Question 1

Figure 4-17  
Refer to Figure 4-17. If the government imposes a price ceiling in this market at a price of $5.00, the result would be a

Accepted Answer

A)  shortage of 20 units. 
B)  shortage of 10 units. 
C)  surplus of 20 units. 
D)  surplus of 10 units. 
A)  shortage of 20 units. 
B)  shortage of 10 units. 
C)  surplus of 20 units. 
D)  surplus of 10 units.

Question 2

Use the figure below to answer the following question(s).
Figure 4-8
 
Refer to Figure 4-8. How much revenue does the $40-per-ton tax generate for the government?

Accepted Answer

A)  $600 million 
B)  $700 million 
C)  $2.4 billion 
D)  $2.8 billion 
A)  $600 million 
B)  $700 million 
C)  $2.4 billion 
D)  $2.8 billion

Question 3

The average tax rate is defined as

Accepted Answer

A)  the average number of times a circulating dollar is taxed during a year. 
B)  the change in the tax rate as income increases. 
C)  the change in the tax rate as income decreases. 
D)  tax liability divided by taxable income. 
A)  the average number of times a circulating dollar is taxed during a year. 
B)  the change in the tax rate as income increases. 
C)  the change in the tax rate as income decreases. 
D)  tax liability divided by taxable income.

Question 4

The more elastic the supply of a product, the more likely it is that the burden of a tax will

Accepted Answer

A)  fall on sellers. 
B)  fall on buyers. 
C)  fall equally on both buyers and sellers. 
D)  be borne by the public sector, and not by market participants. 
A)  fall on sellers. 
B)  fall on buyers. 
C)  fall equally on both buyers and sellers. 
D)  be borne by the public sector, and not by market participants.

Question 5

Figure 4-5  
Figure 4-5 represents the market for gasoline before and after a per-gallon tax. What does the triangular area ABC represent?

Accepted Answer

A)  the amount of revenue raised due to imposing the tax 
B)  the loss in consumer surplus due to imposing the tax 
C)  the loss in producer surplus due to imposing the tax 
D)  the deadweight loss (or excess burden) caused by the tax 
A)  the amount of revenue raised due to imposing the tax 
B)  the loss in consumer surplus due to imposing the tax 
C)  the loss in producer surplus due to imposing the tax 
D)  the deadweight loss (or excess burden) caused by the tax

Question 6

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

Accepted Answer

A)  10 percent. 
B)  25 percent. 
C)  40 percent. 
D)  50 percent 
A)  10 percent. 
B)  25 percent. 
C)  40 percent. 
D)  50 percent

Question 7

When a tax is imposed on a good,

Accepted Answer

A)  the supply curve for the good always shifts. 
B)  the demand curve for the good always shifts. 
C)  the amount of the good that buyers are willing to buy at each price always remains unchanged. 
D)  the equilibrium quantity of the good always decreases. 
A)  the supply curve for the good always shifts. 
B)  the demand curve for the good always shifts. 
C)  the amount of the good that buyers are willing to buy at each price always remains unchanged. 
D)  the equilibrium quantity of the good always decreases.

Question 8

Black markets that operate outside the legal system are often characterized by

Accepted Answer

A)  low profits for suppliers. 
B)  lower opportunity costs for suppliers and buyers. 
C)  decreased prices. 
D)  the use of violence as a means of settling disputes. 
A)  low profits for suppliers. 
B)  lower opportunity costs for suppliers and buyers. 
C)  decreased prices. 
D)  the use of violence as a means of settling disputes.

Question 9

Other things constant, an increase in the demand for motorcycles will

Accepted Answer

A)  decrease the price of motorcycles. 
B)  decrease the quantity of motorcycles bought and sold. 
C)  decrease the demand for motorcycle workers and lower their wages. 
D)  increase the demand for motorcycle workers and increase their wages. 
A)  decrease the price of motorcycles. 
B)  decrease the quantity of motorcycles bought and sold. 
C)  decrease the demand for motorcycle workers and lower their wages. 
D)  increase the demand for motorcycle workers and increase their wages.

Question 10

The actual burden of a tax is determined primarily by

Accepted Answer

A)  the elasticities of demand and supply. 
B)  the legal (or statutory) assignment of the tax. 
C)  the number of exchanges that are eliminated from the market as a result of the tax. 
D)  none of the above. 
A)  the elasticities of demand and supply. 
B)  the legal (or statutory) assignment of the tax. 
C)  the number of exchanges that are eliminated from the market as a result of the tax. 
D)  none of the above.

Question 11

If a government imposed price ceiling legally sets the price of beef below market equilibrium, which of the following will most likely happen?

Accepted Answer

A)  The quantity of beef demanded will decrease. 
B)  The quantity of beef supplied will increase. 
C)  There will be a surplus of beef. 
D)  There will be a shortage of beef. 
A)  The quantity of beef demanded will decrease. 
B)  The quantity of beef supplied will increase. 
C)  There will be a surplus of beef. 
D)  There will be a shortage of beef.

Figure 4-17 Refer to Figure 4-17. If the government imposes a price ceiling in this market at a price of $5.00, the result would be a

Use the figure below to answer the following question(s). Figure 4-8 Refer to Figure 4-8. How much revenue does the $40-per-ton tax generate for the government?

The average tax rate is defined as

The more elastic the supply of a product, the more likely it is that the burden of a tax will

Figure 4-5 Figure 4-5 represents the market for gasoline before and after a per-gallon tax. What does the triangular area ABC represent?

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

When a tax is imposed on a good,

Black markets that operate outside the legal system are often characterized by

Other things constant, an increase in the demand for motorcycles will

The actual burden of a tax is determined primarily by

If a government imposed price ceiling legally sets the price of beef below market equilibrium, which of the following will most likely happen?

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

Figure 4-17 Refer to Figure 4-17. If the government imposes a price ceiling in this market at a price of $5.00, the result would be a

Use the figure below to answer the following question(s). Figure 4-8 Refer to Figure 4-8. How much revenue does the $40-per-ton tax generate for the government?

The average tax rate is defined as

The more elastic the supply of a product, the more likely it is that the burden of a tax will

Figure 4-5 Figure 4-5 represents the market for gasoline before and after a per-gallon tax. What does the triangular area ABC represent?

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

When a tax is imposed on a good,

Black markets that operate outside the legal system are often characterized by

Other things constant, an increase in the demand for motorcycles will

The actual burden of a tax is determined primarily by

If a government imposed price ceiling legally sets the price of beef below market equilibrium, which of the following will most likely happen?

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