set above the equilibrium wage rate has no effect.

A price floor

-The above figure shows the market for neckties. Based on the graph, how much tax per necktie has been imposed by the government?

Suppose the local government places a sales tax on hotel rooms and that the demand for these rooms is elastic while the supply is perfectly inelastic. The tax incidence is such that the tax will be paid by

-The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be tax revenue?

-The above figure shows the apartment market in Big City. What could the Big City Housing Authority do if it wants to reduce the rents paid by its citizens?

Assume that your state government has placed a price ceiling of $.20 per kilowatt hour on electricity. The equilibrium price per kilowatt hour for electricity is $.25. The government's action will result in

Assuming the market of soda has a regular downward sloping demand curve and upward sloping supply curve, the tax will the price paid by buyers and the price received by sellers.

Can the incidence of a sales tax ever be so that buyers pay all of the tax or so that sellers pay all of the tax?

Do rent ceilings result in any deadweight loss?

If penalties for trading illegal drugs are instituted on both buyers and sellers, the

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 figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $6 per hour, how many hours do students work?

A tax is imposed on the sale of a product. As long as neither the supply nor the demand is perfectly elastic or inelastic

-In the figure above, D0 is the demand for labor curve. Imposing a minimum wage of $6 per hour will initially

-The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be the new equilibrium price paid by consumers after the tax?

Compare and contrast a price ceiling and a price floor.

A minimum wage set above the equilibrium wage rate has no effect.

A price floor

-The above figure shows the market for neckties. Based on the graph, how much tax per necktie has been imposed by the government?

Suppose the local government places a sales tax on hotel rooms and that the demand for these rooms is elastic while the supply is perfectly inelastic. The tax incidence is such that the tax will be paid by

-The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be tax revenue?

-The above figure shows the apartment market in Big City. What could the Big City Housing Authority do if it wants to reduce the rents paid by its citizens?

Assume that your state government has placed a price ceiling of $.20 per kilowatt hour on electricity. The equilibrium price per kilowatt hour for electricity is $.25. The government's action will result in

Assuming the market of soda has a regular downward sloping demand curve and upward sloping supply curve, the tax will ________ the price paid by buyers and ________ the price received by sellers.

Can the incidence of a sales tax ever be so that buyers pay all of the tax or so that sellers pay all of the tax?

Do rent ceilings result in any deadweight loss?

If penalties for trading illegal drugs are instituted on both buyers and sellers, the

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

-In the figure above, D₀ is the demand for labor curve. Imposing a minimum wage of $6 per hour will initially

Assuming the market of soda has a regular downward sloping demand curve and upward sloping supply curve, the tax will the price paid by buyers and the price received by sellers.