Question 1

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 2

When a tax is imposed on a good, the actual incidence of the tax generally

Accepted Answer

A) falls entirely on the buyer. 
B) falls entirely on the seller. 
C) is shared between the buyer and seller. 
D) is the same as the statutory incidence. 
A) falls entirely on the buyer. 
B) falls entirely on the seller. 
C) is shared between the buyer and seller. 
D) is the same as the statutory incidence.

Question 3

If a government-imposed price floor legally sets the price of milk above market equilibrium, which of the following will most likely happen?

Accepted Answer

A) The quantity of milk demanded will increase. 
B) The quantity of milk supplied will decrease. 
C) There will be a surplus of milk. 
D) There will be a shortage of milk. 
A) The quantity of milk demanded will increase. 
B) The quantity of milk supplied will decrease. 
C) There will be a surplus of milk. 
D) There will be a shortage of milk.

Question 4

Which of the following is a major disadvantage of setting the price of a good below equilibrium and using waiting in line rather than price to ration the good?

Accepted Answer

A) Compared to price rationing, waiting in line is unfair since it is easier for those with higher incomes to wait in line. 
B) Waiting in line imposes a cost on the consumer; paying higher prices does not. 
C) Both waiting in line and higher prices are costly to consumers, but unlike the payment of a higher price, waiting in line does not provide suppliers with an incentive to expand future output. 
D) Waiting in line benefits consumers at the expense of producers. 
A) Compared to price rationing, waiting in line is unfair since it is easier for those with higher incomes to wait in line. 
B) Waiting in line imposes a cost on the consumer; paying higher prices does not. 
C) Both waiting in line and higher prices are costly to consumers, but unlike the payment of a higher price, waiting in line does not provide suppliers with an incentive to expand future output. 
D) Waiting in line benefits consumers at the expense of producers.

Question 5

Use the table below to choose the correct answer.  
The tax schedule shown here is

Accepted Answer

A) regressive. 
B) proportional. 
C) progressive. 
D) proportional up to $20,000 and regressive beyond that. 
A) regressive. 
B) proportional. 
C) progressive. 
D) proportional up to $20,000 and regressive beyond that.

Question 6

A $25 government subsidy paid directly to buyers of jeans will result in

Accepted Answer

A) a downward shift in the demand curve for jeans by $25. 
B) an upward shift in the demand curve for jeans by $25. 
C) a downward shift in the supply curve for jeans by $25. 
D) an upward shift in the supply curve for jeans by $25. 
A) a downward shift in the demand curve for jeans by $25. 
B) an upward shift in the demand curve for jeans by $25. 
C) a downward shift in the supply curve for jeans by $25. 
D) an upward shift in the supply curve for jeans by $25.

Question 7

When a price ceiling prevents a higher market price from rationing a good,

Accepted Answer

A) a surplus of the good will develop. 
B) scarcity of the good will be eliminated. 
C) non-price factors will play a more important role in the rationing process. 
D) the future supply of the good will expand rapidly. 
A) a surplus of the good will develop. 
B) scarcity of the good will be eliminated. 
C) non-price factors will play a more important role in the rationing process. 
D) the future supply of the good will expand rapidly.

Question 8

Use the figure below to answer the following question(s).
Figure 4-13
  
-Refer to Figure 4-13. The supply curve S and the demand curve D₁ indicate initial conditions in the market for flu shots. A new government program is implemented that grants buyers a $25 subsidy when they buy a flu shot, shifting the demand curve from D₁ to D₂. Which of the following is true for this subsidy given the information provided in the figure?

Accepted Answer

A) The original price of a flu shot was $75, and after the subsidy, it rises to $90. 
B) $65 represents the net price a buyer must pay for a flu shot after taking into account the subsidy payment. 
C) Buyers of flu shots will receive an actual benefit of $10 from the subsidy, while sellers of flu shots will receive an actual benefit of $15 from the subsidy. 
D) All of the above are true. 
A) The original price of a flu shot was $75, and after the subsidy, it rises to $90. 
B) $65 represents the net price a buyer must pay for a flu shot after taking into account the subsidy payment. 
C) Buyers of flu shots will receive an actual benefit of $10 from the subsidy, while sellers of flu shots will receive an actual benefit of $15 from the subsidy. 
D) All of the above are true.

Question 9

If Neleh's income increases from $60,000 to $80,000 and her tax liability increases from $12,000 to $16,000, which of the following is true?

Accepted Answer

A) Her marginal tax rate is 20 percent in this income range. 
B) Her average tax rate is 30 percent at her new income level of $80,000. 
C) She faces a regressive tax in this income range. 
D) She faces a progressive tax in this income range. 
A) Her marginal tax rate is 20 percent in this income range. 
B) Her average tax rate is 30 percent at her new income level of $80,000. 
C) She faces a regressive tax in this income range. 
D) She faces a progressive tax in this income range.

Question 10

A legal system that provides secure private property rights and unbiased enforcement of contracts

Accepted Answer

A) is unnecessary for the smooth operation of markets. 
B) reduces the efficiency of markets. 
C) enhances the efficiency of markets. 
D) makes it easier for sellers to cheat or defraud consumers. 
A) is unnecessary for the smooth operation of markets. 
B) reduces the efficiency of markets. 
C) enhances the efficiency of markets. 
D) makes it easier for sellers to cheat or defraud consumers.

Question 11

Approximately 50,000 luxury boats (priced $100,000 or more) are currently produced each year. Using the economic way of thinking, how much revenue would the government actually generate with a $10,000 excise tax on luxury boats?

Accepted Answer

A) $500 million 
B) less than $500 million 
C) more than $500 million 
D) approximately $5 billion 
A) $500 million 
B) less than $500 million 
C) more than $500 million 
D) approximately $5 billion

Question 12

If the government wants to raise tax revenue and shift most of the tax burden to the consumers, it would impose a tax on a good with a

Accepted Answer

A) flat (elastic) demand curve and a steep (inelastic) supply curve. 
B) steep (inelastic) demand curve and a flat (elastic) supply curve. 
C) steep (inelastic) demand curve and steep (inelastic) demand curve. 
D) flat (elastic) demand curve and a flat (elastic) supply curve. 
A) flat (elastic) demand curve and a steep (inelastic) supply curve. 
B) steep (inelastic) demand curve and a flat (elastic) supply curve. 
C) steep (inelastic) demand curve and steep (inelastic) demand curve. 
D) flat (elastic) demand curve and a flat (elastic) supply curve.

Question 13

The burden of a tax will fall primarily on sellers 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.

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

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

When a tax is imposed on a good, the actual incidence of the tax generally

If a government-imposed price floor legally sets the price of milk above market equilibrium, which of the following will most likely happen?

Which of the following is a major disadvantage of setting the price of a good below equilibrium and using waiting in line rather than price to ration the good?

Use the table below to choose the correct answer. The tax schedule shown here is

A $25 government subsidy paid directly to buyers of jeans will result in

When a price ceiling prevents a higher market price from rationing a good,

If Neleh's income increases from $60,000 to $80,000 and her tax liability increases from $12,000 to $16,000, which of the following is true?

A legal system that provides secure private property rights and unbiased enforcement of contracts

Approximately 50,000 luxury boats (priced $100,000 or more) are currently produced each year. Using the economic way of thinking, how much revenue would the government actually generate with a $10,000 excise tax on luxury boats?

If the government wants to raise tax revenue and shift most of the tax burden to the consumers, it would impose a tax on a good with a

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

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

B: 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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