Question 1

Producers favor a ________ because ________.

Accepted Answer

A) price ceiling;the equilibrium price increases 
B) price support;the deadweight loss is minimized 
C) price ceiling;total revenue increases 
D) price support;total revenue increases 
E) price ceiling;consumer surplus increases 
A) price ceiling;the equilibrium price increases 
B) price support;the deadweight loss is minimized 
C) price ceiling;total revenue increases 
D) price support;total revenue increases 
E) price ceiling;consumer surplus increases

Question 2

The incidence of a tax refers to

Accepted Answer

A) the division of the burden of a tax between buyers and sellers. 
B) the deadweight loss that a tax generates. 
C) the inefficiency of a tax. 
D) the revenue collected by government because of a tax. 
E) the division of the burden of a tax between the public and the government. 
A) the division of the burden of a tax between buyers and sellers. 
B) the deadweight loss that a tax generates. 
C) the inefficiency of a tax. 
D) the revenue collected by government because of a tax. 
E) the division of the burden of a tax between the public and the government.

Question 3

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to the resources lost due to search?

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 4

-The above figure shows the domestic market for tomatoes.Suppose this market is isolated from global competition and there is a support price set at $16.In this figure,what area equals the producer surplus?

Accepted Answer

A) area A + area B + area C 
B) area A + area F 
C) area B + area C + area D + area F 
D) area C + area D + area E + area G 
E) area F 
A) area A + area B + area C 
B) area A + area F 
C) area B + area C + area D + area F 
D) area C + area D + area E + area G 
E) area F

Question 5

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

Accepted Answer

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

Question 6

When a tax is imposed on a good,at the after-tax equilibrium the marginal benefit of the last unit produced ________ the marginal cost.

Accepted Answer

A) equals 
B) is greater than 
C) is less than 
D) can be calculated but is not comparable to 
E) The premise of the question is incorrect because after a tax is imposed,it becomes impossible to determine the marginal benefit and the marginal cost. 
A) equals 
B) is greater than 
C) is less than 
D) can be calculated but is not comparable to 
E) The premise of the question is incorrect because after a tax is imposed,it becomes impossible to determine the marginal benefit and the marginal cost.

Question 7

Suppose the demand for peaches from South Carolina is perfectly elastic.If the supply curve is upward sloping and a tax is imposed on peaches from South Carolina,then

Accepted Answer

A) peach sellers pay all of the tax. 
B) peach buyers pay all of the tax. 
C) peach buyers and sellers evenly split the tax. 
D) the government does not collect any revenue from the tax. 
E) the tax does not change the equilibrium quantity of peaches. 
A) peach sellers pay all of the tax. 
B) peach buyers pay all of the tax. 
C) peach buyers and sellers evenly split the tax. 
D) the government does not collect any revenue from the tax. 
E) the tax does not change the equilibrium quantity of peaches.

Question 8

In a market with a price support set above the equilibrium price,

Accepted Answer

A) consumers gain. 
B) taxes on consumers decrease. 
C) marginal benefit exceeds marginal cost. 
D) the market is efficient. 
E) farmers gain. 
A) consumers gain. 
B) taxes on consumers decrease. 
C) marginal benefit exceeds marginal cost. 
D) the market is efficient. 
E) farmers gain.

Question 9

A price ceiling

Accepted Answer

A) is an illegal price. 
B) is the price that exists in a black market. 
C) is the maximum price that can legally be charged. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct. 
A) is an illegal price. 
B) is the price that exists in a black market. 
C) is the maximum price that can legally be charged. 
D) Both answers A and B are correct. 
E) Both answers B and C are correct.

Question 10

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 deadweight loss is

Accepted Answer

A) $4,000 an hour. 
B) $2,000 an hour. 
C) $1,000 an hour. 
D) $5,000 an hour. 
E) zero. 
A) $4,000 an hour. 
B) $2,000 an hour. 
C) $1,000 an hour. 
D) $5,000 an hour. 
E) zero.

Question 11

A minimum wage set above the equilibrium wage

Accepted Answer

A) decreases the deadweight loss in the market. 
B) decreases the workers' surplus because workers must spend resources looking for jobs. 
C) increases the firm's surplus. 
D) increases the market's efficiency. 
E) has no effect on the market. 
A) decreases the deadweight loss in the market. 
B) decreases the workers' surplus because workers must spend resources looking for jobs. 
C) increases the firm's surplus. 
D) increases the market's efficiency. 
E) has no effect on the market.

Question 12

The methods that governments use to support farmers vary,but they almost always involve some or all the following methods EXCEPT

Accepted Answer

A) pay farmers a subsidy. 
B) introduce a price floor. 
C) isolate the domestic market from global competition. 
D) tax farmers. 
E) use price supports. 
A) pay farmers a subsidy. 
B) introduce a price floor. 
C) isolate the domestic market from global competition. 
D) tax farmers. 
E) use price supports.

Question 13

In a housing market with no rent ceilings,the equilibrium rent is that for which the quantity of apartments demanded

Accepted Answer

A) equals the quantity supplied. 
B) is greater than the quantity supplied. 
C) is less than the quantity supplied. 
D) might be greater than,equal to,or less than the quantity supplied depending on whether the supply curve is upward sloping,horizontal,or vertical. 
E) None of the above answers is correct because without rent ceilings there is no equilibrium rent. 
A) equals the quantity supplied. 
B) is greater than the quantity supplied. 
C) is less than the quantity supplied. 
D) might be greater than,equal to,or less than the quantity supplied depending on whether the supply curve is upward sloping,horizontal,or vertical. 
E) None of the above answers is correct because without rent ceilings there is no equilibrium rent.

Question 14

A rent ceiling on housing creates a problem of allocating the available housing units because

Accepted Answer

A) the demand for housing decreases and the demand curve shifts leftward. 
B) the supply of housing increases and the supply curve shifts rightward. 
C) a shortage of apartments occurs. 
D) a surplus of apartments occurs. 
E) it eliminates search,which is one of the major ways housing units are allocated. 
A) the demand for housing decreases and the demand curve shifts leftward. 
B) the supply of housing increases and the supply curve shifts rightward. 
C) a shortage of apartments occurs. 
D) a surplus of apartments occurs. 
E) it eliminates search,which is one of the major ways housing units are allocated.

Question 15

-The labor demand and labor supply schedules are given in the table above.If a minimum wage of $11 per hour is imposed,

Accepted Answer

A) a surplus of 300 workers occurs. 
B) there is no shortage or surplus of workers. 
C) 900 workers are employed. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct. 
A) a surplus of 300 workers occurs. 
B) there is no shortage or surplus of workers. 
C) 900 workers are employed. 
D) Both answers B and C are correct. 
E) Both answers A and C are correct.

Question 16

-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,producer surplus equals ________.

Accepted Answer

A) $900,000 
B) $400,000 
C) $200,000 
D) $100,000 
E) $1,800,000 
A) $900,000 
B) $400,000 
C) $200,000 
D) $100,000 
E) $1,800,000

Question 17

The unemployment caused by minimum wage would be larger if

Accepted Answer

A) both labor demand and labor supply are more elastic. 
B) both labor demand and labor supply are more inelastic. 
C) minimum wage is set equal to the equilibrium wage rate. 
D) minimum wage is set below the equilibrium wage rate. 
E) both labor demand and labor supply are perfectly inelastic. 
A) both labor demand and labor supply are more elastic. 
B) both labor demand and labor supply are more inelastic. 
C) minimum wage is set equal to the equilibrium wage rate. 
D) minimum wage is set below the equilibrium wage rate. 
E) both labor demand and labor supply are perfectly inelastic.

Question 18

-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 and taking account of the resources lost in search,consumer surplus equals ________.

Accepted Answer

A) $900,000 
B) $400,000 
C) $200,000 
D) $180,000 
E) $100,000 
A) $900,000 
B) $400,000 
C) $200,000 
D) $180,000 
E) $100,000

Question 19

The figure above shows the market for sugar beets.The government intervenes in this market and sets a support price at $35 a ton.
-The figure above shows that the government provides a subsidy to the farmers of ________ million.

Accepted Answer

A) $350 
B) $1,050 
C) $50 
D) $100 
E) $700 
A) $350 
B) $1,050 
C) $50 
D) $100 
E) $700

Question 20

A price ceiling in the market for fuel oil that is below the equilibrium price will

Accepted Answer

A) lead to the quantity supplied of fuel oil exceeding the quantity demanded. 
B) lead to the quantity demanded of fuel oil exceeding the quantity supplied. 
C) decrease the demand for fuel oil. 
D) increase the supply of fuel oil. 
E) have no effect in the market for fuel oil. 
A) lead to the quantity supplied of fuel oil exceeding the quantity demanded. 
B) lead to the quantity demanded of fuel oil exceeding the quantity supplied. 
C) decrease the demand for fuel oil. 
D) increase the supply of fuel oil. 
E) have no effect in the market for fuel oil.

Producers favor a because .

The incidence of a tax refers to

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to the resources lost due to search?

-The above figure shows the domestic market for tomatoes.Suppose this market is isolated from global competition and there is a support price set at $16.In this figure,what area equals the producer surplus?

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

When a tax is imposed on a good,at the after-tax equilibrium the marginal benefit of the last unit produced ________ the marginal cost.

Suppose the demand for peaches from South Carolina is perfectly elastic.If the supply curve is upward sloping and a tax is imposed on peaches from South Carolina,then

In a market with a price support set above the equilibrium price,

A price ceiling

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 deadweight loss is

A minimum wage set above the equilibrium wage

The methods that governments use to support farmers vary,but they almost always involve some or all the following methods EXCEPT

In a housing market with no rent ceilings,the equilibrium rent is that for which the quantity of apartments demanded

A rent ceiling on housing creates a problem of allocating the available housing units because

-The labor demand and labor supply schedules are given in the table above.If a minimum wage of $11 per hour is imposed,

-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,producer surplus equals ________.

The unemployment caused by minimum wage would be larger if

-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 and taking account of the resources lost in search,consumer surplus equals ________.

The figure above shows the market for sugar beets.The government intervenes in this market and sets a support price at $35 a ton. -The figure above shows that the government provides a subsidy to the farmers of ________ million.

A price ceiling in the market for fuel oil that is below the equilibrium price will

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

Producers favor a ________ because ________.

The incidence of a tax refers to

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to the resources lost due to search?

-The above figure shows the domestic market for tomatoes.Suppose this market is isolated from global competition and there is a support price set at $16.In this figure,what area equals the producer surplus?

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

When a tax is imposed on a good,at the after-tax equilibrium the marginal benefit of the last unit produced ________ the marginal cost.

Suppose the demand for peaches from South Carolina is perfectly elastic.If the supply curve is upward sloping and a tax is imposed on peaches from South Carolina,then

In a market with a price support set above the equilibrium price,

A price ceiling

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 deadweight loss is

A minimum wage set above the equilibrium wage

The methods that governments use to support farmers vary,but they almost always involve some or all the following methods EXCEPT

In a housing market with no rent ceilings,the equilibrium rent is that for which the quantity of apartments demanded

A rent ceiling on housing creates a problem of allocating the available housing units because

-The labor demand and labor supply schedules are given in the table above.If a minimum wage of $11 per hour is imposed,

-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,producer surplus equals ________.

The unemployment caused by minimum wage would be larger if

-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 and taking account of the resources lost in search,consumer surplus equals ________.

The figure above shows the market for sugar beets.The government intervenes in this market and sets a support price at $35 a ton. -The figure above shows that the government provides a subsidy to the farmers of ________ million.

A price ceiling in the market for fuel oil that is below the equilibrium price will

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

Producers favor a because .