Question 1

Figure 4-17
  
-Refer to Figure 4-17. Which of the following price controls would cause a shortage of 10 units of the good?

Accepted Answer

A) a price ceiling of $5.50 
B) a price floor of $5.50 
C) a price ceiling of $6.50 
D) a price floor of $6.50 
A) a price ceiling of $5.50 
B) a price floor of $5.50 
C) a price ceiling of $6.50 
D) a price floor of $6.50

Question 2

Figure 4-16
  
-Refer to Figure 4-16. Some policymakers have argued that the government should establish a "living wage." A living wage would provide workers a reasonable standard of living in their city or region. If a living wage of $10 per hour is established in the market pictured here, we would expect

Accepted Answer

A) employment will increase to 14 million. 
B) employment will decrease to 8 million. 
C) the wage will actually rise to $20 per hour. 
D) there will be a surplus of 14 million workers. 
A) employment will increase to 14 million. 
B) employment will decrease to 8 million. 
C) the wage will actually rise to $20 per hour. 
D) there will be a surplus of 14 million workers.

Question 3

Both price floors and price ceilings, when effective, lead to

Accepted Answer

A) shortages. 
B) surpluses. 
C) an increase in the quantity traded. 
D) a reduction in the quantity traded. 
A) shortages. 
B) surpluses. 
C) an increase in the quantity traded. 
D) a reduction in the quantity traded.

Question 4

Figure 4-25
  
-Refer to Figure 4-25. The price that buyers pay after the tax is imposed is

Accepted Answer

A) P₁. 
B) P₂. 
C) P₃. 
D) impossible to determine from the figure. 
A) P₁. 
B) P₂. 
C) P₃. 
D) impossible to determine from the figure.

Question 5

Figure 4-25
  
-Refer to Figure 4-25. After the tax is levied, consumer 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

Figure 4-24
  
-Refer to Figure 4-24. The price that buyers pay after the tax is imposed is

Accepted Answer

A) P₁. 
B) P₂. 
C) P₃. 
D) impossible to determine from the figure. 
A) P₁. 
B) P₂. 
C) P₃. 
D) impossible to determine from the figure.

Question 7

Figure 4-21
  
-Refer to Figure 4-21. How much tax revenue does this tax produce for the government?

Accepted Answer

A) $480 
B) $600 
C) $800 
D) $1,080 
A) $480 
B) $600 
C) $800 
D) $1,080

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

If an increase in the government-imposed minimum wage pushes the price (wage) of unskilled labor above market equilibrium, which of the following will most likely occur in the unskilled labor market?

Accepted Answer

A) an increase in demand for unskilled labor 
B) a decrease in the supply of unskilled labor 
C) a shortage of unskilled labor 
D) a surplus of unskilled labor 
A) an increase in demand for unskilled labor 
B) a decrease in the supply of unskilled labor 
C) a shortage of unskilled labor 
D) a surplus of unskilled labor

Question 10

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 11

Figure 4-22
  
-Refer to Figure 4-22. The amount of the tax per unit is

Accepted Answer

A) $1.00. 
B) $1.50. 
C) $2.50. 
D) $3.50. 
A) $1.00. 
B) $1.50. 
C) $2.50. 
D) $3.50.

Question 12

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 13

Figure 4-22
  
-Refer to Figure 4-22. Sellers 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 14

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 15

Figure 4-20
  
-Refer to Figure 4-20. The burden of the tax on sellers 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 16

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 17

Suppose that the minimum wage was increased to $10 per hour. Which of the following would be most likely to result from the minimum wage increase?

Accepted Answer

A) an increase in the employment of low-skill workers previously employed at wage rates of less than $10 per hour 
B) an increase in the number of jobs providing low-skill workers with on-the-job training 
C) a reduction in the number of teenagers unemployed 
D) an increase in the demand for high-skill workers providing services that are a good substitute for those whose wages were pushed up by the higher minimum wage 
A) an increase in the employment of low-skill workers previously employed at wage rates of less than $10 per hour 
B) an increase in the number of jobs providing low-skill workers with on-the-job training 
C) a reduction in the number of teenagers unemployed 
D) an increase in the demand for high-skill workers providing services that are a good substitute for those whose wages were pushed up by the higher minimum wage

Question 18

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 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

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.

Exam 4: B: Supply and Demand: Applications and Extensions

Figure 4-17 -Refer to Figure 4-17. Which of the following price controls would cause a shortage of 10 units of the good?

Both price floors and price ceilings, when effective, lead to

Figure 4-25 -Refer to Figure 4-25. The price that buyers pay after the tax is imposed is

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

Figure 4-24 -Refer to Figure 4-24. The price that buyers pay after the tax is imposed is

Figure 4-21 -Refer to Figure 4-21. How much tax revenue does this tax produce for the government?

Because illegal drug markets operate outside the legal system,

If an increase in the government-imposed minimum wage pushes the price (wage) of unskilled labor above market equilibrium, which of the following will most likely occur in the unskilled labor market?

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. The amount of the tax per unit is

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

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

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?

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

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

Suppose that the minimum wage was increased to $10 per hour. Which of the following would be most likely to result from the minimum wage increase?

An income tax is regressive if

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

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: 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

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

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

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

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