Question 1

If political officials want to minimize the excess burden accompanying a tax,they should set the tax at a rate

Accepted Answer

A) that will maximize the revenue derived from the tax. 
B) slightly above the rate that will maximize the revenue derived from the tax. 
C) well below the rate that will maximize the revenue derived from the tax. 
D) that is the highest that could possibly be imposed. 
A) that will maximize the revenue derived from the tax. 
B) slightly above the rate that will maximize the revenue derived from the tax. 
C) well below the rate that will maximize the revenue derived from the tax. 
D) that is the highest that could possibly be imposed.

Question 2

Figure 4-22
  
-Refer to Figure 4-22.Buyers pay how much of the tax per unit?

Accepted Answer

A) $1.00. 
B) $1.50. 
C) $2.50. 
D) $3.00. 
A) $1.00. 
B) $1.50. 
C) $2.50. 
D) $3.00.

Question 3

If Heather's tax liability increases from $10,000 to $16,000 when her income increases from $30,000 to $40,000,her marginal tax rate is

Accepted Answer

A) 33 percent. 
B) 35 percent. 
C) 50 percent. 
D) 60 percent. 
A) 33 percent. 
B) 35 percent. 
C) 50 percent. 
D) 60 percent.

Question 4

A subsidy on a product will generate more actual benefit for consumers (and less for producers)when

Accepted Answer

A) the supply of the product is relatively inelastic. 
B) the supply of the product is relatively elastic. 
C) the demand for the product is relatively elastic. 
D) either a or c is true. 
A) the supply of the product is relatively inelastic. 
B) the supply of the product is relatively elastic. 
C) the demand for the product is relatively elastic. 
D) either a or c is true.

Question 5

Figure 4-25
  
-Refer to Figure 4-25.After the tax is levied,producer surplus is represented by area

Accepted Answer

A) A. 
B) A + B + C. 
C) D + E + F. 
D) F. 
A) A. 
B) A + B + C. 
C) D + E + F. 
D) F.

Question 6

When a supply and demand model is used to analyze the market for labor,

Accepted Answer

A) demand is generally no longer downward sloping. 
B) the wage rate is used on the vertical axis as the market price. 
C) employment is used on the horizontal axis as the market quantity. 
D) both b and c. 
A) demand is generally no longer downward sloping. 
B) the wage rate is used on the vertical axis as the market price. 
C) employment is used on the horizontal axis as the market quantity. 
D) both b and c.

Question 7

Which of the following would occur following the imposition of a price ceiling that sets the price of a good (for example,rental housing)below the market equilibrium?

Accepted Answer

A) an improvement in the quality of the good 
B) an increase in the amount of the good available 
C) a shortage of the good 
D) a surplus of the good 
A) an improvement in the quality of the good 
B) an increase in the amount of the good available 
C) a shortage of the good 
D) a surplus of the good

Question 8

A new law requiring plumbers to pass strict certification tests that reduce the number of plumbers would

Accepted Answer

A) increase the wage rate of plumbers. 
B) decrease the wage rate of plumbers. 
C) increase the employment of plumbers. 
D) cause no change in the labor market for plumbers. 
A) increase the wage rate of plumbers. 
B) decrease the wage rate of plumbers. 
C) increase the employment of plumbers. 
D) cause no change in the labor market for plumbers.

Question 9

Taxes adversely affect the allocation of resources because

Accepted Answer

A) they do not always fall more heavily on the rich than on the poor. 
B) the taxes collected are not enough to finance government spending. 
C) not everyone pays taxes. 
D) they distort prices and thus distort the decisions of households and firms. 
A) they do not always fall more heavily on the rich than on the poor. 
B) the taxes collected are not enough to finance government spending. 
C) not everyone pays taxes. 
D) they distort prices and thus distort the decisions of households and firms.

Question 10

Figure 4-19
  
-Refer to Figure 4-19.When the price ceiling applies in this market and the supply curve for gasoline shifts from S₁ to S₂,

Accepted Answer

A) the price will increase to P₃. 
B) a surplus will occur at the new market price of P₂. 
C) the market price will stay at P₁ due to the price ceiling. 
D) a shortage will occur at the price ceiling of P₂. 
A) the price will increase to P₃. 
B) a surplus will occur at the new market price of P₂. 
C) the market price will stay at P₁ due to the price ceiling. 
D) a shortage will occur at the price ceiling of P₂.

Question 11

An effective minimum wage

Accepted Answer

A) imposes a price ceiling on the wages of various categories of low-skill workers. 
B) increases the demand for low-skill workers. 
C) makes it easier for low skill workers to find jobs. 
D) increases the earnings of some low-skill workers while reducing the employment and training opportunities available to others. 
A) imposes a price ceiling on the wages of various categories of low-skill workers. 
B) increases the demand for low-skill workers. 
C) makes it easier for low skill workers to find jobs. 
D) increases the earnings of some low-skill workers while reducing the employment and training opportunities available to others.

Question 12

Figure 4-22
  
-Refer to Figure 4-22.From this tax the government will collect a total of

Accepted Answer

A) $125.00. 
B) $175.00. 
C) $200.00. 
D) $250.00. 
A) $125.00. 
B) $175.00. 
C) $200.00. 
D) $250.00.

Question 13

In the mid-1940s,the marginal income tax rate in the top income tax bracket was 94 percent.In the 1960s,the top rate was lowered to 70 percent,and in the 1980s,the top rate was again lowered to 28 percent.The data show that as a result of these tax rate reductions,tax revenue (particularly from the rich)increased.This is consistent with the idea illustrated with the

Accepted Answer

A) Laffer curve. 
B) production possibilities curve. 
C) supply of loanable funds curve. 
D) demand for unskilled labor curve. 
A) Laffer curve. 
B) production possibilities curve. 
C) supply of loanable funds curve. 
D) demand for unskilled labor curve.

Question 14

Figure 4-22
  
-Refer to Figure 4-22.The price paid by buyers after the tax is imposed is

Accepted Answer

A) $1.00. 
B) $3.50. 
C) $5.00. 
D) $6.00. 
A) $1.00. 
B) $3.50. 
C) $5.00. 
D) $6.00.

Question 15

The market pricing system corrects an excess supply by

Accepted Answer

A) raising the product price and increasing producer profits. 
B) lowering the product price and decreasing producer profits. 
C) raising the product price and decreasing producer profits. 
D) lowering the product price and increasing producer profits. 
A) raising the product price and increasing producer profits. 
B) lowering the product price and decreasing producer profits. 
C) raising the product price and decreasing producer profits. 
D) lowering the product price and increasing producer profits.

Question 16

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 17

If there was an increase in the excise tax on beer,what would be the effect on the equilibrium price and quantity of beer?

Accepted Answer

A) price increases,quantity decreases 
B) price decreases,quantity decreases 
C) price increases,quantity increases 
D) price decreases,quantity increases 
A) price increases,quantity decreases 
B) price decreases,quantity decreases 
C) price increases,quantity increases 
D) price decreases,quantity increases

Question 18

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 19

Figure 4-21
  
-Refer to Figure 4-21.The price paid by buyers 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 20

Use the table below to choose the correct answer.
 
For the income range illustrated,the tax shown here is

Accepted Answer

A) regressive. 
B) proportional. 
C) progressive. 
D) progressive up to $30,000 but regressive beyond that. 
A) regressive. 
B) proportional. 
C) progressive. 
D) progressive up to $30,000 but regressive beyond that.

Exam 4: Asupply and Demand: Applications and Extensions

If political officials want to minimize the excess burden accompanying a tax,they should set the tax at a rate

Figure 4-22 -Refer to Figure 4-22.Buyers pay how much of the tax per unit?

If Heather's tax liability increases from $10,000 to $16,000 when her income increases from $30,000 to $40,000,her marginal tax rate is

A subsidy on a product will generate more actual benefit for consumers (and less for producers)when

Figure 4-25 -Refer to Figure 4-25.After the tax is levied,producer surplus is represented by area

When a supply and demand model is used to analyze the market for labor,

Which of the following would occur following the imposition of a price ceiling that sets the price of a good (for example,rental housing)below the market equilibrium?

A new law requiring plumbers to pass strict certification tests that reduce the number of plumbers would

Taxes adversely affect the allocation of resources because

Figure 4-19 -Refer to Figure 4-19.When the price ceiling applies in this market and the supply curve for gasoline shifts from S₁ to S₂,

An effective minimum wage

Figure 4-22 -Refer to Figure 4-22.From this tax the government will collect a total of

Figure 4-22 -Refer to Figure 4-22.The price paid by buyers after the tax is imposed is

The market pricing system corrects an excess supply by

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?

If there was an increase in the excise tax on beer,what would be the effect on the equilibrium price and quantity of beer?

The average tax rate is defined as

Figure 4-21 -Refer to Figure 4-21.The price paid by buyers after the tax is imposed is

Use the table below to choose the correct answer. For the income range illustrated,the tax shown here 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

Filters