Question 1

Agricultural price supports in the United States

Accepted Answer

A) harm U.S.consumers,U.S.taxpayers,and foreign farmers and creates a deadweight loss. 
B) benefit U.S.taxpayers,U.S.farmers,and U.S.consumers. 
C) create gains to U.S.farmers that are at least as large as losses to U.S.consumers. 
D) decrease the deadweight loss and improve market efficiency. 
E) None of the above answers is correct. 
A) harm U.S.consumers,U.S.taxpayers,and foreign farmers and creates a deadweight loss. 
B) benefit U.S.taxpayers,U.S.farmers,and U.S.consumers. 
C) create gains to U.S.farmers that are at least as large as losses to U.S.consumers. 
D) decrease the deadweight loss and improve market efficiency. 
E) None of the above answers is correct.

Question 2

-In the figure above,suppose that the government imposes a tax of $4 per pizza.Then,the tax revenue collected by the government equals

Accepted Answer

A) $240. 
B) $320. 
C) $160. 
D) $120. 
E) $4. 
A) $240. 
B) $320. 
C) $160. 
D) $120. 
E) $4.

Question 3

Rent controls

Accepted Answer

A) create a deadweight loss. 
B) increase maintenance by landlords. 
C) benefit people who live in rent controlled apartments. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct. 
A) create a deadweight loss. 
B) increase maintenance by landlords. 
C) benefit people who live in rent controlled apartments. 
D) Both answers A and C are correct. 
E) Both answers B and C are correct.

Question 4

-The graph shows the market for holiday condos in West Palm Beach.The equilibrium rent is ________ a week.

Accepted Answer

A) any amount less than $1,550 
B) any amount greater than $1,550 
C) $1,550 
D) $4,000 
E) None of the above answers is correct. 
A) any amount less than $1,550 
B) any amount greater than $1,550 
C) $1,550 
D) $4,000 
E) None of the above answers is correct.

Question 5

Which of the following is true regarding a price support set above the equilibrium price?
I.The price support increases the price consumers pay.
Ii.The price support creates a deadweight loss.
Iii.The price support decreases output.

Accepted Answer

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

Question 6

-The graph shows the market for ski chalets in Aspen.The Aspen Tourist Board asks the local government to impose a rent ceiling on ski chalets.If the rent ceiling is set at $1,900 a week,then there is

Accepted Answer

A) a shortage of 3,000 chalets a week. 
B) a surplus of 3,000 chalets a week. 
C) neither a shortage nor surplus of chalets. 
D) a shortage of 6,000 chalets a week. 
E) a surplus of 6,000 chalets a week. 
A) a shortage of 3,000 chalets a week. 
B) a surplus of 3,000 chalets a week. 
C) neither a shortage nor surplus of chalets. 
D) a shortage of 6,000 chalets a week. 
E) a surplus of 6,000 chalets a week.

Question 7

To be effective in raising people's wages,a minimum wage must be set

Accepted Answer

A) above the equilibrium wage rate. 
B) below the equilibrium wage rate. 
C) equal to the equilibrium wage rate. 
D) below $7. 
E) either above or below the equilibrium wage depending on whether the supply curve of labor shifts rightward or leftward in response to the minimum wage. 
A) above the equilibrium wage rate. 
B) below the equilibrium wage rate. 
C) equal to the equilibrium wage rate. 
D) below $7. 
E) either above or below the equilibrium wage depending on whether the supply curve of labor shifts rightward or leftward in response to the minimum wage.

Question 8

Sellers bear the entire incidence of a tax on a good.This outcome can occur if

Accepted Answer

A) supply is perfectly inelastic. 
B) the good is an inferior good. 
C) demand is perfectly inelastic. 
D) the demand curve is downward sloping and the supply curve is upward sloping. 
E) supply is perfectly elastic. 
A) supply is perfectly inelastic. 
B) the good is an inferior good. 
C) demand is perfectly inelastic. 
D) the demand curve is downward sloping and the supply curve is upward sloping. 
E) supply is perfectly elastic.

Question 9

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

Accepted Answer

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

Question 10

One of the consequences of a rent ceiling set below the equilibrium rent is

Accepted Answer

A) decreased search activity. 
B) increased search activity. 
C) the establishment of landlord unions. 
D) surpluses of apartments. 
E) the elimination of the deadweight loss that would otherwise exist in the housing market. 
A) decreased search activity. 
B) increased search activity. 
C) the establishment of landlord unions. 
D) surpluses of apartments. 
E) the elimination of the deadweight loss that would otherwise exist in the housing market.

Question 11

-The above figure shows the market for 2 bedroom town homes in San Diego.If a rent ceiling is set at $1,000 per month,what is true?

Accepted Answer

A) The quantity of town homes demanded decreases to 100,000. 
B) Black market rents might be as high as $1,300 per month. 
C) The quantity of town homes supplied increases to 250,000. 
D) More town homes are rented after the rent ceiling that before. 
E) The quantity demanded of town homes is less than the quantity supplied. 
A) The quantity of town homes demanded decreases to 100,000. 
B) Black market rents might be as high as $1,300 per month. 
C) The quantity of town homes supplied increases to 250,000. 
D) More town homes are rented after the rent ceiling that before. 
E) The quantity demanded of town homes is less than the quantity supplied.

Question 12

Why do sellers pay all of a tax when supply is perfectly inelastic?

Accepted Answer

A) because a perfectly inelastic supply means that the demand is elastic 
B) because the government requires firms to collect the tax 
C) because a perfectly inelastic supply means that the quantity supplied is quite sensitive to a change in price 
D) because a perfectly inelastic supply means that suppliers will produce the same amount regardless of the price 
E) because in this case the price of the good that suppliers receive and keep does not change 
A) because a perfectly inelastic supply means that the demand is elastic 
B) because the government requires firms to collect the tax 
C) because a perfectly inelastic supply means that the quantity supplied is quite sensitive to a change in price 
D) because a perfectly inelastic supply means that suppliers will produce the same amount regardless of the price 
E) because in this case the price of the good that suppliers receive and keep does not change

Question 13

A price floor

Accepted Answer

A) is the highest price at which it is legal to trade a particular good,service,or factor of production. 
B) is the lowest price at which it is legal to trade a particular good,service,or factor of production. 
C) is an illegal price to charge. 
D) is the equilibrium price when the stock market crashes. 
E) is the lowest price for which the quantity demanded equals the quantity supplied. 
A) is the highest price at which it is legal to trade a particular good,service,or factor of production. 
B) is the lowest price at which it is legal to trade a particular good,service,or factor of production. 
C) is an illegal price to charge. 
D) is the equilibrium price when the stock market crashes. 
E) is the lowest price for which the quantity demanded equals the quantity supplied.

Question 14

Suppose the equilibrium wage rate for apricot pickers is $9.00 per hour in California and at that wage rate the equilibrium quantity of apricot pickers is 14,000.If the minimum wage is set at $7.50 per hour,then the

Accepted Answer

A) quantity of apricot pickers employed increases. 
B) quantity of apricot pickers employed decreases. 
C) quantity of apricot pickers employed does not change. 
D) wage rate for apricot pickers increases. 
E) some apricot pickers are unemployed. 
A) quantity of apricot pickers employed increases. 
B) quantity of apricot pickers employed decreases. 
C) quantity of apricot pickers employed does not change. 
D) wage rate for apricot pickers increases. 
E) some apricot pickers are unemployed.

Question 15

The deadweight loss from a tax is called the

Accepted Answer

A) marginal benefit of the tax. 
B) marginal cost of the tax. 
C) excess burden of the tax. 
D) net gain from taxation. 
E) net loss from taxation. 
A) marginal benefit of the tax. 
B) marginal cost of the tax. 
C) excess burden of the tax. 
D) net gain from taxation. 
E) net loss from taxation.

Question 16

In the market for cotton,suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons.If the government then imposes a price support of $20 per ton,

Accepted Answer

A) the market price increases. 
B) the market price decreases. 
C) marginal cost decreases. 
D) consumer surplus increases. 
E) the deadweight loss is decreased. 
A) the market price increases. 
B) the market price decreases. 
C) marginal cost decreases. 
D) consumer surplus increases. 
E) the deadweight loss is decreased.

Question 17

For a given elasticity of demand,the less elastic the supply,the

Accepted Answer

A) larger the deadweight loss from a tax. 
B) larger the share of a tax paid by the sellers. 
C) greater the burden on the government from a tax. 
D) greater is the excess burden from a tax. 
E) larger the share of a tax paid by the buyers. 
A) larger the deadweight loss from a tax. 
B) larger the share of a tax paid by the sellers. 
C) greater the burden on the government from a tax. 
D) greater is the excess burden from a tax. 
E) larger the share of a tax paid by the buyers.

Question 18

The demand for insulin is quite inelastic.The demand for Pepsi is quite elastic.Suppose the elasticity of supply for insulin is the same as the elasticity of supply for Pepsi.If a $0.20 tax was imposed on each of these goods (holding everything else constant),which consumers would pay more of the tax?

Accepted Answer

A) the Pepsi consumers 
B) the insulin consumers 
C) There would be no difference in the amount of tax paid by the consumers. 
D) More information is needed to determine which consumers pay more of the tax. 
E) The premise of the question is wrong because the elasticity of demand and the incidence of a tax are not related. 
A) the Pepsi consumers 
B) the insulin consumers 
C) There would be no difference in the amount of tax paid by the consumers. 
D) More information is needed to determine which consumers pay more of the tax. 
E) The premise of the question is wrong because the elasticity of demand and the incidence of a tax are not related.

Question 19

-The above figure shows the demand curves in four different markets.If each of the markets has an identical upward sloping supply curve and the same tax is levied on suppliers,which market would produce the smallest amount of deadweight loss?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
E) C and D 
A) A 
B) B 
C) C 
D) D 
E) C and D

Question 20

Will an increase in the minimum wage create more unemployment if the supply and demand for labor are highly elastic or highly inelastic?

Accepted Answer

An increase in the minimum wage creates

Agricultural price supports in the United States

-In the figure above,suppose that the government imposes a tax of $4 per pizza.Then,the tax revenue collected by the government equals

Rent controls

-The graph shows the market for holiday condos in West Palm Beach.The equilibrium rent is ________ a week.

Which of the following is true regarding a price support set above the equilibrium price? I.The price support increases the price consumers pay. Ii.The price support creates a deadweight loss. Iii.The price support decreases output.

-The graph shows the market for ski chalets in Aspen.The Aspen Tourist Board asks the local government to impose a rent ceiling on ski chalets.If the rent ceiling is set at $1,900 a week,then there is

To be effective in raising people's wages,a minimum wage must be set

Sellers bear the entire incidence of a tax on a good.This outcome can occur if

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

One of the consequences of a rent ceiling set below the equilibrium rent is

-The above figure shows the market for 2 bedroom town homes in San Diego.If a rent ceiling is set at $1,000 per month,what is true?

Why do sellers pay all of a tax when supply is perfectly inelastic?

A price floor

Suppose the equilibrium wage rate for apricot pickers is $9.00 per hour in California and at that wage rate the equilibrium quantity of apricot pickers is 14,000.If the minimum wage is set at $7.50 per hour,then the

The deadweight loss from a tax is called the

In the market for cotton,suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons.If the government then imposes a price support of $20 per ton,

For a given elasticity of demand,the less elastic the supply,the

-The above figure shows the demand curves in four different markets.If each of the markets has an identical upward sloping supply curve and the same tax is levied on suppliers,which market would produce the smallest amount of deadweight loss?

Will an increase in the minimum wage create more unemployment if the supply and demand for labor are highly elastic or highly inelastic?

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

Agricultural price supports in the United States

-In the figure above,suppose that the government imposes a tax of $4 per pizza.Then,the tax revenue collected by the government equals

Rent controls

-The graph shows the market for holiday condos in West Palm Beach.The equilibrium rent is ________ a week.

Which of the following is true regarding a price support set above the equilibrium price? I.The price support increases the price consumers pay. Ii.The price support creates a deadweight loss. Iii.The price support decreases output.

-The graph shows the market for ski chalets in Aspen.The Aspen Tourist Board asks the local government to impose a rent ceiling on ski chalets.If the rent ceiling is set at $1,900 a week,then there is

To be effective in raising people's wages,a minimum wage must be set

Sellers bear the entire incidence of a tax on a good.This outcome can occur if

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

One of the consequences of a rent ceiling set below the equilibrium rent is

-The above figure shows the market for 2 bedroom town homes in San Diego.If a rent ceiling is set at $1,000 per month,what is true?

Why do sellers pay all of a tax when supply is perfectly inelastic?

A price floor

Suppose the equilibrium wage rate for apricot pickers is $9.00 per hour in California and at that wage rate the equilibrium quantity of apricot pickers is 14,000.If the minimum wage is set at $7.50 per hour,then the

The deadweight loss from a tax is called the

In the market for cotton,suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons.If the government then imposes a price support of $20 per ton,

For a given elasticity of demand,the less elastic the supply,the

-The above figure shows the demand curves in four different markets.If each of the markets has an identical upward sloping supply curve and the same tax is levied on suppliers,which market would produce the smallest amount of deadweight loss?

Will an increase in the minimum wage create more unemployment if the supply and demand for labor are highly elastic or highly inelastic?

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