Exam 4: Supply and Demand: Applications and Extensions

Ava states, "If raising the minimum wage to $10 an hour is good, like Senator Largess suggests, then raising it to $20 an hour would be twice as good." Is Ava correct? Why or why not?

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Question 1

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The minimum wage is a price floor that causes unemployment when it is established above the market-clearing wage for unskilled workers. If the equilibrium wage in this market is $4 an hour and the minimum is $10, workers who aren't worth at least this much to the firm will not be hired. If it is raised to $20, even fewer workers will find jobs. We could suggest that raising the minimum wage is bad, but it would be hard to say that raising it to $20 would be twice as bad. Bads are hard to quantify, and all of this is beyond the value-free world of positive economics. Raises of this nature in the minimum wage will increase unemployment. It is up to the individual to decide if this is good or bad.

The "incidence of a tax" is the term used to indicate

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Question 2

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Figure 4-20 -Refer to Figure 4-20. The burden of the tax on buyers is

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Question 3

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Use the figure below illustrating the impact of an excise tax to answer the following question(s). Figure 4-6 -Refer to Figure 4-6. The amount of the actual tax burden paid by consumers and producers is

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Question 4

A law establishing a maximum legal price for a good or service is known as

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Question 5

If there was an increase in the excise tax imposed on guitar suppliers, what would be the effect on the equilibrium price and quantity of guitars?

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Question 6

Figure 4-2 -Given the demand and supply conditions shown in Figure 4-2, if the government imposes a price ceiling of a, indicate the quantity consumers would like to buy and the amount producers would be willing to supply.

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Question 7

When policymakers impose price controls, they

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Question 8

An increase in the demand for a product will cause the

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Question 9

If a household has $40,000 in taxable income and its tax liability is $20,000, the household's average tax rate is

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Question 10

Figure 4-22 -Refer to Figure 4-22. Sellers pay how much of the tax per unit?

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Question 11

Price controls will tend to cause misallocation of resources because

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Question 12

When government gives a subsidy to buyers of good X, the benefits of the subsidy flow to

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Question 13

Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because

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Question 14

Figure 4-25 -Refer to Figure 4-25. The price that buyers pay after the tax is imposed is

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Question 15

Use the figure below to answer the following question(s). Figure 4-9 -Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point b and a $.40 excise tax is illustrated. How much revenue would the $.40 gasoline tax raise?

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Question 16

Which of the following examples illustrates a proportional income tax?

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Question 17

Use the table below to choose the correct answer. For the income range illustrated, the tax shown here is

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Question 18

Use the figure below to answer the following question(s). Figure 4-13 -Refer to Figure 4-13. The supply curve S and the demand curve D₁ indicate initial conditions in the market for flu shots. A new government program is implemented that grants buyers a $25 subsidy when they buy a flu shot, shifting the demand curve from D₁ to D₂. Which of the following is true for this subsidy given the information provided in the figure?

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Question 19

If a government price control succeeds in affecting price, it can be expected to lead to a corresponding

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Question 20

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Ava states, "If raising the minimum wage to $10 an hour is good, like Senator Largess suggests, then raising it to $20 an hour would be twice as good." Is Ava correct? Why or why not?

The "incidence of a tax" is the term used to indicate

Figure 4-20 -Refer to Figure 4-20. The burden of the tax on buyers is

Use the figure below illustrating the impact of an excise tax to answer the following question(s). Figure 4-6 -Refer to Figure 4-6. The amount of the actual tax burden paid by consumers and producers is

A law establishing a maximum legal price for a good or service is known as

If there was an increase in the excise tax imposed on guitar suppliers, what would be the effect on the equilibrium price and quantity of guitars?

Figure 4-2 -Given the demand and supply conditions shown in Figure 4-2, if the government imposes a price ceiling of a, indicate the quantity consumers would like to buy and the amount producers would be willing to supply.

When policymakers impose price controls, they

An increase in the demand for a product will cause the

If a household has $40,000 in taxable income and its tax liability is $20,000, the household's average tax rate is

Figure 4-22 -Refer to Figure 4-22. Sellers pay how much of the tax per unit?

Price controls will tend to cause misallocation of resources because

When government gives a subsidy to buyers of good X, the benefits of the subsidy flow to

Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because

Figure 4-25 -Refer to Figure 4-25. The price that buyers pay after the tax is imposed is

Use the figure below to answer the following question(s). Figure 4-9 -Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point b and a $.40 excise tax is illustrated. How much revenue would the $.40 gasoline tax raise?

Which of the following examples illustrates a proportional income tax?

Use the table below to choose the correct answer. For the income range illustrated, the tax shown here is

If a government price control succeeds in affecting price, it can be expected to lead to a corresponding

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy, Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

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