Question 1

A legal minimum wage is an example of

Accepted Answer

A) the invisible hand principle. 
B) a price floor. 
C) a price ceiling. 
D) a fringe benefit. 
A) the invisible hand principle. 
B) a price floor. 
C) a price ceiling. 
D) a fringe benefit.

Question 2

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 3

When a price ceiling is imposed below the equilibrium price of a commodity,

Accepted Answer

A) quantity supplied will be greater than quantity demanded for the good. 
B) the problem of scarcity will be solved. 
C) a shortage of the good will develop. 
D) a surplus of the good will develop. 
A) quantity supplied will be greater than quantity demanded for the good. 
B) the problem of scarcity will be solved. 
C) a shortage of the good will develop. 
D) a surplus of the good will develop.

Question 4

Many economists believe a general sales tax (particularly on items such as food)takes a larger proportion of income from low-income households than from high-income households.If this is true,a general sales tax is a

Accepted Answer

A) regressive tax. 
B) proportional tax. 
C) neutral tax. 
D) progressive tax. 
A) regressive tax. 
B) proportional tax. 
C) neutral tax. 
D) progressive tax.

Question 5

If the Federal government enacts a new excise tax of $1.50 per six-pack of beer.Which of the following is most likely to occur?

Accepted Answer

A) Consumers of beer will pay a higher price and buy a larger quantity. 
B) Consumers of beer will pay a higher price,which will increase the profits of beer companies,inducing them to sell a larger quantity. 
C) Consumers of beer will pay a higher price and buy a smaller quantity. 
D) Consumers of beer will buy less wine from France. 
A) Consumers of beer will pay a higher price and buy a larger quantity. 
B) Consumers of beer will pay a higher price,which will increase the profits of beer companies,inducing them to sell a larger quantity. 
C) Consumers of beer will pay a higher price and buy a smaller quantity. 
D) Consumers of beer will buy less wine from France.

Question 6

The actual benefit of a government subsidy is determined primarily by

Accepted Answer

A) the elasticities of demand and supply. 
B) the legal (or statutory)assignment of the subsidy 
C) the number of exchanges that are made possible as a result of the subsidy. 
D) whether the subsidy is paid by cash or check. 
A) the elasticities of demand and supply. 
B) the legal (or statutory)assignment of the subsidy 
C) the number of exchanges that are made possible as a result of the subsidy. 
D) whether the subsidy is paid by cash or check.

Question 7

Figure 4-24
  
-Refer to Figure 4-24.The per-unit burden of the tax on sellers is

Accepted Answer

A) P₃ - P₁. 
B) P₃ - P₂. 
C) P₂ - P₁. 
D) Q₂ - Q₁. 
A) P₃ - P₁. 
B) P₃ - P₂. 
C) P₂ - P₁. 
D) Q₂ - Q₁.

Question 8

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 9

Figure 4-21
  
-Refer to Figure 4-21.The price received by sellers after the tax is imposed is

Accepted Answer

A) $18. 
B) $14. 
C) $12. 
D) $8. 
A) $18. 
B) $14. 
C) $12. 
D) $8.

Question 10

The state of Florida is considering putting an excise tax on either good X or good Y.An economist discovers the supply of good X is more elastic than the supply of good Y,while the demand elasticities are identical.Which good should Florida tax in order to minimize the deadweight loss of the tax?

Accepted Answer

The state of Florida should ta

Question 11

Studies indicate the demand for cigarettes is highly inelastic,while the demand for green peas tends to be elastic.Other things constant,how will this affect the incidence of an excise tax on these products?

Accepted Answer

A) Consumers will tend to bear a greater share of the burden of an excise tax on cigarettes than of an excise tax on peas. 
B) Consumers will tend to bear a greater share of the burden of an excise tax on peas than of an excise tax on cigarettes. 
C) Producers will bear a greater share of the burden of an excise tax on cigarettes than of an excise tax on peas. 
D) Uncertain;elasticity of demand exerts no impact on how the burden of an excise tax is distributed between consumers and producers. 
A) Consumers will tend to bear a greater share of the burden of an excise tax on cigarettes than of an excise tax on peas. 
B) Consumers will tend to bear a greater share of the burden of an excise tax on peas than of an excise tax on cigarettes. 
C) Producers will bear a greater share of the burden of an excise tax on cigarettes than of an excise tax on peas. 
D) Uncertain;elasticity of demand exerts no impact on how the burden of an excise tax is distributed between consumers and producers.

Question 12

The burden of a tax will fall primarily on buyers when the

Accepted Answer

A) demand for the product is highly inelastic and the supply is relatively elastic. 
B) demand for the product is highly elastic and the supply is relatively inelastic. 
C) tax is legally (statutorily)imposed on the seller of the product. 
D) tax is legally (statutorily)imposed on the buyer of the product. 
A) demand for the product is highly inelastic and the supply is relatively elastic. 
B) demand for the product is highly elastic and the supply is relatively inelastic. 
C) tax is legally (statutorily)imposed on the seller of the product. 
D) tax is legally (statutorily)imposed on the buyer of the product.

Question 13

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.

Question 14

In 2010 the federal government reduced the Social Security tax withholding rate from 12.4 percent (6.2 percent on both the employer and employee)to 8.4 percent (4.2 percent on both the employer and employee)on the wages of all workers.If the supply of labor is relatively inelastic when compared to the elasticity of the demand for labor,the burden of this tax will

Accepted Answer

A) continue to fall primarily on employees. 
B) continue to fall primarily on employers. 
C) be divided equally between employees and employers. 
D) change from primarily falling on employees to employers. 
A) continue to fall primarily on employees. 
B) continue to fall primarily on employers. 
C) be divided equally between employees and employers. 
D) change from primarily falling on employees to employers.

Question 15

Which of the following is correct?

Accepted Answer

A) An increase in the number of students choosing to major in marketing would likely lead to an increase in the wage earned by marketing graduates. 
B) A new law allowing nurses to offer patients some of the medical services that are currently only available through doctors would increase the wage rate earned by doctors. 
C) An increase in the demand for newly constructed homes would lead to a reduction in the price of lumber. 
D) New licensing requirements that substantially lowered the number of plumbers would likely lead to an increase in the wage rate of plumbers. 
A) An increase in the number of students choosing to major in marketing would likely lead to an increase in the wage earned by marketing graduates. 
B) A new law allowing nurses to offer patients some of the medical services that are currently only available through doctors would increase the wage rate earned by doctors. 
C) An increase in the demand for newly constructed homes would lead to a reduction in the price of lumber. 
D) New licensing requirements that substantially lowered the number of plumbers would likely lead to an increase in the wage rate of plumbers.

Question 16

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

Accepted Answer

A) decrease in the quantity of sales only if the price is forced down. 
B) decrease in the quantity of sales if the price is forced down and an increase in the volume of sales if the price is forced up. 
C) decrease in the quantity of sales whether the price is forced up or down. 
D) increase in the quantity of sales whether the price is forced up or down. 
A) decrease in the quantity of sales only if the price is forced down. 
B) decrease in the quantity of sales if the price is forced down and an increase in the volume of sales if the price is forced up. 
C) decrease in the quantity of sales whether the price is forced up or down. 
D) increase in the quantity of sales whether the price is forced up or down.

Question 17

After the ban on the production and sale of alcohol ended in 1933,

Accepted Answer

A) the quality of alcohol sold declined. 
B) the murder rate declined. 
C) the profit rate for bootleg sellers of alcohol increased. 
D) all of the above occurred. 
A) the quality of alcohol sold declined. 
B) the murder rate declined. 
C) the profit rate for bootleg sellers of alcohol increased. 
D) all of the above occurred.

Question 18

How would a decrease in lumber prices influence the home construction market?

Accepted Answer

A) The demand for newly constructed homes will increase. 
B) The demand for newly constructed homes will decrease. 
C) The supply of newly constructed homes will increase. 
D) The supply of newly constructed homes will decrease. 
A) The demand for newly constructed homes will increase. 
B) The demand for newly constructed homes will decrease. 
C) The supply of newly constructed homes will increase. 
D) The supply of newly constructed homes will decrease.

Question 19

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 20

A black market is

Accepted Answer

A) a market that operates outside the legal system,either by selling illegal goods or by selling goods at illegal prices. 
B) a market where goods and services can be obtained at lower prices. 
C) a government-mandated market where controls are placed on prices. 
D) a market where exchanges are made using bartering. 
A) a market that operates outside the legal system,either by selling illegal goods or by selling goods at illegal prices. 
B) a market where goods and services can be obtained at lower prices. 
C) a government-mandated market where controls are placed on prices. 
D) a market where exchanges are made using bartering.

Exam 4: Asupply and Demand: Applications and Extensions

A legal minimum wage is an example of

The actual burden of a tax is determined primarily by

When a price ceiling is imposed below the equilibrium price of a commodity,

Many economists believe a general sales tax (particularly on items such as food)takes a larger proportion of income from low-income households than from high-income households.If this is true,a general sales tax is a

If the Federal government enacts a new excise tax of $1.50 per six-pack of beer.Which of the following is most likely to occur?

The actual benefit of a government subsidy is determined primarily by

Figure 4-24 -Refer to Figure 4-24.The per-unit burden of the tax on sellers is

Because illegal drug markets operate outside the legal system,

Figure 4-21 -Refer to Figure 4-21.The price received by sellers after the tax is imposed is

The state of Florida is considering putting an excise tax on either good X or good Y.An economist discovers the supply of good X is more elastic than the supply of good Y,while the demand elasticities are identical.Which good should Florida tax in order to minimize the deadweight loss of the tax?

Studies indicate the demand for cigarettes is highly inelastic,while the demand for green peas tends to be elastic.Other things constant,how will this affect the incidence of an excise tax on these products?

The burden of a tax will fall primarily on buyers when the

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

Which of the following is correct?

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

After the ban on the production and sale of alcohol ended in 1933,

How would a decrease in lumber prices influence the home construction market?

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

A black market is

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

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

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney 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

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-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

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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