Question 1

An effective subsidy paid to soybean farmers ________ the market price of soybeans and ________ the farmers' marginal cost of production.

Accepted Answer

A) lowers; increases 
B) lowers; decreases 
C) raises; increases 
D) raises; decreases 
E) raises; does not change 
A) lowers; increases 
B) lowers; decreases 
C) raises; increases 
D) raises; decreases 
E) raises; does not change A

Question 2

A production quota is set below the equilibrium quantity.At the quota quantity, marginal social benefit is ________ marginal social cost and the level of production is ________.

Accepted Answer

A) equal to; efficient 
B) greater than; efficient 
C) less than; efficient 
D) less than; inefficient 
A) equal to; efficient 
B) greater than; efficient 
C) less than; efficient 
D) less than; inefficient D

Question 3

When a minimum wage is set above the equilibrium wage rate,

Accepted Answer

A) unemployment decreases. 
B) job search activity decreases. 
C) the supply of workers decreases. 
D) unemployment increases. 
E) the supply of workers increases. 
A) unemployment decreases. 
B) job search activity decreases. 
C) the supply of workers decreases. 
D) unemployment increases. 
E) the supply of workers increases. D

Question 4

The buyer pays most of a tax if demand is relatively inelastic because

Accepted Answer

A) the buyer cannot easily substitute to other markets. 
B) the buyer can easily substitute to other markets. 
C) the government forces the seller to bear the burden of the tax. 
D) there is a black market for this good. 
E) the seller cannot easily substitute to other goods. 
A) the buyer cannot easily substitute to other markets. 
B) the buyer can easily substitute to other markets. 
C) the government forces the seller to bear the burden of the tax. 
D) there is a black market for this good. 
E) the seller cannot easily substitute to other goods.

Question 5

If the government imposes a maximum rent for housing that is above the equilibrium price, then you predict that

Accepted Answer

A) the law will have no effect in the market for housing. 
B) the law will generate a shortage of housing. 
C) the law will create a surplus of housing. 
D) the demand curve for housing shifts rightward. 
E) the supply curve of housing shifts leftward. 
A) the law will have no effect in the market for housing. 
B) the law will generate a shortage of housing. 
C) the law will create a surplus of housing. 
D) the demand curve for housing shifts rightward. 
E) the supply curve of housing shifts leftward.

Question 6

An effective minimum wage ________ the firms' surplus and ________ the workers' surplus.

Accepted Answer

A) decreases; increases 
B) increases; increases 
C) decreases; decreases 
D) increases; decreases 
E) has no effect on; has no effect on 
A) decreases; increases 
B) increases; increases 
C) decreases; decreases 
D) increases; decreases 
E) has no effect on; has no effect on

Question 7

A 3 cents per-unit tax on bread leads to no change in the quantity bought and sold.The tax is paid

Accepted Answer

A) completely by the sellers. 
B) completely by the buyers. 
C) equally by the buyers and sellers. 
D) mostly but not completely by the buyers. 
E) completely by either the sellers or the buyers; we cannot tell without more information. 
A) completely by the sellers. 
B) completely by the buyers. 
C) equally by the buyers and sellers. 
D) mostly but not completely by the buyers. 
E) completely by either the sellers or the buyers; we cannot tell without more information.

Question 8

Use the figure below to answer the following questions.
   
Figure 6.1.1
-Refer to Figure 6.1.1.If the demand for rental housing increases and the demand curve shifts rightward from D₀ to D₁, and the market is unregulated, the number of rooms rented is

Accepted Answer

A) 1,500, and the rent rises to $200 a month. 
B) 2,000, and the rent is at its initial level. 
C) 1,750, and the rent rises to $175 a month. 
D) 2,000, and the rent rises to $200 a month. 
E) 1,750, and the rent rises to $200 a month. 
A) 1,500, and the rent rises to $200 a month. 
B) 2,000, and the rent is at its initial level. 
C) 1,750, and the rent rises to $175 a month. 
D) 2,000, and the rent rises to $200 a month. 
E) 1,750, and the rent rises to $200 a month.

Question 9

If enforcement is aimed at buyers of an illegal good, the

Accepted Answer

A) price and quantity bought decrease. 
B) price and quantity bought increase. 
C) price rises and quantity bought decreases. 
D) price falls and quantity bought increases. 
E) price change is uncertain and quantity bought decreases. 
A) price and quantity bought decrease. 
B) price and quantity bought increase. 
C) price rises and quantity bought decreases. 
D) price falls and quantity bought increases. 
E) price change is uncertain and quantity bought decreases.

Question 10

The government sets a price floor for corn, which is above the equilibrium price of corn.As a result

Accepted Answer

A) the market for corn is efficient. 
B) a shortage of corn occurs. 
C) consumer surplus is maximized. 
D) a deadweight loss is created. 
E) the sum of consumer surplus and producer surplus is maximized. 
A) the market for corn is efficient. 
B) a shortage of corn occurs. 
C) consumer surplus is maximized. 
D) a deadweight loss is created. 
E) the sum of consumer surplus and producer surplus is maximized.

Question 11

A production quota is set equal to the equilibrium quantity.At the quota quantity, marginal social benefit is ________ marginal social cost and the level of production is ________.

Accepted Answer

A) less than; efficient 
B) greater than; efficient 
C) greater than; inefficient 
D) less than; inefficient 
E) equal to; efficient 
A) less than; efficient 
B) greater than; efficient 
C) greater than; inefficient 
D) less than; inefficient 
E) equal to; efficient

Question 12

Use the table below to answer the following questions.
Table 6.3.1
  
-Refer to Table 6.3.1.Suppose a sales tax of $2 a unit is imposed on the good described in the table.Government revenue from the tax is

Accepted Answer

A) $1,200. 
B) $1,000. 
C) $800. 
D) $600. 
E) zero. 
A) $1,200. 
B) $1,000. 
C) $800. 
D) $600. 
E) zero.

Question 13

Use the figure below to answer the following questions.
   
Figure 6.2.1
-Refer to Figure 6.2.1.If the minimum wage is set at $2 per hour, what is the level of unemployment in millions of hours?

Accepted Answer

A) 50 
B) 40 
C) 20 
D) 10 
E) 0 
A) 50 
B) 40 
C) 20 
D) 10 
E) 0

Question 14

Use the figure below to answer the following questions.
   
Figure 6.3.1
-Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.On each frisbee, the sellers' share of the tax is

Accepted Answer

A) $0.40. 
B) $0.60. 
C) $1.00. 
D) $5.60. 
E) $6.60. 
A) $0.40. 
B) $0.60. 
C) $1.00. 
D) $5.60. 
E) $6.60.

Question 15

If the demand for a good is perfectly elastic, then a tax on the good will be paid

Accepted Answer

A) completely by the buyers. 
B) completely by the sellers. 
C) equally by the buyers and sellers. 
D) mostly but not completely by the buyers. 
E) mostly but not completely by the sellers. 
A) completely by the buyers. 
B) completely by the sellers. 
C) equally by the buyers and sellers. 
D) mostly but not completely by the buyers. 
E) mostly but not completely by the sellers.

Question 16

Use the figure below to answer the following questions.
   
Figure 6.3.1
-Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.Government revenue from the tax is

Accepted Answer

A) $4,000. 
B) $5,000. 
C) $22,400. 
D) $26,400. 
E) $30,000. 
A) $4,000. 
B) $5,000. 
C) $22,400. 
D) $26,400. 
E) $30,000.

Question 17

If the supply of a good is perfectly inelastic, then a tax on the good will be paid

Accepted Answer

A) completely by the buyers. 
B) completely by the sellers. 
C) equally by the buyers and sellers. 
D) mostly but not completely by the buyers. 
E) mostly but not completely by the sellers. 
A) completely by the buyers. 
B) completely by the sellers. 
C) equally by the buyers and sellers. 
D) mostly but not completely by the buyers. 
E) mostly but not completely by the sellers.

Question 18

Use the figure below to answer the following questions.
   
Figure 6.3.2
-Refer to Figure 6.3.2.The seller's share of the tax is

Accepted Answer

A) zero. 
B) $0.50. 
C) $1.00. 
D) $1.50. 
E) $2.00. 
A) zero. 
B) $0.50. 
C) $1.00. 
D) $1.50. 
E) $2.00.

Question 19

Which one of the following statements is false?

Accepted Answer

A) An effective minimum wage sets the wage rate above the equilibrium wage rate. 
B) An effective rent ceiling sets the rent below the equilibrium rent. 
C) An effective rent ceiling leads to a housing shortage. 
D) An effective minimum wage is inefficient. 
E) A minimum wage is a price ceiling in the labour market. 
A) An effective minimum wage sets the wage rate above the equilibrium wage rate. 
B) An effective rent ceiling sets the rent below the equilibrium rent. 
C) An effective rent ceiling leads to a housing shortage. 
D) An effective minimum wage is inefficient. 
E) A minimum wage is a price ceiling in the labour market.

Question 20

Good A has a perfectly inelastic demand and an upward-sloping supply curve.Good B has a perfectly inelastic supply and a downward-sloping demand curve.If the same sales tax is imposed on the sellers of both good A and good B, the

Accepted Answer

A) price paid by buyers of good B rises by more than the price paid by buyers of good A. 
B) price paid by buyers of good A rises by more than the price paid by buyers of good B. 
C) price paid by buyers of good A rises by the same amount as the price paid by buyers of good B. 
D) quantity bought by buyers of good B decreases by more than the quantity bought by buyers of good A. 
E) quantity bought by buyers of good A decreases by more than the quantity bought by buyers of good A. 
A) price paid by buyers of good B rises by more than the price paid by buyers of good A. 
B) price paid by buyers of good A rises by more than the price paid by buyers of good B. 
C) price paid by buyers of good A rises by the same amount as the price paid by buyers of good B. 
D) quantity bought by buyers of good B decreases by more than the quantity bought by buyers of good A. 
E) quantity bought by buyers of good A decreases by more than the quantity bought by buyers of good A.

An effective subsidy paid to soybean farmers the market price of soybeans and the farmers' marginal cost of production.

A production quota is set below the equilibrium quantity.At the quota quantity, marginal social benefit is marginal social cost and the level of production is .

When a minimum wage is set above the equilibrium wage rate,

The buyer pays most of a tax if demand is relatively inelastic because

If the government imposes a maximum rent for housing that is above the equilibrium price, then you predict that

An effective minimum wage the firms' surplus and the workers' surplus.

A 3 cents per-unit tax on bread leads to no change in the quantity bought and sold.The tax is paid

Use the figure below to answer the following questions. Figure 6.1.1 -Refer to Figure 6.1.1.If the demand for rental housing increases and the demand curve shifts rightward from D₀ to D₁, and the market is unregulated, the number of rooms rented is

If enforcement is aimed at buyers of an illegal good, the

The government sets a price floor for corn, which is above the equilibrium price of corn.As a result

A production quota is set equal to the equilibrium quantity.At the quota quantity, marginal social benefit is marginal social cost and the level of production is .

Use the table below to answer the following questions. Table 6.3.1 -Refer to Table 6.3.1.Suppose a sales tax of $2 a unit is imposed on the good described in the table.Government revenue from the tax is

Use the figure below to answer the following questions. Figure 6.2.1 -Refer to Figure 6.2.1.If the minimum wage is set at $2 per hour, what is the level of unemployment in millions of hours?

Use the figure below to answer the following questions. Figure 6.3.1 -Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.On each frisbee, the sellers' share of the tax is

If the demand for a good is perfectly elastic, then a tax on the good will be paid

Use the figure below to answer the following questions. Figure 6.3.1 -Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.Government revenue from the tax is

If the supply of a good is perfectly inelastic, then a tax on the good will be paid

Use the figure below to answer the following questions. Figure 6.3.2 -Refer to Figure 6.3.2.The seller's share of the tax is

Which one of the following statements is false?

Good A has a perfectly inelastic demand and an upward-sloping supply curve.Good B has a perfectly inelastic supply and a downward-sloping demand curve.If the same sales tax is imposed on the sellers of both good A and good B, the

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

Exam 6: Government Actions in Markets

An effective subsidy paid to soybean farmers ________ the market price of soybeans and ________ the farmers' marginal cost of production.

A production quota is set below the equilibrium quantity.At the quota quantity, marginal social benefit is ________ marginal social cost and the level of production is ________.

When a minimum wage is set above the equilibrium wage rate,

The buyer pays most of a tax if demand is relatively inelastic because

If the government imposes a maximum rent for housing that is above the equilibrium price, then you predict that

An effective minimum wage ________ the firms' surplus and ________ the workers' surplus.

A 3 cents per-unit tax on bread leads to no change in the quantity bought and sold.The tax is paid

Use the figure below to answer the following questions. Figure 6.1.1 -Refer to Figure 6.1.1.If the demand for rental housing increases and the demand curve shifts rightward from D₀ to D₁, and the market is unregulated, the number of rooms rented is

If enforcement is aimed at buyers of an illegal good, the

The government sets a price floor for corn, which is above the equilibrium price of corn.As a result

A production quota is set equal to the equilibrium quantity.At the quota quantity, marginal social benefit is ________ marginal social cost and the level of production is ________.

Use the table below to answer the following questions. Table 6.3.1 -Refer to Table 6.3.1.Suppose a sales tax of $2 a unit is imposed on the good described in the table.Government revenue from the tax is

Use the figure below to answer the following questions. Figure 6.2.1 -Refer to Figure 6.2.1.If the minimum wage is set at $2 per hour, what is the level of unemployment in millions of hours?

Use the figure below to answer the following questions. Figure 6.3.1 -Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.On each frisbee, the sellers' share of the tax is

If the demand for a good is perfectly elastic, then a tax on the good will be paid

Use the figure below to answer the following questions. Figure 6.3.1 -Refer to Figure 6.3.1 showing the market for frisbees before and after a tax is imposed.Government revenue from the tax is

If the supply of a good is perfectly inelastic, then a tax on the good will be paid

Use the figure below to answer the following questions. Figure 6.3.2 -Refer to Figure 6.3.2.The seller's share of the tax is

Which one of the following statements is false?

Good A has a perfectly inelastic demand and an upward-sloping supply curve.Good B has a perfectly inelastic supply and a downward-sloping demand curve.If the same sales tax is imposed on the sellers of both good A and good B, the

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Filters

An effective subsidy paid to soybean farmers the market price of soybeans and the farmers' marginal cost of production.

A production quota is set below the equilibrium quantity.At the quota quantity, marginal social benefit is marginal social cost and the level of production is .

An effective minimum wage the firms' surplus and the workers' surplus.

A production quota is set equal to the equilibrium quantity.At the quota quantity, marginal social benefit is marginal social cost and the level of production is .