Question 1

A price floor is

Accepted Answer

A) the highest possible legal price that can be charged for a good or service. 
B) usually equal to the equilibrium price established before the government imposed the price floor. 
C) the lowest legal price at which a good or service can be traded. 
D) a legal price of zero that can be charged for a good or service. 
E) almost always equal to the price ceiling. 
A) the highest possible legal price that can be charged for a good or service. 
B) usually equal to the equilibrium price established before the government imposed the price floor. 
C) the lowest legal price at which a good or service can be traded. 
D) a legal price of zero that can be charged for a good or service. 
E) almost always equal to the price ceiling.

Question 2

When a tax is imposed on a good or service,the

Accepted Answer

A) revenue gained by the government is the excess burden. 
B) deadweight loss that arises from a tax is the excess burden. 
C) share of the tax paid by the buyer is the excess burden. 
D) share of the tax paid by the seller is the excess burden. 
E) amount the government collects as tax revenue is the deadweight loss from the tax. 
A) revenue gained by the government is the excess burden. 
B) deadweight loss that arises from a tax is the excess burden. 
C) share of the tax paid by the buyer is the excess burden. 
D) share of the tax paid by the seller is the excess burden. 
E) amount the government collects as tax revenue is the deadweight loss from the tax.

Question 3

-The above figure shows the market for finish carpenters in Bozeman.There is a minimum wage set at $18.Compared to the initial equilibrium without the minimum wage,once the minimum wage is in place,and after taking account of job search,the total workers' surplus ________ and the total firms' surplus ________.

Accepted Answer

A) decreases;increases 
B) increases;increases 
C) increases;decreases 
D) does not change;increases 
E) decreases;decreases 
A) decreases;increases 
B) increases;increases 
C) increases;decreases 
D) does not change;increases 
E) decreases;decreases

Question 4

A tax

Accepted Answer

A) places a wedge between the price paid by the buyers and the price received by the sellers. 
B) reduces consumer surplus and producer surplus. 
C) decreases government spending. 
D) Both answers A and B are correct. 
E) None of the above answers is correct. 
A) places a wedge between the price paid by the buyers and the price received by the sellers. 
B) reduces consumer surplus and producer surplus. 
C) decreases government spending. 
D) Both answers A and B are correct. 
E) None of the above answers is correct.

Question 5

-The above figure shows the market for DVDs.The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs.After this price ceiling is in effect,deadweight loss equals ________.

Accepted Answer

A) $1,600,000 
B) $200,000 
C) $800,000 
D) $1,800,000 
E) $400,000 
A) $1,600,000 
B) $200,000 
C) $800,000 
D) $1,800,000 
E) $400,000

Question 6

When the minimum wage is raised,the ________ union labor ________.

Accepted Answer

A) demand for;increases 
B) demand for;decreases 
C) supply of;increases 
D) supply of;decreases 
E) demand for;does not change 
A) demand for;increases 
B) demand for;decreases 
C) supply of;increases 
D) supply of;decreases 
E) demand for;does not change

Question 7

When a minimum wage is introduced ________ the equilibrium wage rate,the quantity of labor demanded ________ and the quantity of labor supplied ________,thus creating unemployment.

Accepted Answer

A) above;increases;decreases 
B) below;increases;decreases 
C) above;decreases;increases 
D) above;decreases;decreases 
E) below;decreases;decreases 
A) above;increases;decreases 
B) below;increases;decreases 
C) above;decreases;increases 
D) above;decreases;decreases 
E) below;decreases;decreases

Question 8

Which of the following is an example of a price floor?

Accepted Answer

A) a law passed in a city to lower apartment rents by setting the maximum price that can be charged for rent 
B) an equilibrium price 
C) a minimum wage law 
D) a law setting the highest price that can legally be charged for a gallon of gasoline. 
E) None of the above answers give examples of a price floor. 
A) a law passed in a city to lower apartment rents by setting the maximum price that can be charged for rent 
B) an equilibrium price 
C) a minimum wage law 
D) a law setting the highest price that can legally be charged for a gallon of gasoline. 
E) None of the above answers give examples of a price floor.

Question 9

A black market

Accepted Answer

A) is legal only when it is associated with government price ceilings. 
B) is defined as the deadweight loss associated with taxes. 
C) benefits no one. 
D) is a potential outcome of a price ceiling. 
E) is always legal. 
A) is legal only when it is associated with government price ceilings. 
B) is defined as the deadweight loss associated with taxes. 
C) benefits no one. 
D) is a potential outcome of a price ceiling. 
E) is always legal.

Question 10

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic,then if a tax is imposed on this product,

Accepted Answer

A) the buyer pays all the tax. 
B) the seller pays all the tax. 
C) the buyer pays 3/4 of the tax. 
D) the seller pays 3/4 of the tax. 
E) the buyer pays 4/3 of the tax. 
A) the buyer pays all the tax. 
B) the seller pays all the tax. 
C) the buyer pays 3/4 of the tax. 
D) the seller pays 3/4 of the tax. 
E) the buyer pays 4/3 of the tax.

Question 11

A rent ceiling in a housing market

Accepted Answer

A) makes all rents lower than the ceiling illegal to charge. 
B) is set above the equilibrium rent in order to have an effect. 
C) increases the time people spend searching for housing. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct. 
A) makes all rents lower than the ceiling illegal to charge. 
B) is set above the equilibrium rent in order to have an effect. 
C) increases the time people spend searching for housing. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct.

Question 12

Which of the following is an impact of a rent ceiling set below the equilibrium rent?

Accepted Answer

A) Renters find apartments to rent more rapidly because the rent ceiling is lower. 
B) Landlords' incentives to provide apartments decrease. 
C) The supply of apartments increases as soon as the rent ceiling is imposed. 
D) A surplus of housing occurs. 
E) Search for apartments decreases because renters need no longer search for the apartment with the lowest rent. 
A) Renters find apartments to rent more rapidly because the rent ceiling is lower. 
B) Landlords' incentives to provide apartments decrease. 
C) The supply of apartments increases as soon as the rent ceiling is imposed. 
D) A surplus of housing occurs. 
E) Search for apartments decreases because renters need no longer search for the apartment with the lowest rent.

Question 13

In a market with a rent ceiling set below the equilibrium rent,the producer and consumer surplus

Accepted Answer

A) both increase. 
B) both decrease,but generally not to zero. 
C) do not change. 
D) are eliminated. 
E) are both totally converted into deadweight loss. 
A) both increase. 
B) both decrease,but generally not to zero. 
C) do not change. 
D) are eliminated. 
E) are both totally converted into deadweight loss.

Question 14

If the government eliminates a tax on a good with a perfectly elastic supply,who benefits most?

Accepted Answer

A) buyers 
B) sellers 
C) buyers if the demand is also perfectly elastic,otherwise sellers 
D) buyers if the demand is unit elastic,otherwise sellers 
E) Buyers and sellers benefit equally. 
A) buyers 
B) sellers 
C) buyers if the demand is also perfectly elastic,otherwise sellers 
D) buyers if the demand is unit elastic,otherwise sellers 
E) Buyers and sellers benefit equally.

Question 15

Labor unions support the minimum wage because

Accepted Answer

A) the increased unemployment is good for labor. 
B) the value associated with the deadweight loss goes to labor unions. 
C) labor unions prefer to operate in black markets. 
D) it puts upward pressure on all wages. 
E) union members are usually paid the minimum wage. 
A) the increased unemployment is good for labor. 
B) the value associated with the deadweight loss goes to labor unions. 
C) labor unions prefer to operate in black markets. 
D) it puts upward pressure on all wages. 
E) union members are usually paid the minimum wage.

Question 16

Suppose the equilibrium rent in Denver is $1,050.A rent ceiling of $755 per month leads to

Accepted Answer

A) a surplus of apartments in Denver. 
B) a shortage of apartments in Denver. 
C) no change in the Denver apartment market. 
D) fair prices in the Denver market. 
E) compared to the situation at the equilibrium rent,a decrease in the quantity of apartments demanded and an increase in the quantity of apartments supplied. 
A) a surplus of apartments in Denver. 
B) a shortage of apartments in Denver. 
C) no change in the Denver apartment market. 
D) fair prices in the Denver market. 
E) compared to the situation at the equilibrium rent,a decrease in the quantity of apartments demanded and an increase in the quantity of apartments supplied.

Question 17

When a price support is set below the equilibrium price,producers ________ the quantity supplied,and consumers ________ the quantity demanded.

Accepted Answer

A) increase;increase 
B) increase;decrease 
C) decrease;increase 
D) decrease;decrease 
E) do not change;do not change 
A) increase;increase 
B) increase;decrease 
C) decrease;increase 
D) decrease;decrease 
E) do not change;do not change

Question 18

A $2.00 increase in the size of a tax on a good will only cause the price for buyers to increase by $2.00 if

Accepted Answer

A) demand is perfectly inelastic. 
B) demand is perfectly elastic. 
C) demand is unit elastic. 
D) demand is inelastic,but not perfectly inelastic. 
E) demand is elastic,but not perfectly elastic. 
A) demand is perfectly inelastic. 
B) demand is perfectly elastic. 
C) demand is unit elastic. 
D) demand is inelastic,but not perfectly inelastic. 
E) demand is elastic,but not perfectly elastic.

Question 19

Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.If the federal government eliminated the 18.4 cents per gallon gasoline tax,the price paid by buyers would

Accepted Answer

A) decrease by less than 18.4 cents. 
B) decrease by 18.4 cents. 
C) decrease by more than 18.4 cents. 
D) stay the same. 
E) increase by 18.4 cents. 
A) decrease by less than 18.4 cents. 
B) decrease by 18.4 cents. 
C) decrease by more than 18.4 cents. 
D) stay the same. 
E) increase by 18.4 cents.

Question 20

-The demand and supply schedules for pizza are in the table above.A price ceiling of $2 per slice results in

Accepted Answer

A) a surplus of 20 slices of pizza. 
B) a shortage of 20 slices of pizza. 
C) a shortage of 40 slices of pizza. 
D) a shortage of 60 slices of pizza. 
E) neither a shortage nor a surplus. 
A) a surplus of 20 slices of pizza. 
B) a shortage of 20 slices of pizza. 
C) a shortage of 40 slices of pizza. 
D) a shortage of 60 slices of pizza. 
E) neither a shortage nor a surplus.

A price floor is

When a tax is imposed on a good or service,the

-The above figure shows the market for finish carpenters in Bozeman.There is a minimum wage set at $18.Compared to the initial equilibrium without the minimum wage,once the minimum wage is in place,and after taking account of job search,the total workers' surplus and the total firms' surplus .

A tax

-The above figure shows the market for DVDs.The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs.After this price ceiling is in effect,deadweight loss equals ________.

When the minimum wage is raised,the union labor .

When a minimum wage is introduced the equilibrium wage rate,the quantity of labor demanded and the quantity of labor supplied ,thus creating unemployment.

Which of the following is an example of a price floor?

A black market

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic,then if a tax is imposed on this product,

A rent ceiling in a housing market

Which of the following is an impact of a rent ceiling set below the equilibrium rent?

In a market with a rent ceiling set below the equilibrium rent,the producer and consumer surplus

If the government eliminates a tax on a good with a perfectly elastic supply,who benefits most?

Labor unions support the minimum wage because

Suppose the equilibrium rent in Denver is $1,050.A rent ceiling of $755 per month leads to

When a price support is set below the equilibrium price,producers the quantity supplied,and consumers the quantity demanded.

A $2.00 increase in the size of a tax on a good will only cause the price for buyers to increase by $2.00 if

Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.If the federal government eliminated the 18.4 cents per gallon gasoline tax,the price paid by buyers would

-The demand and supply schedules for pizza are in the table above.A price ceiling of $2 per slice results in

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 7: Government Actions in Markets

A price floor is

When a tax is imposed on a good or service,the

A tax

-The above figure shows the market for DVDs.The government decides that all citizens deserve to watch affordable DVDs so a price ceiling of $12 per DVD is placed on DVDs.After this price ceiling is in effect,deadweight loss equals ________.

When the minimum wage is raised,the ________ union labor ________.

When a minimum wage is introduced ________ the equilibrium wage rate,the quantity of labor demanded ________ and the quantity of labor supplied ________,thus creating unemployment.

Which of the following is an example of a price floor?

A black market

If the elasticity of demand for a product equals 3 and the supply is perfectly elastic,then if a tax is imposed on this product,

A rent ceiling in a housing market

Which of the following is an impact of a rent ceiling set below the equilibrium rent?

In a market with a rent ceiling set below the equilibrium rent,the producer and consumer surplus

If the government eliminates a tax on a good with a perfectly elastic supply,who benefits most?

Labor unions support the minimum wage because

Suppose the equilibrium rent in Denver is $1,050.A rent ceiling of $755 per month leads to

When a price support is set below the equilibrium price,producers ________ the quantity supplied,and consumers ________ the quantity demanded.

A $2.00 increase in the size of a tax on a good will only cause the price for buyers to increase by $2.00 if

Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.If the federal government eliminated the 18.4 cents per gallon gasoline tax,the price paid by buyers would

-The demand and supply schedules for pizza are in the table above.A price ceiling of $2 per slice results in

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

When the minimum wage is raised,the union labor .

When a minimum wage is introduced the equilibrium wage rate,the quantity of labor demanded and the quantity of labor supplied ,thus creating unemployment.

When a price support is set below the equilibrium price,producers the quantity supplied,and consumers the quantity demanded.