Question 1

Compared to the situation in which a good is legal, making the good illegal and imposing ________ results in less being sold.

Accepted Answer

A)  a much higher fine on sellers than on buyers 
B)  a much higher fine on buyers than on sellers 
C)  any fine on either the buyer or the seller 
D)  all of the above 
A)  a much higher fine on sellers than on buyers 
B)  a much higher fine on buyers than on sellers 
C)  any fine on either the buyer or the seller 
D)  all of the above

Question 2

-The price ceiling depicted in the above figure results in

Accepted Answer

A)  consumer surplus increasing from $30 thousand to $34.5 thousand. 
B)  producer surplus decreasing from $24 thousand to $6 thousand. 
C)  a deadweight loss of $16 thousand. 
D)  Both answers A and B are correct. 
A)  consumer surplus increasing from $30 thousand to $34.5 thousand. 
B)  producer surplus decreasing from $24 thousand to $6 thousand. 
C)  a deadweight loss of $16 thousand. 
D)  Both answers A and B are correct.

Question 3

Suppose the government has declared beer to be an illegal substance and has imposed penalties on any person caught selling a beer. Buying a beer, however, remains legal. 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 4

-A $10 per-unit tax on cell phones raises the equilibrium price paid by consumers by $5. Before the tax, 5,000 cell phones were sold per year. The revenue from the tax is

Accepted Answer

A)  zero. 
B)  positive but less than $50,000 per year. 
C)  $50,000 per year. 
D)  more than $50,000 per year. 
A)  zero. 
B)  positive but less than $50,000 per year. 
C)  $50,000 per year. 
D)  more than $50,000 per year.

Question 5

If a tax is imposed in a market in which demand is perfectly inelastic

Accepted Answer

A)  the buyers pay the entire tax. 
B)  the sellers pay the entire tax. 
C)  the buyers and the sellers both pay a portion of the tax. 
D)  neither the buyer nor the seller pays the tax. 
A)  the buyers pay the entire tax. 
B)  the sellers pay the entire tax. 
C)  the buyers and the sellers both pay a portion of the tax. 
D)  neither the buyer nor the seller pays the tax.

Question 6

When a sales tax is imposed on sellers, the supply curve shifts so that the vertical distance between the old and the new supply curve equals the

Accepted Answer

A)  sales tax multiplied by the price elasticity of demand. 
B)  sales tax multiplied by the price elasticity of supply. 
C)  amount of the sales tax. 
D)  sales tax divided by the price elasticity of demand. 
A)  sales tax multiplied by the price elasticity of demand. 
B)  sales tax multiplied by the price elasticity of supply. 
C)  amount of the sales tax. 
D)  sales tax divided by the price elasticity of demand.

Question 7

The less elastic the supply, the

Accepted Answer

A)  less likely the government is to tax the product. 
B)  less likely the government is to impose a price ceiling. 
C)  larger the fraction of any tax imposed on the product that is paid by the suppliers. 
D)  less elastic the demand. 
A)  less likely the government is to tax the product. 
B)  less likely the government is to impose a price ceiling. 
C)  larger the fraction of any tax imposed on the product that is paid by the suppliers. 
D)  less elastic the demand.

Question 8

-In the figure above, originally the apartment rental market is in short-run and long-run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month. Now suppose that demand increases. The increase in demand results in the quantity supplied

Accepted Answer

A)  increasing. 
B)  staying the same. 
C)  decreasing. 
D)  increasing, staying the same, or decreasing depending on how much demand increases. 
A)  increasing. 
B)  staying the same. 
C)  decreasing. 
D)  increasing, staying the same, or decreasing depending on how much demand increases.

Question 9

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. Using the figure, what is the tax per blouse?

Accepted Answer

A)  $10 per blouse 
B)  $20 per blouse 
C)  $30 per blouse 
D)  $40 per blouse 
A)  $10 per blouse 
B)  $20 per blouse 
C)  $30 per blouse 
D)  $40 per blouse

Question 10

A price ceiling, such as a rent ceiling

Accepted Answer

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

Question 11

An example of a price floor is a

Accepted Answer

A)  rent control. 
B)  minimum wage. 
C)  subsidy. 
D)  quota. 
A)  rent control. 
B)  minimum wage. 
C)  subsidy. 
D)  quota.

Question 12

If salt has a ________, then ________ pay most of any tax levied on salt.

Accepted Answer

A)  high elasticity of supply; sellers 
B)  low elasticity of demand; buyers 
C)  high elasticity of demand; buyers 
D)  low elasticity of supply; buyers 
A)  high elasticity of supply; sellers 
B)  low elasticity of demand; buyers 
C)  high elasticity of demand; buyers 
D)  low elasticity of supply; buyers

Question 13

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. The government would raise more tax revenue from this excise tax if

Accepted Answer

A)  the demand was more inelastic. 
B)  it places a price ceiling on blouses in addition to the tax. 
C)  it places a price floor on blouses in addition to the tax. 
D)  all of the above. 
A)  the demand was more inelastic. 
B)  it places a price ceiling on blouses in addition to the tax. 
C)  it places a price floor on blouses in addition to the tax. 
D)  all of the above.

Question 14

-Which of the following is NOT true about the $3 per pizza tax illustrated in the above figure?

Accepted Answer

A)  It decreases consumer surplus by $90 thousand. 
B)  It decreases producer surplus by $45 thousand. 
C)  It creates a deadweight loss of $135 thousand. 
D)  None of the above because they are all true. 
A)  It decreases consumer surplus by $90 thousand. 
B)  It decreases producer surplus by $45 thousand. 
C)  It creates a deadweight loss of $135 thousand. 
D)  None of the above because they are all true.

Question 15

-The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $3 per hour is imposed. Employment will decrease by

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 16

-In a supply and demand diagram, illustrate a price floor that affects the market's price and quantity and a price floor that has no effect on the price and quantity.

Accepted Answer

@#IMG-DLM& The figure above shows a price floor th

Question 17

If the elasticity of supply of labor is low and the elasticity of demand for labor is high, then workers pay most of the Social Security tax levied on labor.

Accepted Answer

A) True 
 B)False

Question 18

If the same fine is imposed on buyers and sellers of an illegal good so that the cost of breaking the law is the same for both, then

Accepted Answer

A)  there is more government revenue collected than with an excise tax on the good. 
B)  there is no deadweight loss in this market because the extra producer surplus will exactly offset the lost consumer surplus. 
C)  the supply and demand curves both shift leftward by equal amounts. 
D)  the equilibrium price of the good definitely increases. 
A)  there is more government revenue collected than with an excise tax on the good. 
B)  there is no deadweight loss in this market because the extra producer surplus will exactly offset the lost consumer surplus. 
C)  the supply and demand curves both shift leftward by equal amounts. 
D)  the equilibrium price of the good definitely increases.

Question 19

-In the figure above, the initial demand curve is D0. There are no rent ceilings nor rent floors. The equilibrium monthly rent is

Accepted Answer

A)  $100 per month. 
B)  $200 per month. 
C)  $300 per month. 
D)  $400 per month. 
A)  $100 per month. 
B)  $200 per month. 
C)  $300 per month. 
D)  $400 per month.

Question 20

A sales tax imposed on sellers shifts the supply curve leftward for the taxed good because the

Accepted Answer

A)  tax is paid by the seller to the government and is, therefore, like a cost of production. 
B)  tax is actually shifted entirely onto the buyer who can afford only a smaller supply. 
C)  higher price causes entry into the market. 
D)  tax shifts the demand curve leftward. 
A)  tax is paid by the seller to the government and is, therefore, like a cost of production. 
B)  tax is actually shifted entirely onto the buyer who can afford only a smaller supply. 
C)  higher price causes entry into the market. 
D)  tax shifts the demand curve leftward.

Compared to the situation in which a good is legal, making the good illegal and imposing ________ results in less being sold.

-The price ceiling depicted in the above figure results in

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

-A $10 per-unit tax on cell phones raises the equilibrium price paid by consumers by $5. Before the tax, 5,000 cell phones were sold per year. The revenue from the tax is

If a tax is imposed in a market in which demand is perfectly inelastic

When a sales tax is imposed on sellers, the supply curve shifts so that the vertical distance between the old and the new supply curve equals the

The less elastic the supply, the

-In the figure above, originally the apartment rental market is in short-run and long-run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month. Now suppose that demand increases. The increase in demand results in the quantity supplied

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. Using the figure, what is the tax per blouse?

A price ceiling, such as a rent ceiling

An example of a price floor is a

If salt has a , then pay most of any tax levied on salt.

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. The government would raise more tax revenue from this excise tax if

-Which of the following is NOT true about the $3 per pizza tax illustrated in the above figure?

-The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $3 per hour is imposed. Employment will decrease by

-In a supply and demand diagram, illustrate a price floor that affects the market's price and quantity and a price floor that has no effect on the price and quantity.

If the elasticity of supply of labor is low and the elasticity of demand for labor is high, then workers pay most of the Social Security tax levied on labor.

If the same fine is imposed on buyers and sellers of an illegal good so that the cost of breaking the law is the same for both, then

-In the figure above, the initial demand curve is D₀. There are no rent ceilings nor rent floors. The equilibrium monthly rent is

A sales tax imposed on sellers shifts the supply curve leftward for the taxed good because 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

Compared to the situation in which a good is legal, making the good illegal and imposing ________ results in less being sold.

-The price ceiling depicted in the above figure results in

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

-A $10 per-unit tax on cell phones raises the equilibrium price paid by consumers by $5. Before the tax, 5,000 cell phones were sold per year. The revenue from the tax is

If a tax is imposed in a market in which demand is perfectly inelastic

When a sales tax is imposed on sellers, the supply curve shifts so that the vertical distance between the old and the new supply curve equals the

The less elastic the supply, the

-In the figure above, originally the apartment rental market is in short-run and long-run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month. Now suppose that demand increases. The increase in demand results in the quantity supplied

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. Using the figure, what is the tax per blouse?

A price ceiling, such as a rent ceiling

An example of a price floor is a

If salt has a ________, then ________ pay most of any tax levied on salt.

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. The government would raise more tax revenue from this excise tax if

-Which of the following is NOT true about the $3 per pizza tax illustrated in the above figure?

-The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $3 per hour is imposed. Employment will decrease by

-In a supply and demand diagram, illustrate a price floor that affects the market's price and quantity and a price floor that has no effect on the price and quantity.

If the elasticity of supply of labor is low and the elasticity of demand for labor is high, then workers pay most of the Social Security tax levied on labor.

If the same fine is imposed on buyers and sellers of an illegal good so that the cost of breaking the law is the same for both, then

-In the figure above, the initial demand curve is D0. There are no rent ceilings nor rent floors. The equilibrium monthly rent is

A sales tax imposed on sellers shifts the supply curve leftward for the taxed good because 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

If salt has a , then pay most of any tax levied on salt.

-In the figure above, the initial demand curve is D₀. There are no rent ceilings nor rent floors. The equilibrium monthly rent is