Question 1

-In the above figure, a sales tax of $1 per unit imposed on sellers ________ the price buyers pay and ________ the price that suppliers keep for themselves.

Accepted Answer

A)  affects; does not affect 
B)  does not affect; affects 
C)  does not affect; does not affect 
D)  affects; affects 
A)  affects; does not affect 
B)  does not affect; affects 
C)  does not affect; does not affect 
D)  affects; affects

Question 2

Consider the market for heart transplants. The demand for a heart transplant is perfectly inelastic and the supply curve is upward sloping. If a $1,000 tax per transplant tax is imposed on buyers (the recipients), how will the tax be divided between the buyer and seller?

Accepted Answer

A)  The sellers will pay the entire tax. 
B)  The buyers will pay the entire tax. 
C)  The tax will be evenly divided between the sellers and buyers. 
D)  More information is needed to determine how the tax is split. 
A)  The sellers will pay the entire tax. 
B)  The buyers will pay the entire tax. 
C)  The tax will be evenly divided between the sellers and buyers. 
D)  More information is needed to determine how the tax is split.

Question 3

In general, a fine on buying a product leads to the

Accepted Answer

A)  supply curve shifting rightward. 
B)  supply curve shifting leftward. 
C)  demand curve shifting rightward. 
D)  demand curve shifting leftward. 
A)  supply curve shifting rightward. 
B)  supply curve shifting leftward. 
C)  demand curve shifting rightward. 
D)  demand curve shifting leftward.

Question 4

-The table above gives the demand and supply schedules for CDs.
a) According to the table, what is the equilibrium price?
b) Suppose the government imposes a price floor of $16 for a CD. What is the result?
c) Suppose the government imposes a price ceiling of $8 for a CD. What is the result?

Accepted Answer

a) The equilibrium price is $14 for a CD

Question 5

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $8 per hour, how many hours of students' labor are unemployed?

Accepted Answer

A)  12,000 hours 
B)  9,000 hours 
C)  6,000 hours 
D)  0 hours 
A)  12,000 hours 
B)  9,000 hours 
C)  6,000 hours 
D)  0 hours

Question 6

-The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, the deadweight loss will be

Accepted Answer

A)  $1,000,000. 
B)  $500,000. 
C)  $250,000. 
D)  $125,000. 
A)  $1,000,000. 
B)  $500,000. 
C)  $250,000. 
D)  $125,000.

Question 7

A rent ceiling results in a shortage. As a result, which of the following do you expect?

Accepted Answer

A)  a shortage of applicants for the apartments available 
B)  discrimination as tenants choose their landlords, possibly based on race, age, or gender 
C)  a black market for apartments whereby higher rents are obtained through various other charges 
D)  in the long-run, more and more people will want to become landlords 
A)  a shortage of applicants for the apartments available 
B)  discrimination as tenants choose their landlords, possibly based on race, age, or gender 
C)  a black market for apartments whereby higher rents are obtained through various other charges 
D)  in the long-run, more and more people will want to become landlords

Question 8

A rent ceiling results in a shortage. As a result, which of the following do you expect?

Accepted Answer

A)  The shortage will persist as long as the ceiling is in effect. 
B)  Discrimination as landlords choose their tenants, possibly based on race, age, or gender. 
C)  A black market for apartments whereby higher rents are obtained through various other charges. 
D)  All of the above would be expected. 
A)  The shortage will persist as long as the ceiling is in effect. 
B)  Discrimination as landlords choose their tenants, possibly based on race, age, or gender. 
C)  A black market for apartments whereby higher rents are obtained through various other charges. 
D)  All of the above would be expected.

Question 9

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, what is the rent?

Accepted Answer

A)  $800 
B)  $600 
C)  $400 
D)  None of the above answers is correct. 
A)  $800 
B)  $600 
C)  $400 
D)  None of the above answers is correct.

Question 10

The supply curve of low-skilled labor is upward sloping because those workers know that government will protect them with minimum wage legislation.

Accepted Answer

A) True 
 B)False

Question 11

If the government makes a good illegal and then imposes stiffer penalties on illegal drug buyers than on sellers, the price of the good ________ and the quantity ________.

Accepted Answer

A)  falls; increases 
B)  rises; decreases 
C)  falls; decreases 
D)  does not change; decreases 
A)  falls; increases 
B)  rises; decreases 
C)  falls; decreases 
D)  does not change; decreases

Question 12

A rent ceiling creates a shortage. As a result, which of the following occurs?

Accepted Answer

A)  only a loss of consumer surplus for tenants 
B)  only a loss of producer surplus for landlords 
C)  a loss of both consumer and producer surplus 
D)  a gain of both consumer and producer surplus 
A)  only a loss of consumer surplus for tenants 
B)  only a loss of producer surplus for landlords 
C)  a loss of both consumer and producer surplus 
D)  a gain of both consumer and producer surplus

Question 13

Economists generally agree that increases in the minimum wage increase employment.

Accepted Answer

A) True 
 B)False

Question 14

In order to have an effect, a price ceiling must be set ________.

Accepted Answer

A)  above the equilibrium price 
B)  equal to the equilibrium price 
C)  below the equilibrium price 
D)  by suppliers 
A)  above the equilibrium price 
B)  equal to the equilibrium price 
C)  below the equilibrium price 
D)  by suppliers

Question 15

The elasticity of demand for chocolate chip cookies is 0.6 and the elasticity of supply for these cookies is 1.9. If a tax is imposed on purchases of chocolate chip cookies, then the

Accepted Answer

A)  consumers would pay more of the tax. 
B)  producers would pay more of the tax. 
C)  tax would be equally shared by the consumers and the producers. 
D)  consumers would pay the entire tax because their demand is less elastic than the producers' supply. 
A)  consumers would pay more of the tax. 
B)  producers would pay more of the tax. 
C)  tax would be equally shared by the consumers and the producers. 
D)  consumers would pay the entire tax because their demand is less elastic than the producers' supply.

Question 16

-The above figure shows the apartment rental market in Bigtown. At what rent will there be neither a shortage nor a surplus of apartments?

Accepted Answer

A)  $1250 per month 
B)  $1000 per month 
C)  $750 per month 
D)  $500 per month 
A)  $1250 per month 
B)  $1000 per month 
C)  $750 per month 
D)  $500 per month

Question 17

One reason why soda companies are so fervently against this tax might be because they assume sellers will pay the entire tax. Sellers will pay the entire tax if

Accepted Answer

A)  demand is perfectly inelastic. 
B)  the price elasticity of demand is between zero and 1. 
C)  demand is unit elastic. 
D)  demand is perfectly elastic. 
A)  demand is perfectly inelastic. 
B)  the price elasticity of demand is between zero and 1. 
C)  demand is unit elastic. 
D)  demand is perfectly elastic.

Question 18

If enforcement is aimed at sellers of an illegal good, its equilibrium price will ________ and its equilibrium quantity will ________.

Accepted Answer

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

Question 19

A sales tax is divided so that buyers pay the full amount if

Accepted Answer

A)  demand has unitary elasticity. 
B)  supply has unitary elasticity. 
C)  demand is perfectly inelastic. 
D)  supply is perfectly inelastic. 
A)  demand has unitary elasticity. 
B)  supply has unitary elasticity. 
C)  demand is perfectly inelastic. 
D)  supply is perfectly inelastic.

Question 20

-The figure above shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced, how many gallons are sold per year?

Accepted Answer

A)  200 million 
B)  400 million 
C)  300 million 
D)  more than 300 million but less than 400 million 
A)  200 million 
B)  400 million 
C)  300 million 
D)  more than 300 million but less than 400 million

-In the above figure, a sales tax of $1 per unit imposed on sellers the price buyers pay and the price that suppliers keep for themselves.

Consider the market for heart transplants. The demand for a heart transplant is perfectly inelastic and the supply curve is upward sloping. If a $1,000 tax per transplant tax is imposed on buyers (the recipients), how will the tax be divided between the buyer and seller?

In general, a fine on buying a product leads to the

-The table above gives the demand and supply schedules for CDs. a) According to the table, what is the equilibrium price? b) Suppose the government imposes a price floor of $16 for a CD. What is the result? c) Suppose the government imposes a price ceiling of $8 for a CD. What is the result?

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $8 per hour, how many hours of students' labor are unemployed?

-The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, the deadweight loss will be

A rent ceiling results in a shortage. As a result, which of the following do you expect?

A rent ceiling results in a shortage. As a result, which of the following do you expect?

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, what is the rent?

The supply curve of low-skilled labor is upward sloping because those workers know that government will protect them with minimum wage legislation.

If the government makes a good illegal and then imposes stiffer penalties on illegal drug buyers than on sellers, the price of the good and the quantity .

A rent ceiling creates a shortage. As a result, which of the following occurs?

Economists generally agree that increases in the minimum wage increase employment.

In order to have an effect, a price ceiling must be set ________.

The elasticity of demand for chocolate chip cookies is 0.6 and the elasticity of supply for these cookies is 1.9. If a tax is imposed on purchases of chocolate chip cookies, then the

-The above figure shows the apartment rental market in Bigtown. At what rent will there be neither a shortage nor a surplus of apartments?

One reason why soda companies are so fervently against this tax might be because they assume sellers will pay the entire tax. Sellers will pay the entire tax if

If enforcement is aimed at sellers of an illegal good, its equilibrium price will and its equilibrium quantity will .

A sales tax is divided so that buyers pay the full amount if

-The figure above shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced, how many gallons are sold per year?

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, a sales tax of $1 per unit imposed on sellers ________ the price buyers pay and ________ the price that suppliers keep for themselves.

Consider the market for heart transplants. The demand for a heart transplant is perfectly inelastic and the supply curve is upward sloping. If a $1,000 tax per transplant tax is imposed on buyers (the recipients), how will the tax be divided between the buyer and seller?

In general, a fine on buying a product leads to the

-The table above gives the demand and supply schedules for CDs. a) According to the table, what is the equilibrium price? b) Suppose the government imposes a price floor of $16 for a CD. What is the result? c) Suppose the government imposes a price ceiling of $8 for a CD. What is the result?

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $8 per hour, how many hours of students' labor are unemployed?

-The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, the deadweight loss will be

A rent ceiling results in a shortage. As a result, which of the following do you expect?

A rent ceiling results in a shortage. As a result, which of the following do you expect?

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, what is the rent?

The supply curve of low-skilled labor is upward sloping because those workers know that government will protect them with minimum wage legislation.

If the government makes a good illegal and then imposes stiffer penalties on illegal drug buyers than on sellers, the price of the good ________ and the quantity ________.

A rent ceiling creates a shortage. As a result, which of the following occurs?

Economists generally agree that increases in the minimum wage increase employment.

In order to have an effect, a price ceiling must be set ________.

The elasticity of demand for chocolate chip cookies is 0.6 and the elasticity of supply for these cookies is 1.9. If a tax is imposed on purchases of chocolate chip cookies, then the

-The above figure shows the apartment rental market in Bigtown. At what rent will there be neither a shortage nor a surplus of apartments?

One reason why soda companies are so fervently against this tax might be because they assume sellers will pay the entire tax. Sellers will pay the entire tax if

If enforcement is aimed at sellers of an illegal good, its equilibrium price will ________ and its equilibrium quantity will ________.

A sales tax is divided so that buyers pay the full amount if

-The figure above shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced, how many gallons are sold per year?

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 above figure, a sales tax of $1 per unit imposed on sellers the price buyers pay and the price that suppliers keep for themselves.

If the government makes a good illegal and then imposes stiffer penalties on illegal drug buyers than on sellers, the price of the good and the quantity .

If enforcement is aimed at sellers of an illegal good, its equilibrium price will and its equilibrium quantity will .