Question 1

Figure 4-21
  
-Refer to Figure 4-21.The per-unit burden of the tax is

Accepted Answer

A) $4 on buyers and $4 on sellers. 
B) $5 on buyers and $5 on sellers. 
C) $4 on buyers and $6 on sellers. 
D) $6 on buyers and $4 on sellers. 
A) $4 on buyers and $4 on sellers. 
B) $5 on buyers and $5 on sellers. 
C) $4 on buyers and $6 on sellers. 
D) $6 on buyers and $4 on sellers.

Question 2

Use the figure below to answer the following question(s).
Figure 4-4
  
-Given the demand and supply conditions shown in Figure 4-4,what will happen as the result of imposing a price ceiling of a?

Accepted Answer

A) Demand for the product will decline. 
B) Supply will increase. 
C) There will be a shortage of the product. 
D) Over time,the quality of the product offered by suppliers will increase. 
A) Demand for the product will decline. 
B) Supply will increase. 
C) There will be a shortage of the product. 
D) Over time,the quality of the product offered by suppliers will increase.

Question 3

If a $5,000 property tax is placed legally (statutorily)on the buyers of new automobiles and as a result the price of automobiles at dealerships rises by $2,000,the actual burden of the tax

Accepted Answer

A) falls completely on automobile buyers. 
B) falls completely on automobile sellers. 
C) is $2,000 on automobile buyers and $3,000 on sellers. 
D) is $3,000 on automobile buyers and $2,000 on sellers. 
A) falls completely on automobile buyers. 
B) falls completely on automobile sellers. 
C) is $2,000 on automobile buyers and $3,000 on sellers. 
D) is $3,000 on automobile buyers and $2,000 on sellers.

Question 4

Figure 4-22
  
-Refer to Figure 4-22.Suppose the same S and D curves apply,and a tax of the same amount per unit as shown here is imposed.Now,however,the buyers of the good,rather than the sellers,are required to pay the tax to the government.Now,

Accepted Answer

A) the burden on buyers will be larger than in the case illustrated in Figure 4-22. 
B) the burden on sellers will be smaller than in the case illustrated in Figure 4-22. 
C) a downward shift of the demand curve replaces the upward shift of the supply curve. 
D) All of the above are correct. 
A) the burden on buyers will be larger than in the case illustrated in Figure 4-22. 
B) the burden on sellers will be smaller than in the case illustrated in Figure 4-22. 
C) a downward shift of the demand curve replaces the upward shift of the supply curve. 
D) All of the above are correct.

Question 5

Which of the following will most likely result from rent controls that reduce monthly rental rates below market equilibrium?

Accepted Answer

A) Shortages and black markets for rental housing will develop. 
B) The quality of rental housing will improve. 
C) The future supply of rental housing will increase rapidly. 
D) Discrimination against minorities and persons with unconventional lifestyles will decline in the rental housing market. 
A) Shortages and black markets for rental housing will develop. 
B) The quality of rental housing will improve. 
C) The future supply of rental housing will increase rapidly. 
D) Discrimination against minorities and persons with unconventional lifestyles will decline in the rental housing market.

Question 6

Suppose the market equilibrium price of wheat is $5 per bushel,and the government sets a price floor of $7 per bushel to aid growers.What is the most likely result of this action?

Accepted Answer

A) There will be a shortage of wheat. 
B) There will be a surplus of wheat. 
C) There will be an increase in the quantity of wheat demanded as the result of the price floor. 
D) There will be a decrease in the quantity of wheat supplied as the result of the price floor. 
A) There will be a shortage of wheat. 
B) There will be a surplus of wheat. 
C) There will be an increase in the quantity of wheat demanded as the result of the price floor. 
D) There will be a decrease in the quantity of wheat supplied as the result of the price floor.

Question 7

In the two decades following 1990,subsidized federal loans per full-time student more than tripled.Economic analysis indicates that this expansion in subsidies

Accepted Answer

A) reduced the cost of a college education for all students. 
B) increased the cost of a college education for all students. 
C) reduced the net cost of a college education for students receiving the subsidies,but increased the cost of college for other students. 
D) increased the net cost of a college education for those receiving the subsidies,but reduced the cost of college for other students. 
A) reduced the cost of a college education for all students. 
B) increased the cost of a college education for all students. 
C) reduced the net cost of a college education for students receiving the subsidies,but increased the cost of college for other students. 
D) increased the net cost of a college education for those receiving the subsidies,but reduced the cost of college for other students.

Question 8

A substantial revision of the income tax code that made business and personal tax returns much easier to complete would tend to cause which of the following changes in the labor market for accountants?

Accepted Answer

A) an increase in the demand for accountants 
B) an increase in the employment of accountants 
C) a decrease in the wage rate of accountants 
D) an increase in the number of students choosing to major in accounting 
A) an increase in the demand for accountants 
B) an increase in the employment of accountants 
C) a decrease in the wage rate of accountants 
D) an increase in the number of students choosing to major in accounting

Question 9

A tax for which the average tax rate remains constant at all levels of income is defined as 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 10

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 11

A price floor that sets the price of a good above market equilibrium will cause

Accepted Answer

A) a decrease in quantity demanded of the good. 
B) an increase in quantity supplied of the good. 
C) a surplus of the good. 
D) all of the above. 
A) a decrease in quantity demanded of the good. 
B) an increase in quantity supplied of the good. 
C) a surplus of the good. 
D) all of the above.

Question 12

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 13

The marginal tax rate is defined as

Accepted Answer

A) tax liability divided by taxable income. 
B) tax liability multiplied by taxable income. 
C) the change in tax liability divided by the change in taxable income. 
D) the change in tax liability minus the change in taxable income. 
A) tax liability divided by taxable income. 
B) tax liability multiplied by taxable income. 
C) the change in tax liability divided by the change in taxable income. 
D) the change in tax liability minus the change in taxable income.

Question 14

Use the figure below to answer the following question(s).
Figure 4-8
  
-Refer to Figure 4-8.Which of the following is true?

Accepted Answer

A) The tax increases the price of soft coal by $40 per ton. 
B) Since the demand for soft coal is more inelastic than the supply,consumers bear most of the burden of the tax. 
C) Since the demand for soft coal is more elastic than the supply,suppliers of soft coal bear most of the burden of the tax. 
D) Since the supply of soft coal is highly inelastic,the primary burden of the tax is imposed on the consumers of soft coal. 
A) The tax increases the price of soft coal by $40 per ton. 
B) Since the demand for soft coal is more inelastic than the supply,consumers bear most of the burden of the tax. 
C) Since the demand for soft coal is more elastic than the supply,suppliers of soft coal bear most of the burden of the tax. 
D) Since the supply of soft coal is highly inelastic,the primary burden of the tax is imposed on the consumers of soft coal.

Question 15

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 16

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 17

The large amount of violence associated with the current drug trade is mostly caused by

Accepted Answer

A) the fact that drug markets must operate outside the normal legal system. 
B) buyers and sellers often being under the influence of drugs at the time of the transaction. 
C) buyers and sellers who are often unfamiliar with conducting normal transactions within the legal system. 
D) the lack of quantity supplied and quantity demand being in balance in black markets because there is no equilibrium price in these markets. 
A) the fact that drug markets must operate outside the normal legal system. 
B) buyers and sellers often being under the influence of drugs at the time of the transaction. 
C) buyers and sellers who are often unfamiliar with conducting normal transactions within the legal system. 
D) the lack of quantity supplied and quantity demand being in balance in black markets because there is no equilibrium price in these markets.

Question 18

Figure 4-20
  
-Refer to Figure 4-20.The price that buyers pay after the tax is imposed is

Accepted Answer

A) $8. 
B) $6. 
C) $5. 
D) $3. 
A) $8. 
B) $6. 
C) $5. 
D) $3.

Question 19

An income tax is regressive if

Accepted Answer

A) the tax liability of high-income recipients exceeds the tax liability of those with low incomes. 
B) the tax liability of high-income recipients is less than the tax liability of those with low incomes. 
C) high-income recipients pay a higher percentage of their incomes in taxes than those with low incomes. 
D) high-income recipients pay a lower percentage of their incomes in taxes than those whose incomes are low. 
A) the tax liability of high-income recipients exceeds the tax liability of those with low incomes. 
B) the tax liability of high-income recipients is less than the tax liability of those with low incomes. 
C) high-income recipients pay a higher percentage of their incomes in taxes than those with low incomes. 
D) high-income recipients pay a lower percentage of their incomes in taxes than those whose incomes are low.

Question 20

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.

Exam 4: Asupply and Demand: Applications and Extensions

Figure 4-21 -Refer to Figure 4-21.The per-unit burden of the tax is

Use the figure below to answer the following question(s). Figure 4-4 -Given the demand and supply conditions shown in Figure 4-4,what will happen as the result of imposing a price ceiling of a?

If a $5,000 property tax is placed legally (statutorily)on the buyers of new automobiles and as a result the price of automobiles at dealerships rises by $2,000,the actual burden of the tax

Figure 4-22 -Refer to Figure 4-22.Suppose the same S and D curves apply,and a tax of the same amount per unit as shown here is imposed.Now,however,the buyers of the good,rather than the sellers,are required to pay the tax to the government.Now,

Which of the following will most likely result from rent controls that reduce monthly rental rates below market equilibrium?

Suppose the market equilibrium price of wheat is $5 per bushel,and the government sets a price floor of $7 per bushel to aid growers.What is the most likely result of this action?

In the two decades following 1990,subsidized federal loans per full-time student more than tripled.Economic analysis indicates that this expansion in subsidies

A substantial revision of the income tax code that made business and personal tax returns much easier to complete would tend to cause which of the following changes in the labor market for accountants?

A tax for which the average tax rate remains constant at all levels of income is defined as a

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

A price floor that sets the price of a good above market equilibrium will cause

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

The marginal tax rate is defined as

Use the figure below to answer the following question(s). Figure 4-8 -Refer to Figure 4-8.Which of the following is true?

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?

Economic analysis indicates minimum wage legislation has

The large amount of violence associated with the current drug trade is mostly caused by

Figure 4-20 -Refer to Figure 4-20.The price that buyers pay after the tax is imposed is

An income tax is regressive if

Which of the following is true?

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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