Question 1

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

Accepted Answer

A) True 
 B)False

Question 2

There is a shortage of every good that is scarce.

Accepted Answer

A) True 
 B)False

Question 3

In a competitive market the ________ curve shows the marginal benefit received by consumers and the ________ curve shows the marginal cost to producers.

Accepted Answer

A) .demand; supply 
B) supply; demand 
C) demand; market demand 
D) supply; market supply 
A) .demand; supply 
B) supply; demand 
C) demand; market demand 
D) supply; market supply

Question 4

All renters benefit from rent control and all landlords lose.

Accepted Answer

A) True 
 B)False

Question 5

A tax is imposed on employers and workers that are used to fund Social Security and Medicare.This tax is sometimes referred to as

Accepted Answer

A) the Income Security Tax. 
B) the federal income tax. 
C) the ACIF. 
D) the payroll tax. 
A) the Income Security Tax. 
B) the federal income tax. 
C) the ACIF. 
D) the payroll tax.

Question 6

Economic efficiency is achieved when there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and

Accepted Answer

A) economic surplus plus consumer surplus equals producer surplus. 
B) consumer surplus plus producer surplus is maximized. 
C) economic surplus is minimized. 
D) the difference between consumer surplus and producer surplus is maximized. 
A) economic surplus plus consumer surplus equals producer surplus. 
B) consumer surplus plus producer surplus is maximized. 
C) economic surplus is minimized. 
D) the difference between consumer surplus and producer surplus is maximized.

Question 7

Suppose the demand curve for a product is downward sloping and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

Accepted Answer

A) sellers bear the entire burden of the tax. 
B) the tax burden will be shared among the government,buyers and sellers. 
C) buyers bear the entire burden of the tax. 
D) the tax burden will be shared by buyers and sellers. 
A) sellers bear the entire burden of the tax. 
B) the tax burden will be shared among the government,buyers and sellers. 
C) buyers bear the entire burden of the tax. 
D) the tax burden will be shared by buyers and sellers.

Question 8

Economists have shown that the burden of a tax is

Accepted Answer

A) greater on the buyer when the tax is collected from the buyer. 
B) greater on the seller when the tax is collected from the seller. 
C) greater on the buyer when the tax is collected from the seller and greater on the seller when the tax is collected from the buyer. 
D) the same whether the tax is collected from the buyer or the seller. 
A) greater on the buyer when the tax is collected from the buyer. 
B) greater on the seller when the tax is collected from the seller. 
C) greater on the buyer when the tax is collected from the seller and greater on the seller when the tax is collected from the buyer. 
D) the same whether the tax is collected from the buyer or the seller.

Question 9

Table 4-5
  
-Refer to Table 4-5.The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion.The equilibrium price and quantity for Aunt Maud's lotion are $20 and 30 thousand units.What is the value of consumer surplus?

Accepted Answer

A) $300 thousand 
B) $450 thousand 
C) $900 thousand 
D) $1,500 thousand 
A) $300 thousand 
B) $450 thousand 
C) $900 thousand 
D) $1,500 thousand

Question 10

When the marginal benefit equals the marginal cost of the last unit sold in a competitive market

Accepted Answer

A) the net benefit of consumers is equal to the net benefit of producers. 
B) an economically efficient level of output is produced. 
C) producer surplus is equal to consumer surplus. 
D) total benefit is equal to total cost. 
A) the net benefit of consumers is equal to the net benefit of producers. 
B) an economically efficient level of output is produced. 
C) producer surplus is equal to consumer surplus. 
D) total benefit is equal to total cost.

Question 11

If the quantity of nail polish supplied is represented by the equation QS = -3 + 2P then the corresponding price of nail polish is represented by the equation

Accepted Answer

A) P = 0.5QS + 1.5. 
B) P = 2QS + 6. 
C) P = 2QS - 6. 
D) P = 1.5 - 0.5QS. 
A) P = 0.5QS + 1.5. 
B) P = 2QS + 6. 
C) P = 2QS - 6. 
D) P = 1.5 - 0.5QS.

Question 12

"Taxes are what we pay for a civilized society." This statement was made by

Accepted Answer

A) Adam Smith. 
B) Oliver Wendell Holmes. 
C) Herbert Hoover. 
D) Franklin Roosevelt. 
A) Adam Smith. 
B) Oliver Wendell Holmes. 
C) Herbert Hoover. 
D) Franklin Roosevelt.

Question 13

Figure 4-6   Figure 4-6 shows the demand and supply curves for the coffee market.The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at $7.00.
-Refer to Figure 4-6.What is the value of the portion of consumer surplus that has been transferred to producer surplus as a result of the price floor?

Accepted Answer

A) $1,200 
B) $1,500 
C) $1,800 
D) $3,000 
A) $1,200 
B) $1,500 
C) $1,800 
D) $3,000

Question 14

Table 4-2
  
-Refer to Table 4-2.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the market price of Marko's polo shirts is $18

Accepted Answer

A) Marko's will produce four shirts. 
B) producer surplus from the first shirt is $18. 
C) producer surplus will equal $22. 
D) there will be a surplus; as a result,the price will fall to $7. 
A) Marko's will produce four shirts. 
B) producer surplus from the first shirt is $18. 
C) producer surplus will equal $22. 
D) there will be a surplus; as a result,the price will fall to $7.

Question 15

Figure 4-1   Figure 4-1 shows Kendra's demand for ice-cream cones curve.
-Refer to Figure 4-1.If the market price is $2.50,what is the maximum number of ice cream cones that Kendra will buy?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 16

Which of the following is a consequence of minimum wage laws?

Accepted Answer

A) Low skilled workers benefit because minimum wage increases the number of jobs providing low skilled workers with training. 
B) Employers will be reluctant to offer low-skill workers jobs with training. 
C) Producers have an incentive to offer workers non-wage benefits such as health care benefits and convenient working hours rather than a higher wage. 
D) All workers benefit when the minimum wage is increased. 
A) Low skilled workers benefit because minimum wage increases the number of jobs providing low skilled workers with training. 
B) Employers will be reluctant to offer low-skill workers jobs with training. 
C) Producers have an incentive to offer workers non-wage benefits such as health care benefits and convenient working hours rather than a higher wage. 
D) All workers benefit when the minimum wage is increased.

Question 17

For most goods and services,the burden of a tax is on the sellers.

Accepted Answer

A) True 
 B)False

Question 18

Which term refers to a legally established maximum price that firms may charge?

Accepted Answer

A) a price ceiling 
B) a subsidy 
C) a price floor 
D) a tariff 
A) a price ceiling 
B) a subsidy 
C) a price floor 
D) a tariff

Question 19

Government intervention in agricultural markets in the U.S.began

Accepted Answer

A) during World War II to ensure that enough food was available for domestic consumption. 
B) after World War I in order to assist farmers to adjust from a war-time economy to a peace-time economy. 
C) during the Great Depression. 
D) during the Korean War. 
A) during World War II to ensure that enough food was available for domestic consumption. 
B) after World War I in order to assist farmers to adjust from a war-time economy to a peace-time economy. 
C) during the Great Depression. 
D) during the Korean War.

Question 20

Juanita goes to the Hardware Emporium to buy a new circular saw.She is willing to pay $120 for a new saw,but buys one on sale for $85.Juanita's consumer surplus from the purchase is

Accepted Answer

A) $35. 
B) $85. 
C) $120. 
D) $205. 
A) $35. 
B) $85. 
C) $120. 
D) $205.

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

There is a shortage of every good that is scarce.

In a competitive market the curve shows the marginal benefit received by consumers and the curve shows the marginal cost to producers.

All renters benefit from rent control and all landlords lose.

A tax is imposed on employers and workers that are used to fund Social Security and Medicare.This tax is sometimes referred to as

Economic efficiency is achieved when there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and

Suppose the demand curve for a product is downward sloping and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

Economists have shown that the burden of a tax is

Table 4-5 -Refer to Table 4-5.The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion.The equilibrium price and quantity for Aunt Maud's lotion are $20 and 30 thousand units.What is the value of consumer surplus?

When the marginal benefit equals the marginal cost of the last unit sold in a competitive market

If the quantity of nail polish supplied is represented by the equation QS = -3 + 2P then the corresponding price of nail polish is represented by the equation

"Taxes are what we pay for a civilized society." This statement was made by

Table 4-2 -Refer to Table 4-2.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the market price of Marko's polo shirts is $18

Figure 4-1 Figure 4-1 shows Kendra's demand for ice-cream cones curve. -Refer to Figure 4-1.If the market price is $2.50,what is the maximum number of ice cream cones that Kendra will buy?

Which of the following is a consequence of minimum wage laws?

For most goods and services,the burden of a tax is on the sellers.

Which term refers to a legally established maximum price that firms may charge?

Government intervention in agricultural markets in the U.S.began

Juanita goes to the Hardware Emporium to buy a new circular saw.She is willing to pay $120 for a new saw,but buys one on sale for $85.Juanita's consumer surplus from the purchase is

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

Exam 4: Economic Efficiency, government Price Setting, and Taxes

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

There is a shortage of every good that is scarce.

In a competitive market the ________ curve shows the marginal benefit received by consumers and the ________ curve shows the marginal cost to producers.

All renters benefit from rent control and all landlords lose.

A tax is imposed on employers and workers that are used to fund Social Security and Medicare.This tax is sometimes referred to as

Economic efficiency is achieved when there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and

Suppose the demand curve for a product is downward sloping and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

Economists have shown that the burden of a tax is

Table 4-5 -Refer to Table 4-5.The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion.The equilibrium price and quantity for Aunt Maud's lotion are $20 and 30 thousand units.What is the value of consumer surplus?

When the marginal benefit equals the marginal cost of the last unit sold in a competitive market

If the quantity of nail polish supplied is represented by the equation QS = -3 + 2P then the corresponding price of nail polish is represented by the equation

"Taxes are what we pay for a civilized society." This statement was made by

Table 4-2 -Refer to Table 4-2.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the market price of Marko's polo shirts is $18

Figure 4-1 Figure 4-1 shows Kendra's demand for ice-cream cones curve. -Refer to Figure 4-1.If the market price is $2.50,what is the maximum number of ice cream cones that Kendra will buy?

Which of the following is a consequence of minimum wage laws?

For most goods and services,the burden of a tax is on the sellers.

Which term refers to a legally established maximum price that firms may charge?

Government intervention in agricultural markets in the U.S.began

Juanita goes to the Hardware Emporium to buy a new circular saw.She is willing to pay $120 for a new saw,but buys one on sale for $85.Juanita's consumer surplus from the purchase is

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Filters

In a competitive market the curve shows the marginal benefit received by consumers and the curve shows the marginal cost to producers.