Question 1

The reason cigarette taxes raise a lot of money and don't reduce adult smoking much is because demand for cigarettes by adults is

Accepted Answer

A) highly elastic. 
B) very inelastic. 
C) unit elastic. 
D) upward sloping. 
A) highly elastic. 
B) very inelastic. 
C) unit elastic. 
D) upward sloping.

Question 2

-In Figure 22.2, which area represents producer surplus to the tobacco company?

Accepted Answer

A) AP*C 
B) BP*C 
C) 0BCQ* 
D) 0P*CQ* 
A) AP*C 
B) BP*C 
C) 0BCQ* 
D) 0P*CQ*

Question 3

Which of the following reasons for making drug sales illegal do economists generally endorse?

Accepted Answer

A) The harm they do to people who knowingly take them. 
B) The harm they do to innocent victims. 
C) That addictive drugs do not allow for people to learn from the mistake of taking them. 
D) The harm that addictive drugs do to innocent victims and that they do not allow for people to learn from the mistake of taking them. 
A) The harm they do to people who knowingly take them. 
B) The harm they do to innocent victims. 
C) That addictive drugs do not allow for people to learn from the mistake of taking them. 
D) The harm that addictive drugs do to innocent victims and that they do not allow for people to learn from the mistake of taking them.

Question 4

Suppose the United States chose to legalize the production and use of marijuana but also decided to put a tax on the good (with the tax paid by producers). After doing so, suppose that the price that consumers paid rose and the amount that growers got to keep fell. This would

Accepted Answer

A) indicate that the demand-side effect was greater than the supply-side effect. 
B) be shockingly counter-intuitive because there would be no supply-and-demand model that could explain it. 
C) indicate that the demand-side effect was smaller than the net supply-side effect. 
D) suggest that the supply curve is vertical. 
A) indicate that the demand-side effect was greater than the supply-side effect. 
B) be shockingly counter-intuitive because there would be no supply-and-demand model that could explain it. 
C) indicate that the demand-side effect was smaller than the net supply-side effect. 
D) suggest that the supply curve is vertical.

Question 5

Until recently, the elasticity of demand for cigarettes by adults was such that an increase in cigarette taxes to one dollar would

Accepted Answer

A) have absolutely no effect of adult smoking. 
B) actually increase adult smoking. 
C) cut adult smoking by around 10%. 
D) cut adult smoking by half. 
A) have absolutely no effect of adult smoking. 
B) actually increase adult smoking. 
C) cut adult smoking by around 10%. 
D) cut adult smoking by half.

Question 6

If demand for drugs is inelastic, then changes in the supply curve through interdiction efforts will dramatically

Accepted Answer

A) lower equilibrium quantity. 
B) lower equilibrium price. 
C) raise equilibrium price. 
D) raise equilibrium quantity. 
A) lower equilibrium quantity. 
B) lower equilibrium price. 
C) raise equilibrium price. 
D) raise equilibrium quantity.

Question 7

An example of an externality associated with drugs is a drug

Accepted Answer

A) dealer killing his customer for lack of payment. 
B) dealer killing his supplier for lack of delivery. 
C) user ruining the drug user's life. 
D) user ruining a spouse's life. 
A) dealer killing his customer for lack of payment. 
B) dealer killing his supplier for lack of delivery. 
C) user ruining the drug user's life. 
D) user ruining a spouse's life.

Question 8

In 2015, the fraction of incarcerations or detentions associated with drug-use is approximately

Accepted Answer

A) 10%. 
B) 24%. 
C) 36%. 
D) 63%. 
A) 10%. 
B) 24%. 
C) 36%. 
D) 63%.

Question 9

In 2015 federal taxes on tobacco annually raised approximately

Accepted Answer

A) $1 billion. 
B) $15 billion. 
C) $29 billion. 
D) $42 billion. 
A) $1 billion. 
B) $15 billion. 
C) $29 billion. 
D) $42 billion.

Question 10

An example of an external cost of alcohol is the

Accepted Answer

A) emotional costs to the families of alcoholics. 
B) cost to alcoholics of going to rehabilitation clinics. 
C) cost of producing whiskey. 
D) cost to bars of hiring janitors to clean up after their customers. 
A) emotional costs to the families of alcoholics. 
B) cost to alcoholics of going to rehabilitation clinics. 
C) cost of producing whiskey. 
D) cost to bars of hiring janitors to clean up after their customers.

Question 11

An externality associated with advertising of products legal only for a specified age group is that it

Accepted Answer

A) might be deemed boring by members of that specified age group. 
B) increases the time members of that specified age group spend watching TV and reading magazines. 
C) might appeal to persons outside of that specified age group. 
D) all of the options are correct. 
A) might be deemed boring by members of that specified age group. 
B) increases the time members of that specified age group spend watching TV and reading magazines. 
C) might appeal to persons outside of that specified age group. 
D) all of the options are correct.

Question 12

For a previously legal good, criminalization will cause

Accepted Answer

A) demand to increase. 
B) demand to become more elastic. 
C) supply to become less elastic. 
D) price to fall, unambiguously. 
A) demand to increase. 
B) demand to become more elastic. 
C) supply to become less elastic. 
D) price to fall, unambiguously.

Question 13

-In Figure 22.2, which area represents consumer surplus to the smoker?

Accepted Answer

A) AP*C 
B) 0ACQ* 
C) 0BCQ* 
D) 0P*CQ* 
A) AP*C 
B) 0ACQ* 
C) 0BCQ* 
D) 0P*CQ*

Question 14

-In Figure 22.2, which area represents total variable cost to the tobacco company?

Accepted Answer

A) OACQ* 
B) BP*C 
C) 0BCQ* 
D) 0P*CQ* 
A) OACQ* 
B) BP*C 
C) 0BCQ* 
D) 0P*CQ*

Question 15

The impact of criminalization upon price is ambiguous because

Accepted Answer

A) reduces supply and reduces demand. 
B) increases supply and reduces demand. 
C) reduces supply and increases demand. 
D) increases supply and increases demand. 
A) reduces supply and reduces demand. 
B) increases supply and reduces demand. 
C) reduces supply and increases demand. 
D) increases supply and increases demand.

Question 16

Prohibition as a strategy for controlling externalities might actually

Accepted Answer

A) create new problems, such as turf wars among gangs or increased incarceration. 
B) solve age-old problems, such as the susceptibility of humans to addictive behavior. 
C) eliminate the need for elaborate enforcement efforts and detention facilities. 
D) all of the options are correct. 
A) create new problems, such as turf wars among gangs or increased incarceration. 
B) solve age-old problems, such as the susceptibility of humans to addictive behavior. 
C) eliminate the need for elaborate enforcement efforts and detention facilities. 
D) all of the options are correct.

Question 17

The reason cigarette taxes would impact kids more than adults is that adult demand is _____ elastic than demand by kids.

Accepted Answer

A) more 
B) less 
C) as 
D) neither more or less 
A) more 
B) less 
C) as 
D) neither more or less

Question 18

In 2015 federal taxes on alcohol annually raise approximately

Accepted Answer

A) $1 billion. 
B) $3 billion. 
C) $10 billion. 
D) $110 billion. 
A) $1 billion. 
B) $3 billion. 
C) $10 billion. 
D) $110 billion.

Question 19

If demand for drugs is inelastic, then changes in the supply curve through interdiction efforts will only slightly

Accepted Answer

A) lower equilibrium quantity. 
B) lower equilibrium price. 
C) raise equilibrium price. 
D) raise equilibrium quantity. 
A) lower equilibrium quantity. 
B) lower equilibrium price. 
C) raise equilibrium price. 
D) raise equilibrium quantity.

Question 20

-In Figure 22.2 and ignoring any possible externalities, the net benefit to society of this market is

Accepted Answer

A) 0ACQ* 
B) ABC 
C) BP*C 
D) 0P*CQ* 
A) 0ACQ* 
B) ABC 
C) BP*C 
D) 0P*CQ*

Exam 22: The Line Between Legal and Illegal Goods

The reason cigarette taxes raise a lot of money and don't reduce adult smoking much is because demand for cigarettes by adults is

-In Figure 22.2, which area represents producer surplus to the tobacco company?

Which of the following reasons for making drug sales illegal do economists generally endorse?

Suppose the United States chose to legalize the production and use of marijuana but also decided to put a tax on the good (with the tax paid by producers). After doing so, suppose that the price that consumers paid rose and the amount that growers got to keep fell. This would

Until recently, the elasticity of demand for cigarettes by adults was such that an increase in cigarette taxes to one dollar would

If demand for drugs is inelastic, then changes in the supply curve through interdiction efforts will dramatically

An example of an externality associated with drugs is a drug

In 2015, the fraction of incarcerations or detentions associated with drug-use is approximately

In 2015 federal taxes on tobacco annually raised approximately

An example of an external cost of alcohol is the

An externality associated with advertising of products legal only for a specified age group is that it

For a previously legal good, criminalization will cause

-In Figure 22.2, which area represents consumer surplus to the smoker?

-In Figure 22.2, which area represents total variable cost to the tobacco company?

The impact of criminalization upon price is ambiguous because

Prohibition as a strategy for controlling externalities might actually

The reason cigarette taxes would impact kids more than adults is that adult demand is _____ elastic than demand by kids.

In 2015 federal taxes on alcohol annually raise approximately

If demand for drugs is inelastic, then changes in the supply curve through interdiction efforts will only slightly

-In Figure 22.2 and ignoring any possible externalities, the net benefit to society of this market is

Economics: the Study of Opportunity Cost

Supply and Demand

The Concept of Elasticity and Consumer and Producer Surplus

Firm Production, Cost, and Revenue

Perfect Competition, Monopoly, and Economic Versus Normal Profit

Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, Depression

Interest Rates and Present Value

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Policy

Federal Spending

Federal Deficits, Surpluses, and the National Debt

The Housing Bubble

The Recession of 2007-2009: Causes and Policy Responses

Is Economic Stagnation the New Normal

Is the Fiscalsky Falling: An Examination of Unfunded Social Security, Medicare, and State and Local Pension Liabilities

International Trade: Does It Jeopardize American Jobs

International Finance and Exchange Rates

The European Debt Crisis

Economic Growth and Development

Nafta, Gatt, Wto: Are Trade Agreements Good for Us

Natural Resources, the Environment, and Climate Change

Health Care

Government-Provided Health Insurance: Medicaid, Medicare, and the Child Health Insurance Program

The Economics of Prescription Drugs

So You Want to Be a Lawyer: Economics and the Law

The Economics of Crime

Antitrust

The Economics of Race and Discrimination

Income and Wealth Inequality

Farm Policy

Minimum Wage

Ticket Brokers and Ticket Scalping

Rent Control

Economics of K-12 Education

Economics of College and University Education

Poverty and Welfare

Head Start

Social Security

Personal Income Taxes

Energy Prices

If We Build It, Will They Come and Other Sports Questions

The Stock Market Crashes

Unions

Walmart: Always Low Prices and Low Wages- Always

The Economic Impact of Casino Gambling

The Economics of Terrorism

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