Question 1

Because illegal drug markets operate outside the legal system,

Accepted Answer

A)  the quality of these drugs has increased. 
B)  the sellers of illegal drugs earn less money. 
C)  there is less violence in these markets than if they were legal. 
D)  none of the above. 
A)  the quality of these drugs has increased. 
B)  the sellers of illegal drugs earn less money. 
C)  there is less violence in these markets than if they were legal. 
D)  none of the above.

Question 2

Figure 4-25  
Refer to Figure 4-25. The price that sellers receive after the tax is imposed is

Accepted Answer

A)  P 1. 
B)  P 2. 
C)  P 3. 
D)  impossible to determine from the figure. 
A)  P 1. 
B)  P 2. 
C)  P 3. 
D)  impossible to determine from the figure.

Question 3

Use the table below to choose the correct answer.
 
The marginal tax rate on income in the $20,000 to $25,000 range is

Accepted Answer

A)  10 percent. 
B)  12 percent. 
C)  20 percent. 
D)  30 percent. 
A)  10 percent. 
B)  12 percent. 
C)  20 percent. 
D)  30 percent.

Question 4

When the top marginal tax rates were lowered substantially during the 1980s, the inflation-adjusted income tax revenue collected from the top 1 percent of all income earners

Accepted Answer

A)  declined sharply. 
B)  remained approximately constant. 
C)  increased substantially. 
D)  did none of the above. 
A)  declined sharply. 
B)  remained approximately constant. 
C)  increased substantially. 
D)  did none of the above.

Question 5

Figure 4-24  
Refer to Figure 4-24. The price that sellers receive after the tax is imposed is

Accepted Answer

A)  P 1. 
B)  P 2. 
C)  P 3. 
D)  impossible to determine from the figure. 
A)  P 1. 
B)  P 2. 
C)  P 3. 
D)  impossible to determine from the figure.

Question 6

Suppose that the federal government levies a 50 cent excise tax on gasoline and that the demand for gasoline is highly inelastic while the supply is highly elastic. Under these circumstances, the burden of the tax

Accepted Answer

A)  will fall primarily on producers. 
B)  will fall primarily on consumers. 
C)  will be split equally between consumers and producers. 
D)  cannot be determined because the burden of a tax is not influenced by the elasticities of supply and demand. 
A)  will fall primarily on producers. 
B)  will fall primarily on consumers. 
C)  will be split equally between consumers and producers. 
D)  cannot be determined because the burden of a tax is not influenced by the elasticities of supply and demand.

Question 7

A subsidy is defined as

Accepted Answer

A)  a payment that must be made to the government whenever a good or service is sold. 
B)  the number of trades that are eliminated from a market when a tax is imposed. 
C)  the difference between total revenue and total cost for a business firm. 
D)  a payment to either the buyer or seller of a good or service, usually on a per-unit basis, when a good or service is purchased. 
A)  a payment that must be made to the government whenever a good or service is sold. 
B)  the number of trades that are eliminated from a market when a tax is imposed. 
C)  the difference between total revenue and total cost for a business firm. 
D)  a payment to either the buyer or seller of a good or service, usually on a per-unit basis, when a good or service is purchased.

Question 8

Other things constant, how will a decrease in the wages of teenagers affect the market for fast food hamburgers?

Accepted Answer

A)  The supply of fast food hamburgers will increase, leading to an increase in the price of hamburgers. 
B)  The supply of fast food hamburgers will increase, leading to a reduction in the price of hamburgers. 
C)  The supply of fast food hamburgers will decrease, leading to an increase in the price of hamburgers. 
D)  The supply of fast food hamburgers will decrease, leading to a reduction in the price of hamburgers. 
A)  The supply of fast food hamburgers will increase, leading to an increase in the price of hamburgers. 
B)  The supply of fast food hamburgers will increase, leading to a reduction in the price of hamburgers. 
C)  The supply of fast food hamburgers will decrease, leading to an increase in the price of hamburgers. 
D)  The supply of fast food hamburgers will decrease, leading to a reduction in the price of hamburgers.

Question 9

Use the figure below to answer the following question(s).
Figure 4-4
 
Given the demand and supply conditions shown in Figure 4-4, if the government imposes a price ceiling of a , which of the following would be true?

Accepted Answer

A)  Consumers would want to buy r units. 
B)  Consumers would want to buy s units. 
C)  Producers would wish to sell s units. 
D)  Producers would wish to sell r units. 
A)  Consumers would want to buy r units. 
B)  Consumers would want to buy s units. 
C)  Producers would wish to sell s units. 
D)  Producers would wish to sell r units.

Question 10

Data from the effects of the substantial tax rate reductions in the 1980s

Accepted Answer

A)  cast serious doubt on the Laffer curve as a guide for tax policy. 
B)  are consistent with the principles illustrated in the Laffer curve. 
C)  generally reject the idea that lower tax rates can lead to higher tax revenue. 
D)  support an "inverted Laffer curve" in which reducing tax rates for those with high incomes leads to lower tax revenue. 
A)  cast serious doubt on the Laffer curve as a guide for tax policy. 
B)  are consistent with the principles illustrated in the Laffer curve. 
C)  generally reject the idea that lower tax rates can lead to higher tax revenue. 
D)  support an "inverted Laffer curve" in which reducing tax rates for those with high incomes leads to lower tax revenue.

Question 11

Figure 4-24  
Refer to Figure 4-24. The amount of deadweight loss associated with the tax is equal to

Accepted Answer

A)  P 3 A C P 1. 
B)  A B C. 
C)  P 2 A D P 3. 
D)  P 1 D C P 2. 
A)  P 3 A C P 1. 
B)  A B C. 
C)  P 2 A D P 3. 
D)  P 1 D C P 2.

Question 12

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 . If a $.40 excise tax was imposed,

Accepted Answer

A)  the supply of gasoline would shift to S 2. 
B)  the price of gasoline to consumers would increase from $1.20 per gallon to $1.40 per gallon. 
C)  the net price received by producers of gasoline would decline from $1.20 per gallon to $1.00 per gallon. 
D)  all of the above would occur. 
A)  the supply of gasoline would shift to S 2. 
B)  the price of gasoline to consumers would increase from $1.20 per gallon to $1.40 per gallon. 
C)  the net price received by producers of gasoline would decline from $1.20 per gallon to $1.00 per gallon. 
D)  all of the above would occur.

Question 13

If the federal government began granting a subsidy of 10 cents per apple to apple growers and as a result the price of apples to consumers falls by 8 cents,

Accepted Answer

A)  the actual benefit of this subsidy goes mostly to consumers. 
B)  the actual benefit of this subsidy goes mostly to producers. 
C)  the actual benefit of this subsidy would be shared equally by producers and consumers. 
D)  nobody would benefit from the subsidy. 
A)  the actual benefit of this subsidy goes mostly to consumers. 
B)  the actual benefit of this subsidy goes mostly to producers. 
C)  the actual benefit of this subsidy would be shared equally by producers and consumers. 
D)  nobody would benefit from the subsidy.

Question 14

If drugs such as marijuana and cocaine were legalized, it would be likely that

Accepted Answer

A)  their prices would decrease. 
B)  there would be a reduction in tainted or poor quality drugs. 
C)  there would be less violence occurring in drug transactions. 
D)  all of the above. 
A)  their prices would decrease. 
B)  there would be a reduction in tainted or poor quality drugs. 
C)  there would be less violence occurring in drug transactions. 
D)  all of the above.

Question 15

An increase in the number of students attending college would tend to

Accepted Answer

A)  reduce the demand for college professors. 
B)  decrease the number of college professors employed. 
C)  increase the demand for college professors. 
D)  reduce the wage for college professors. 
A)  reduce the demand for college professors. 
B)  decrease the number of college professors employed. 
C)  increase the demand for college professors. 
D)  reduce the wage for college professors.

Question 16

If the demand for a good is very price elastic, the imposition of a tax on that good

Accepted Answer

A)  places the largest portion of the burden on the sellers of that product 
B)  places the burden of the tax equally on buyers and sellers 
C)  places the largest portion of the tax on consumers 
D)  will make demand more elastic than it was before the tax 
E)  will make demand more inelastic than it was before the tax 
A)  places the largest portion of the burden on the sellers of that product 
B)  places the burden of the tax equally on buyers and sellers 
C)  places the largest portion of the tax on consumers 
D)  will make demand more elastic than it was before the tax 
E)  will make demand more inelastic than it was before the tax

Question 17

Which of the following is true?

Accepted Answer

A)  An increase in the minimum wage will reduce the training opportunities available to inexperienced workers. 
B)  The minimum wage is an example of a price floor. 
C)  Most minimum wage workers are employed part-time, and they are generally either a spouse or a teenage member of a household with an income well above the poverty level. 
D)  All of the above are true. 
A)  An increase in the minimum wage will reduce the training opportunities available to inexperienced workers. 
B)  The minimum wage is an example of a price floor. 
C)  Most minimum wage workers are employed part-time, and they are generally either a spouse or a teenage member of a household with an income well above the poverty level. 
D)  All of the above are true.

Question 18

Figure 4-23

Refer to Figure 4-23. In which market will the tax burden be most equally divided between the buyer and the seller?

Accepted Answer

A)  market (a) 
B)  market (b) 
C)  market (c) 
D)  All of the above are correct. 
A)  market (a) 
B)  market (b) 
C)  market (c) 
D)  All of the above are correct.

Question 19

Economic analysis indicates minimum wage legislation has

Accepted Answer

A)  made it possible for any teenager who wants to work to earn almost 80 percent as much as an adult. 
B)  made it easier for teenagers to find jobs that offer the opportunity for training. 
C)  been an important source of increases in income since most workers earn at or near the minimum wage. 
D)  reduced the on-the-job training opportunities available to teenagers. 
A)  made it possible for any teenager who wants to work to earn almost 80 percent as much as an adult. 
B)  made it easier for teenagers to find jobs that offer the opportunity for training. 
C)  been an important source of increases in income since most workers earn at or near the minimum wage. 
D)  reduced the on-the-job training opportunities available to teenagers.

Question 20

The statutory incidence (or burden) of a tax refers to

Accepted Answer

A)  the governmental agency responsible for collecting the tax. 
B)  who actually bears the burden of a tax once changes in market prices are taken into account. 
C)  the degree of progressiveness in the rate structure of the tax. 
D)  who the tax is legally or statutorily imposed on. 
A)  the governmental agency responsible for collecting the tax. 
B)  who actually bears the burden of a tax once changes in market prices are taken into account. 
C)  the degree of progressiveness in the rate structure of the tax. 
D)  who the tax is legally or statutorily imposed on.

Because illegal drug markets operate outside the legal system,

Figure 4-25 Refer to Figure 4-25. The price that sellers receive after the tax is imposed is

Use the table below to choose the correct answer. The marginal tax rate on income in the $20,000 to $25,000 range is

When the top marginal tax rates were lowered substantially during the 1980s, the inflation-adjusted income tax revenue collected from the top 1 percent of all income earners

Figure 4-24 Refer to Figure 4-24. The price that sellers receive after the tax is imposed is

Suppose that the federal government levies a 50 cent excise tax on gasoline and that the demand for gasoline is highly inelastic while the supply is highly elastic. Under these circumstances, the burden of the tax

A subsidy is defined as

Other things constant, how will a decrease in the wages of teenagers affect the market for fast food hamburgers?

Use the figure below to answer the following question(s). Figure 4-4 Given the demand and supply conditions shown in Figure 4-4, if the government imposes a price ceiling of a , which of the following would be true?

Data from the effects of the substantial tax rate reductions in the 1980s

Figure 4-24 Refer to Figure 4-24. The amount of deadweight loss associated with the tax is equal to

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 . If a $.40 excise tax was imposed,

If the federal government began granting a subsidy of 10 cents per apple to apple growers and as a result the price of apples to consumers falls by 8 cents,

If drugs such as marijuana and cocaine were legalized, it would be likely that

An increase in the number of students attending college would tend to

If the demand for a good is very price elastic, the imposition of a tax on that good

Which of the following is true?

Figure 4-23 Refer to Figure 4-23. In which market will the tax burden be most equally divided between the buyer and the seller?

Economic analysis indicates minimum wage legislation has

The statutory incidence (or burden) of a tax refers to

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

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Applying the Basics: Special Topics in Economics

Filters

Exam 4: Supply and Demand: Applications and Extensions

Because illegal drug markets operate outside the legal system,

Figure 4-25 Refer to Figure 4-25. The price that sellers receive after the tax is imposed is

Use the table below to choose the correct answer. The marginal tax rate on income in the $20,000 to $25,000 range is

When the top marginal tax rates were lowered substantially during the 1980s, the inflation-adjusted income tax revenue collected from the top 1 percent of all income earners

Figure 4-24 Refer to Figure 4-24. The price that sellers receive after the tax is imposed is

Suppose that the federal government levies a 50 cent excise tax on gasoline and that the demand for gasoline is highly inelastic while the supply is highly elastic. Under these circumstances, the burden of the tax

A subsidy is defined as

Other things constant, how will a decrease in the wages of teenagers affect the market for fast food hamburgers?

Use the figure below to answer the following question(s). Figure 4-4 Given the demand and supply conditions shown in Figure 4-4, if the government imposes a price ceiling of a , which of the following would be true?

Data from the effects of the substantial tax rate reductions in the 1980s

Figure 4-24 Refer to Figure 4-24. The amount of deadweight loss associated with the tax is equal to

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 . If a $.40 excise tax was imposed,

If the federal government began granting a subsidy of 10 cents per apple to apple growers and as a result the price of apples to consumers falls by 8 cents,

If drugs such as marijuana and cocaine were legalized, it would be likely that

An increase in the number of students attending college would tend to

If the demand for a good is very price elastic, the imposition of a tax on that good

Which of the following is true?

Figure 4-23 Refer to Figure 4-23. In which market will the tax burden be most equally divided between the buyer and the seller?

Economic analysis indicates minimum wage legislation has

The statutory incidence (or burden) of a tax refers to

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

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Applying the Basics: Special Topics in Economics

Filters