Question 1

Suppose the government imposes a price support that is above the equilibrium price.As a result,

Accepted Answer

A) total revenue increases. 
B) consumer surplus increases. 
C) the marginal cost of the last unit produced decreases. 
D) the government has effectively imposed a price ceiling. 
E) the subsidy the government pays decreases. 
A) total revenue increases. 
B) consumer surplus increases. 
C) the marginal cost of the last unit produced decreases. 
D) the government has effectively imposed a price ceiling. 
E) the subsidy the government pays decreases.

Question 2

Neither the demand nor the supply of sugar is perfectly elastic or inelastic.If the government imposes a 5 percent tax on sugar,the

Accepted Answer

A) price of sugar buyers pay falls by 5 percent. 
B) price of sugar buyers pay increases by less then 5 percent. 
C) price of sugar buyers pay does not change. 
D) quantity of sugar increases. 
E) price of sugar buyers pay rises by 5 percent. 
A) price of sugar buyers pay falls by 5 percent. 
B) price of sugar buyers pay increases by less then 5 percent. 
C) price of sugar buyers pay does not change. 
D) quantity of sugar increases. 
E) price of sugar buyers pay rises by 5 percent.

Question 3

When a tax is imposed on a good or a service,the marginal benefit of the last unit bought ________ the marginal cost of the last unit.

Accepted Answer

A) is equal to 
B) is greater than 
C) is less than 
D) None of the above answers is correct because there is no consistent relationship between the marginal benefit of the last unit and its marginal cost. 
E) is not able to be compared to 
A) is equal to 
B) is greater than 
C) is less than 
D) None of the above answers is correct because there is no consistent relationship between the marginal benefit of the last unit and its marginal cost. 
E) is not able to be compared to

Question 4

An increase in the minimum wage to $15 per hour would lead to

Accepted Answer

A) an increase in search activity for many workers. 
B) a decrease in search activity for many workers. 
C) a decrease in unemployment. 
D) no change in unemployment. 
E) no change in employment. 
A) an increase in search activity for many workers. 
B) a decrease in search activity for many workers. 
C) a decrease in unemployment. 
D) no change in unemployment. 
E) no change in employment.

Question 5

A minimum wage set above the equilibrium wage rate creates

Accepted Answer

A) efficiency because it increases most workers' wages. 
B) efficiency because few workers lose their jobs. 
C) efficiency because workers can earn a living wage. 
D) inefficiency and a deadweight loss. 
E) inefficiency because it creates excessive employment. 
A) efficiency because it increases most workers' wages. 
B) efficiency because few workers lose their jobs. 
C) efficiency because workers can earn a living wage. 
D) inefficiency and a deadweight loss. 
E) inefficiency because it creates excessive employment.

Question 6

The figure above shows supply and demand in the market for labor.The government introduces a minimum wage of $7 per hour.
-In the figure above,the number of unemployed workers is

Accepted Answer

A) 4,000. 
B) 3,000. 
C) 2,000. 
D) 5,000. 
E) zero. 
A) 4,000. 
B) 3,000. 
C) 2,000. 
D) 5,000. 
E) zero.

Question 7

A price support set above the equilibrium price does which of the following?
I.decreases producer surplus
Ii.decreases consumer surplus
Iii.decreases the marginal cost of the last unit produced

Accepted Answer

A) i and ii 
B) i and iii 
C) ii and iii 
D) i,ii,and iii 
E) ii only 
A) i and ii 
B) i and iii 
C) ii and iii 
D) i,ii,and iii 
E) ii only

Question 8

A regulation that sets the lowest price at which it is legal to trade a good is a

Accepted Answer

A) search ceiling. 
B) price floor. 
C) production ceiling. 
D) price ceiling. 
E) subsidy. 
A) search ceiling. 
B) price floor. 
C) production ceiling. 
D) price ceiling. 
E) subsidy.

Question 9

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire and that ________ pay most of the tax.

Accepted Answer

A) $30;buyers 
B) $40;buyers 
C) $30;sellers 
D) $60;sellers 
E) $60;buyers 
A) $30;buyers 
B) $40;buyers 
C) $30;sellers 
D) $60;sellers 
E) $60;buyers

Question 10

Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock;$7.50 in St.Louis and $9.05 in Raleigh.An increase in the minimum wage to $7.50 per hour results in unemployment of landscapers in

Accepted Answer

A) Little Rock and St.Louis. 
B) only Raleigh. 
C) Little Rock,St.Louis,and Raleigh. 
D) only Little Rock. 
E) St.Louis and Raleigh. 
A) Little Rock and St.Louis. 
B) only Raleigh. 
C) Little Rock,St.Louis,and Raleigh. 
D) only Little Rock. 
E) St.Louis and Raleigh.

Question 11

With a price support program,who receives a subsidy?

Accepted Answer

A) only consumers 
B) only producers 
C) the government 
D) importers 
E) Both consumers and producers receive a subsidy. 
A) only consumers 
B) only producers 
C) the government 
D) importers 
E) Both consumers and producers receive a subsidy.

Question 12

Suppose the demand for barley is perfectly elastic.The supply curve of barley is upward sloping.If a tax is imposed on barley,

Accepted Answer

A) barley sellers pay the entire tax. 
B) barley buyers pay the entire tax. 
C) the government pays the entire tax. 
D) the tax is split evenly between barley buyers and sellers. 
E) who pays the tax depends on whether the government imposes the tax on barley sellers or on barley buyers. 
A) barley sellers pay the entire tax. 
B) barley buyers pay the entire tax. 
C) the government pays the entire tax. 
D) the tax is split evenly between barley buyers and sellers. 
E) who pays the tax depends on whether the government imposes the tax on barley sellers or on barley buyers.

Question 13

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S0 to S1.The amount of this tax is ________ per bucket of golf balls.

Accepted Answer

A) $4 
B) $2 
C) $2.50 
D) $1 
E) $3 
A) $4 
B) $2 
C) $2.50 
D) $1 
E) $3

Question 14

Why do rent ceilings lead to shortages and black markets?

Accepted Answer

Rent ceilings that are set below the mar

Question 15

A sales tax imposed on tires ________ consumer surplus and ________ producer surplus.

Accepted Answer

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

Question 16

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,

Accepted Answer

A) the quantity supplied of milk exceeds the quantity demanded. 
B) the quantity supplied of milk falls short of the quantity demanded. 
C) the supply increases. 
D) the market will not be affected. 
E) there will be a shortage of milk. 
A) the quantity supplied of milk exceeds the quantity demanded. 
B) the quantity supplied of milk falls short of the quantity demanded. 
C) the supply increases. 
D) the market will not be affected. 
E) there will be a shortage of milk.

Question 17

The excess burden of a tax refers to the fact that

Accepted Answer

A) the benefits from a tax exceed the tax revenue. 
B) the deadweight loss from a tax exceeds the remaining consumer surplus. 
C) marginal cost is greater than marginal benefit after the tax. 
D) a tax creates a deadweight loss. 
E) taxes are split between buyers and sellers. 
A) the benefits from a tax exceed the tax revenue. 
B) the deadweight loss from a tax exceeds the remaining consumer surplus. 
C) marginal cost is greater than marginal benefit after the tax. 
D) a tax creates a deadweight loss. 
E) taxes are split between buyers and sellers.

Question 18

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,after taking account of the resources lost in search,what area is equal to the consumer surplus?

Accepted Answer

A) area A 
B) area B 
C) area C 
D) area D 
E) area E 
A) area A 
B) area B 
C) area C 
D) area D 
E) area E

Question 19

-The above figure shows the market for winter jackets.In an effort to keep the nation warm,the president places a price ceiling of $100 in the market for winter jackets.As a result,there is a

Accepted Answer

A) shortage equal to 150,000 jackets. 
B) surplus equal to 150,000 jackets. 
C) surplus equal to 300,000 jackets. 
D) shortage equal to 250,000 jackets. 
E) shortage equal to 100,000 jackets. 
A) shortage equal to 150,000 jackets. 
B) surplus equal to 150,000 jackets. 
C) surplus equal to 300,000 jackets. 
D) shortage equal to 250,000 jackets. 
E) shortage equal to 100,000 jackets.

Question 20

Which of the following is true?
I.A price ceiling is inefficient but fair.
Ii.A price floor is inefficient and unfair.
Iii.A price support increases the quantity produced.

Accepted Answer

A) only i 
B) only ii 
C) only iii 
D) i and ii 
E) ii and iii 
A) only i 
B) only ii 
C) only iii 
D) i and ii 
E) ii and iii

Suppose the government imposes a price support that is above the equilibrium price.As a result,

Neither the demand nor the supply of sugar is perfectly elastic or inelastic.If the government imposes a 5 percent tax on sugar,the

When a tax is imposed on a good or a service,the marginal benefit of the last unit bought ________ the marginal cost of the last unit.

An increase in the minimum wage to $15 per hour would lead to

A minimum wage set above the equilibrium wage rate creates

The figure above shows supply and demand in the market for labor.The government introduces a minimum wage of $7 per hour. -In the figure above,the number of unemployed workers is

A price support set above the equilibrium price does which of the following? I.decreases producer surplus Ii.decreases consumer surplus Iii.decreases the marginal cost of the last unit produced

A regulation that sets the lowest price at which it is legal to trade a good is a

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of per tire and that pay most of the tax.

Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock;$7.50 in St.Louis and $9.05 in Raleigh.An increase in the minimum wage to $7.50 per hour results in unemployment of landscapers in

With a price support program,who receives a subsidy?

Suppose the demand for barley is perfectly elastic.The supply curve of barley is upward sloping.If a tax is imposed on barley,

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S0 to S1.The amount of this tax is ________ per bucket of golf balls.

Why do rent ceilings lead to shortages and black markets?

A sales tax imposed on tires consumer surplus and producer surplus.

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,

The excess burden of a tax refers to the fact that

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,after taking account of the resources lost in search,what area is equal to the consumer surplus?

-The above figure shows the market for winter jackets.In an effort to keep the nation warm,the president places a price ceiling of $100 in the market for winter jackets.As a result,there is a

Which of the following is true? I.A price ceiling is inefficient but fair. Ii.A price floor is inefficient and unfair. Iii.A price support increases the quantity produced.

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

Suppose the government imposes a price support that is above the equilibrium price.As a result,

Neither the demand nor the supply of sugar is perfectly elastic or inelastic.If the government imposes a 5 percent tax on sugar,the

When a tax is imposed on a good or a service,the marginal benefit of the last unit bought ________ the marginal cost of the last unit.

An increase in the minimum wage to $15 per hour would lead to

A minimum wage set above the equilibrium wage rate creates

The figure above shows supply and demand in the market for labor.The government introduces a minimum wage of $7 per hour. -In the figure above,the number of unemployed workers is

A price support set above the equilibrium price does which of the following? I.decreases producer surplus Ii.decreases consumer surplus Iii.decreases the marginal cost of the last unit produced

A regulation that sets the lowest price at which it is legal to trade a good is a

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of ________ per tire and that ________ pay most of the tax.

Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock;$7.50 in St.Louis and $9.05 in Raleigh.An increase in the minimum wage to $7.50 per hour results in unemployment of landscapers in

With a price support program,who receives a subsidy?

Suppose the demand for barley is perfectly elastic.The supply curve of barley is upward sloping.If a tax is imposed on barley,

-The above figure shows the market for buckets of golf balls at the driving range.A new leisure time tax is placed on suppliers in this market,shifting the supply curve from S0 to S1.The amount of this tax is ________ per bucket of golf balls.

Why do rent ceilings lead to shortages and black markets?

A sales tax imposed on tires ________ consumer surplus and ________ producer surplus.

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,

The excess burden of a tax refers to the fact that

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,after taking account of the resources lost in search,what area is equal to the consumer surplus?

-The above figure shows the market for winter jackets.In an effort to keep the nation warm,the president places a price ceiling of $100 in the market for winter jackets.As a result,there is a

Which of the following is true? I.A price ceiling is inefficient but fair. Ii.A price floor is inefficient and unfair. Iii.A price support increases the quantity produced.

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

-The figure above shows the market for tires.The figure shows that the government has imposed a tax of per tire and that pay most of the tax.

A sales tax imposed on tires consumer surplus and producer surplus.