Question 1

Rent controls generally fix the price of rental housing below market equilibrium.Economic analysis suggests these controls

Accepted Answer

A) are effective in helping the poor find housing. 
B) improve the quality of housing available to consumers. 
C) create a surplus of rental housing. 
D) reduce the future supply of rental housing. 
A) are effective in helping the poor find housing. 
B) improve the quality of housing available to consumers. 
C) create a surplus of rental housing. 
D) reduce the future supply of rental housing.

Question 2

Suppose there is an increase in the excise tax imposed on cigarettes,a good for which the demand is relatively inelastic.The short-run burden of the tax increase will be borne primarily by

Accepted Answer

A) consumers,because the increase in market price will be large relative to the increase in the excise tax. 
B) firms,because the increase in market price will be large relative to the increase in the excise tax. 
C) consumers,because the increase in market price will be small relative to the increase in the excise tax. 
D) firms,because the increase in market price will be small relative to the increase in the excise tax. 
A) consumers,because the increase in market price will be large relative to the increase in the excise tax. 
B) firms,because the increase in market price will be large relative to the increase in the excise tax. 
C) consumers,because the increase in market price will be small relative to the increase in the excise tax. 
D) firms,because the increase in market price will be small relative to the increase in the excise tax.

Question 3

Figure 4-3
  
-Figure 4-3 indicates the demand (D)and supply (S)for the rental housing market in a large city.If the government imposed a price ceiling of a,which of the following would be true?

Accepted Answer

A) The quantity of rental housing demanded would be t. 
B) The quantity of rental housing supplied would be r. 
C) There would be a shortage of rental housing. 
D) All of the above are true. 
A) The quantity of rental housing demanded would be t. 
B) The quantity of rental housing supplied would be r. 
C) There would be a shortage of rental housing. 
D) All of the above are true.

Question 4

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.Which of the following states the actual burden of the tax?

Accepted Answer

A) $.20 for buyers and $.20 for sellers 
B) $.30 for buyers and $.10 for sellers 
C) The entire $.40 falls on sellers. 
D) The entire $.40 falls on buyers. 
A) $.20 for buyers and $.20 for sellers 
B) $.30 for buyers and $.10 for sellers 
C) The entire $.40 falls on sellers. 
D) The entire $.40 falls on buyers.

Question 5

If a $2 tax per bottle of wine is imposed on wine producers,which of the following will occur?

Accepted Answer

A) The price of wine will increase,fewer bottles will be purchased,and there will be a deadweight loss from this tax. 
B) The price of wine will increase,more bottles will be purchased,and consumers will gain as the result of this tax. 
C) The price of wine will decrease,more bottles will be purchased,and there will be a deadweight loss from this tax. 
D) The price of wine and quantity sold will be unchanged. 
A) The price of wine will increase,fewer bottles will be purchased,and there will be a deadweight loss from this tax. 
B) The price of wine will increase,more bottles will be purchased,and consumers will gain as the result of this tax. 
C) The price of wine will decrease,more bottles will be purchased,and there will be a deadweight loss from this tax. 
D) The price of wine and quantity sold will be unchanged.

Question 6

If a local government enacts rent control legislation that sets the price of rental housing below equilibrium,which of the following will most likely happen in the local rental housing market?

Accepted Answer

A) Discrimination in the rental housing market will be less likely. 
B) The quality of rental housing will improve. 
C) A surplus of rental housing will develop. 
D) A shortage of rental housing will develop. 
A) Discrimination in the rental housing market will be less likely. 
B) The quality of rental housing will improve. 
C) A surplus of rental housing will develop. 
D) A shortage of rental housing will develop.

Question 7

The actual incidence of a tax

Accepted Answer

A) depends on the statutory incidence. 
B) is entirely random. 
C) depends on the elasticities of supply and demand. 
D) falls entirely on buyers or entirely on sellers. 
A) depends on the statutory incidence. 
B) is entirely random. 
C) depends on the elasticities of supply and demand. 
D) falls entirely on buyers or entirely on sellers.

Question 8

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

Accepted Answer

A) $1.00 per unit. 
B) $1.50 per unit. 
C) $2.00 per unit. 
D) $3.00 per unit. 
A) $1.00 per unit. 
B) $1.50 per unit. 
C) $2.00 per unit. 
D) $3.00 per unit.

Question 9

When a government subsidy is granted to the sellers of a product,buyers can end up capturing some of the benefit because

Accepted Answer

A) the market price of the product will fall in response to the subsidy. 
B) the market price of the product will rise in response to the subsidy. 
C) the market price of the product will not change in response to the subsidy. 
D) producers will reduce the supply of the product. 
A) the market price of the product will fall in response to the subsidy. 
B) the market price of the product will rise in response to the subsidy. 
C) the market price of the product will not change in response to the subsidy. 
D) producers will reduce the supply of the product.

Question 10

The more elastic the supply of a product,the more likely that the actual benefit of a subsidy granted of the product will

Accepted Answer

A) go to sellers. 
B) go to buyers. 
C) go equally to both buyers and sellers. 
D) do none of the above. 
A) go to sellers. 
B) go to buyers. 
C) go equally to both buyers and sellers. 
D) do none of the above.

Question 11

When government imposes price controls in a market,

Accepted Answer

A) non-price factors become more important in the rationing of the good. 
B) efficiency in the market is enhanced. 
C) shortages and surpluses are eliminated. 
D) buyers and sellers both become better off. 
A) non-price factors become more important in the rationing of the good. 
B) efficiency in the market is enhanced. 
C) shortages and surpluses are eliminated. 
D) buyers and sellers both become better off.

Question 12

When the government increased its involvement in rescue efforts on Mount McKinley (the tallest peak in North America),the number of mountain climbing deaths

Accepted Answer

A) decreased slightly. 
B) decreased substantially. 
C) remained the same. 
D) increased. 
A) decreased slightly. 
B) decreased substantially. 
C) remained the same. 
D) increased.

Question 13

When a price floor is imposed above the equilibrium price of a commodity,

Accepted Answer

A) quantity demanded will be greater than quantity supplied for the good. 
B) the quantity demanded by consumers will be greater than at the equilibrium price. 
C) a shortage of the good will develop. 
D) a surplus of the good will develop. 
A) quantity demanded will be greater than quantity supplied for the good. 
B) the quantity demanded by consumers will be greater than at the equilibrium price. 
C) a shortage of the good will develop. 
D) a surplus of the good will develop.

Question 14

Figure 4-18
  
-Refer to Figure 4-18.The price of the good would continue to serve as the rationing mechanism if

Accepted Answer

A) a price ceiling of $4.00 were imposed. 
B) a price ceiling of $5.00 were imposed. 
C) a price floor of $3.00 were imposed. 
D) All of the above are correct. 
A) a price ceiling of $4.00 were imposed. 
B) a price ceiling of $5.00 were imposed. 
C) a price floor of $3.00 were imposed. 
D) All of the above are correct.

Question 15

Which of the following is true?

Accepted Answer

A) Most minimum wage workers are employed more than 40 hours per week. 
B) Economic analysis indicates an increase in the minimum wage would increase the training opportunities available to inexperienced workers. 
C) Most minimum wage workers are heads of families with incomes below the poverty level. 
D) Most minimum wage workers are employed part-time,and they are often members of a household with an income well above the poverty level. 
A) Most minimum wage workers are employed more than 40 hours per week. 
B) Economic analysis indicates an increase in the minimum wage would increase the training opportunities available to inexperienced workers. 
C) Most minimum wage workers are heads of families with incomes below the poverty level. 
D) Most minimum wage workers are employed part-time,and they are often members of a household with an income well above the poverty level.

Question 16

Other things constant,if a labor union is able to successfully increase the wages of autoworkers,there will be

Accepted Answer

A) an increase in the supply of automobiles causing the price of automobiles to fall. 
B) an increase in the supply of automobiles causing the price of automobiles to rise. 
C) a decrease in the supply of automobiles causing the price of automobiles to fall. 
D) a decrease in the supply of automobiles causing the price of automobiles to rise. 
A) an increase in the supply of automobiles causing the price of automobiles to fall. 
B) an increase in the supply of automobiles causing the price of automobiles to rise. 
C) a decrease in the supply of automobiles causing the price of automobiles to fall. 
D) a decrease in the supply of automobiles causing the price of automobiles to rise.

Question 17

A $10 per unit government subsidy paid directly to sellers of heaters will result in

Accepted Answer

A) a downward shift in the demand curve for heaters by $10. 
B) an upward shift in the demand curve for heaters by $10. 
C) a downward shift in the supply curve for heaters by $10. 
D) an upward shift in the supply curve for heaters by $10. 
A) a downward shift in the demand curve for heaters by $10. 
B) an upward shift in the demand curve for heaters by $10. 
C) a downward shift in the supply curve for heaters by $10. 
D) an upward shift in the supply curve for heaters by $10.

Question 18

Figure 4-20
  
-Refer to Figure 4-20.The amount of the tax per unit is

Accepted Answer

A) $1. 
B) $2. 
C) $3. 
D) $5. 
A) $1. 
B) $2. 
C) $3. 
D) $5.

Question 19

Other things constant,a decrease in the demand for computers will

Accepted Answer

A) increase the price of computers. 
B) increase the quantity supplied of computers. 
C) increase the demand for computer manufacturing workers. 
D) decrease the demand for computer manufacturing workers. 
A) increase the price of computers. 
B) increase the quantity supplied of computers. 
C) increase the demand for computer manufacturing workers. 
D) decrease the demand for computer manufacturing workers.

Question 20

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

Accepted Answer

A) P₃ A C P₁. 
B) A B C. 
C) P₂ A D P₃. 
D) P₁ D C P₂. 
A) P₃ A C P₁. 
B) A B C. 
C) P₂ A D P₃. 
D) P₁ D C P₂.

Exam 4: Asupply and Demand: Applications and Extensions

Rent controls generally fix the price of rental housing below market equilibrium.Economic analysis suggests these controls

Suppose there is an increase in the excise tax imposed on cigarettes,a good for which the demand is relatively inelastic.The short-run burden of the tax increase will be borne primarily by

Figure 4-3 -Figure 4-3 indicates the demand (D)and supply (S)for the rental housing market in a large city.If the government imposed a price ceiling of a,which of the following would be true?

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.Which of the following states the actual burden of the tax?

If a $2 tax per bottle of wine is imposed on wine producers,which of the following will occur?

If a local government enacts rent control legislation that sets the price of rental housing below equilibrium,which of the following will most likely happen in the local rental housing market?

The actual incidence of a tax

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

When a government subsidy is granted to the sellers of a product,buyers can end up capturing some of the benefit because

The more elastic the supply of a product,the more likely that the actual benefit of a subsidy granted of the product will

When government imposes price controls in a market,

When the government increased its involvement in rescue efforts on Mount McKinley (the tallest peak in North America),the number of mountain climbing deaths

When a price floor is imposed above the equilibrium price of a commodity,

Figure 4-18 -Refer to Figure 4-18.The price of the good would continue to serve as the rationing mechanism if

Which of the following is true?

Other things constant,if a labor union is able to successfully increase the wages of autoworkers,there will be

A $10 per unit government subsidy paid directly to sellers of heaters will result in

Figure 4-20 -Refer to Figure 4-20.The amount of the tax per unit is

Other things constant,a decrease in the demand for computers will

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

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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