Chap 06

Microeconomics, 8e (Parkin) Testbank 2
Chapter 6 Markets in Action

1)
The short
run effect of a decrease in the supply of housing is a ________ in the rent and ________ in the quantity of housing units. A)
rise; a
B)
decrease
rise; an
C)
increase
fall; a
D)
decrease
fall; an
increase Answer:
Topic :
The Market Response to a Decrease in Supply Skill:
Recognition
2)
In the of a rent ceiling, the long run adjustment to an initial decrease in the supply of absence housing is A)
a decrease
B)
in demand for housing due to higher rent.
a decrease
C)
in demand for housing due to the initial shortage.
an increase in the supply of housing due to profits. D)
an increase in the supply of housing due to the initial surplus. Answer:
Topic :
Recognition
Rent (dollar s per month) 200 300 400 500 600 3)
Quanti ty of apartm ents supplie d (per month) 20 40 60 80 100
Quanti ty of apartm ents deman ded (per month) 100 80 60 40 20
The above
table gives the demand schedule and the supply schedule for housing in Anytown, U.S.A. If a price ceiling of $300 is imposed in the housing market, then A)
there would be a surplus of apartments. B)
there would be a shortage of apartments. C)
the market
D)
would reach equilibrium at the quantity of 60 housing units.
the supply of housing would increase. Answer:
Topic :
A Regulated Housing Market Skill:
Analytical
4)
The above
table gives the demand schedule and the supply schedule for housing in Anytown, U.S.A. If a price ceiling of $600 was imposed in the housing market, then A)
there would be a surplus of apartments. B)
there would be a shortage of apartments. C)
the market
D)
would reach equilibrium at the quantity of 60 housing units.
the supply of housing would increase. Answer:
Topic :
Analytical
5)
In the above
figure, which of the following shifts shows the effect of severe flooding that destroys many of the apartment buildings in Bigtown? A)
from S1 to
B)
S2
from S2 to
C)
S1
from D1 to
D)
D2
from D2 to D1 Answer:
Topic :
Recognition
6)
A rent
ceiling results in a shortage. As a result, which of the following do you expect? A)
The shortage will persist as long as the ceiling is in effect. B)
Discriminatio n as landlords choose their tenants, possibly based on race, age, or gender. C)
A black market for D)
apartments whereby higher rents are obtained through various other charges.
All of the
above would be expected. Answer:
Topic :
Analytical
7)
When a ceiling is imposed in a housing market, the opportunity cost of housing equals the rent A)
rent.
B)
market
C)
equilibrium rent that would prevail in the absence of a rent ceiling.
value of the time and resources spent searching plus the rent. D)
consumer surplus. Answer:
Topic :
Conceptual
8)
A rent
ceiling results in a shortage. As a result, which of the following do you expect? A)
A shortage of applicants for the apartments available. B)
Discriminatio n as tenants choose their landlords, possibly based on race, age, or gender. C)
A black market for D)
apartments whereby higher rents are obtained through various other charges.
In the long- run, more and more people will want to become landlords. Answer:
Topic :
Black Markets Skill:
Analytical
9)
The above
figure shows the apartment rental market in Bigtown. At what rent will there be neither a shortage nor a surplus of apartments? A)
$1250 per
B)
month
$1000 per
C)
month
$750 per
D)
month
$500 per
month Answer:
Topic :
A Housing Market Skill:
Recognition
10)
The above
figure shows the apartment rental market in Bigtown. If severe flooding resulted in the destruction of many of the city's apartment buildings, then the A)
supply curve of apartments would shift leftward and rent would rise above $750.00. B)
demand
C)
curve for apartments would shift rightward and rent would rise above $750.00.
equilibrium quantity of apartments rented would increase beyond 3,000. D)
equilibrium market price of apartments rented would fall below $750.00. Answer:
Topic :
Analytical
11)
The above
figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling below $750 per month, the rent ceiling will help A)
all renters.
B)
some renters and hurt other renters. C)
all landlords. D)
some
landlords and hurt other landlords. Answer:
Topic :
Analytical
12)
The above
figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling above $750 per month, the ceiling will A)
help all
B)
renters.
help some
C)
renters and hurt other renters.
help all
D)
landlords.
have no
effect at all on the Bigtown rental market. Answer:
Topic :
Analytical
13)
The above figure
shows the apartment rental market in Bigtown. If there is a shortage of 200,000 apartments in the Bigtown rental market, it may be because the Bigtown Housing Authority has imposed a rent A)
ceiling of
B)
$750.00 monthly.
ceiling of
C)
$500.00 monthly.
floor of
D)
$750.00 monthly.
floor of
$500.00 monthly. Answer:
Topic :
Analytical
14)
The above figure
shows the apartment rental market in Bigtown. If the market is in equilibrium and then the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, which of the following would occur? A)
a decrease
B)
in the search time and expense of finding an apartment
an increase in the search time and expense of finding an apartment C)
an increase in producer surplus but a decrease in consumer surplus D)
an increase in efficiency Answer:
Topic :
Search Activity Skill:
Analytical
15)
The above
figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, the deadweight loss will be A)
$1,000,000. B)
$500,000.
C)
$250,000.
D)
$125,000. Answer:
Topic :
Inefficiency of Rent Ceilings Skill:
Analytical
16)
The figure
above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, how many apartment units are rented? A)
2,000
B)
3,000
C)
4,000
D)
None of the above answers is correct. Answer:
Topic :
Analytical*
17)
The figure
above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, what is the rent? A)
$800
B)
$600
C)
$400
D)
Topic :
Analytical
18)
The figure
above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, there is A)
a shortage of 3,000 units of rental housing. B)
a shortage of 6,000 units of rental housing. C)
a surplus of 3,000 units of rental housing. D)
neither a
shortage nor a surplus of rental housing. Answer:
Topic :
Analytical*
19)
The figure
above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $400, how many apartment units are rented? A)
2,000
B)
3,000
C)
4,000
D)
Topic :
Analytical*
20)
The figure
above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $400, what is the rent? A)
$800
B)
$600
C)
$400
D)
Topic :
Analytical
21)
The figure
above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $400, there is A)
a shortage of 4,000 units of rental housing. B)
a shortage of 2,000 units of rental housing. C)
a surplus of 3,000 units of rental housing. D)
neither a
shortage nor a surplus of rental housing. Answer:
Topic :
Analytical*
22)
Which of the followin g is a
result of an effective rent ceiling? I. equity in the housing market II. efficient allocation of resources III. a shortage of housing units. A)
I and II
B)
I and III
C)
II only
D)
III only
Answer:
Topic :
Conceptual
23)
A rent
ceiling creates a shortage. As a result, which of the following occurs? A)
only a loss of consumer surplus for tenants B)
only a loss of producer surplus for landlords C)
a loss of
D)
both consumer and producer surplus
a gain of
both consumer and producer surplus Answer:
Topic :
Analytical
24)
A rent
ceiling creates a shortage. As a result, there is A)
an efficient
B)
allocation of housing.
a surplus of housing. C)
an increase in the producer surplus in the housing market. D)
a decrease in the producer surplus in the housing market. Answer:
Topic :
Analytical
25)
A rent
ceiling creates a shortage. As a result, there is a deadweight loss A)
from only
B)
lost consumer surplus.
from only
C)
lost producer surplus.
from both
D)
lost consumer and producer surplus.
that exactly offsets the gains in consumer and producer surplus. Answer:
Topic :
Analytical
26)
Which of the
following is an economic policy that promotes the efficient quantity of apartments? A)
a rent floor
B)
above the equilibrium rent
a rent ceiling below the equilibrium rent C)
a sales tax
D)
imposed on renting an apartment
none of the above Answer:
Topic :
Conceptual
27)
A rent
ceiling results in a shortage of apartments. As a result, there is A)
only a loss of consumer surplus for tenants. B)
only a loss of producer surplus for landlords. C)
a loss of
D)
both consumer and producer surplus.
a gain of
both consumer and producer surplus. Answer:
Topic :
Conceptual
28)
The figure above
shows the housing market in the city of Appleville. A rent ceiling of $650 per month is imposed. With the rent ceiling, the quantity of housing rented in Appleville is A)
200 units
B)
below the efficient level.
100 units
C)
above the efficient level.
300 units
D)
below the efficient level.
efficient.
Answer:
Topic :
Analytical*
29)
The figure above
shows the housing market in the city of Appleville. A rent ceiling of $650 per month is imposed. With the rent ceiling, the deadweight loss in the Appleville housing market is A)
zero.
B)
at least
C)
$15,000 per month.
at most
D)
$7,500 per month.
300 units per month. Answer:
Topic :
Analytical*
30)
The figure above
shows the housing market in the city of Appleville. A rent ceiling of $650 per month is imposed. With the rent ceiling, what is the maximum black market rent in Appleville? A)
$650 per
B)
month
$700 per
C)
month
$750 per
D)
month
$800 per
month Answer:
Topic :
Analytical*
31)
The above
figure shows the demand and supply curves for housing. What would be the effects of a rent ceiling equal to $500 per month? A)
a surplus
B)
equal to 3,000 apartments
a shortage
C)
equal to 3,000 apartments
a shortage
D)
equal to 250 apartments
nothing
because the rent ceiling has no effect on the equilibrium price and quantity Answer:
Topic :
Conceptual
32)
The above
figure shows the demand and supply curves for housing As a result of a rent ceiling at $500, the deadweight loss is represented by the area A)
rectangle
B)
feag.
triangle gfe. C)
triangle eca. D)
triangle acb. Answer:
Topic :
Conceptual
33)
A hurrican e sweeps
through New Orleans and destroys a substantial portion of available housing. The pre-hurricane housing market for New Orleans is illustrated in the above figure. In the absence of rent controls, the short-run market response will be to move to a new equilibrium in the above figure at a price-quantity combination such as A)
$600 and
B)
100,000 units.
$800 and
C)
200,000 units.
$800 and
D)
400,000 units.
$600 and 500,000 units. Answer:
Topic :
An Unregulated Housing Market Skill:
Analytical
34)
A hurrican e sweeps
through New Orleans and destroys a substantial portion of available housing. The pre-hurricane housing market for New Orleans is illustrated in the above figure. In the absence of rent controls, a perfectly elastic long-run supply curve of housing would lead to a post-hurricane price-quantity combination in the long run of A)
$600 and
B)
300,000 units.
$600 and
C)
100,000 units.
$800 and
D)
400,000 units.
$800 and 200,000 units. Answer:
Topic :
An Unregulated Housing Market Skill:
Analytical
35)
A hurrican e sweeps
through New Orleans and destroys a substantial portion of available housing. The pre-hurricane housing market for New Orleans is illustrated in the above figure. Assume that the housing market in New Orleans has a rent ceiling in place at $600 per unit. In the short-run, the post-hurricane quantity of housing may be A)
200,00 units. B)
300,000
C)
units.
400,000
D)
units.
500,000
units. Answer:
Topic :
Analytical
36)
A hurrican e sweeps through
New Orleans and destroys a substantial portion of available housing. The prehurricane housing market for New Orleans is illustrated in the above figure. Assume that the housing market in New Orleans has a rent ceiling in place at $600 per unit. A maximum black market rent of $800 could be charged for which of the following quantities? A)
200,00 units B)
300,000
C)
units
400,000
D)
units
500,000
units Answer:
Topic :
Analytical
37)
A price
ceiling is a price A)
below which a seller cannot legally sell. B)
above which a seller cannot legally sell. C)
that creates a surplus of the good. D)
Both
answers A and C are correct. Answer:
Topic :
Price Ceiling Skill:
Recognition
38)
A price
ceiling can result in which of the following? A)
inefficiency B)
black
C)
markets
increased
D)
search activities
All of the
above answers are correct. Answer:
Topic :
Analytical
39)
Price
ceilings, such as rent ceilings, A)
increase
B)
producer surplus.
decrease
C)
producer surplus.
do not affect producer surplus. D)
might
increase or decrease producer surplus. Answer:
Topic :
Recognition
40)
A price
ceiling, such as a rent ceiling, A)
always
B)
results in a surplus.
always
C)
results in a shortage.
results in a
D)
surplus if the ceiling price is less than the equilibrium price.
results in a shortage if the ceiling price is less than the equilibrium price. Answer:
Topic :
Recognition
41)
Which
of the following is a typical effect of a price ceiling set below the equilibrium price? A)
Less of the
B)
good is produced with the ceiling than would be produced without the ceiling.
The price
C)
ceiling has no effect on the market equilibrium.
Consumers more than they can at the equilibrium price because the ceiling price is lower. can buy D)
Topic :
Recognition
42)
Which of the
following is NOT a potential impact of an effective price ceiling, such as a rent ceiling? A)
a surplus
B)
an increase in search C)
D)
deadweight loss
None of the above because they are all potential impacts of an effective price ceiling. Answer:
Topic :
Conceptual
43)
Which
of the following is a potential impact of an effective price ceiling? A)
a shortage
B)
use of non- such as discrimination to allocate the price-controlled good to consumers price factors C)
deterioration in the quality of the price-controlled good D)
All of the
above are potential impacts of an effective price ceiling. Answer:
Topic :
Conceptual
44)
In order to have an effect, a price ceiling must be set ________. A)
above the
B)
equilibrium price
equal to the equilibrium price C)
below the
D)
equilibrium price
by suppliers Answer:
Topic :
Recognition
45)
A price is a regulated ________ that must be set below the equilibrium price to have an effect. ________ A)
floor; price
B)
floor;
C)
quantity
ceiling; price D)
ceiling;
quantity Answer:
Topic :
Recognition
46)
________ illegal activity between buyers and sellers sometimes used to evade a price ceiling. is an A)
Increased
B)
search activity
A price floor C)
Creating a
D)
shortage
A black
market Answer:
Topic :
Conceptual
47)
In the
U.S. economy, wage rates for various types of labor are determined primarily by A)
the federal
B)
government.
labor unions. C)
the supply
D)
and demand for the various types of labor.
the state of technology. Answer:
Topic :
The Labor Market Skill:
Conceptual
48)
In the of a minimum wage, the short-run effect of a decrease in the demand for labor is a absence ________ in the equilibrium wage rate and ________ in the equilibrium employment. A)
rise; a
B)
decrease
rise; an
C)
increase
fall; a
D)
decrease
fall; an
increase Answer:
Topic :
Conceptual
49)
In the
market for unskilled labor, the long-run A)
minimum
B)
wage is lower than the short-run minimum wage.
demand for labor is less elastic than the short-run demand. C)
supply of
D)
labor is less elastic than the short-run supply.
supply of labor is more elastic than the short-run supply. Answer:
Topic :
Conceptual
50)
The initial
effect of a labor saving invention, such as automatic teller machines in the banking industry, is a A)
rightward
B)
shift of the demand curve for labor.
leftward shift of the demand curve for labor. C)
rightward
D)
shift of the supply curve of labor
leftward shift of the supply curve of labor. Answer:
Topic :
Conceptual
51)
Suppos long-run supply of labor is perfectly elastic. Then in the long run, compared to the e that initial equilibrium, a labor saving invention, such as automatic teller machines in the the banking industry, results in A)
a decrease
B)
in employment and no change in the wage rate.
a decrease
C)
in the wage rate and no change in employment.
a decrease
D)
in both the wage rate and employment.
an increase in both the wage rate and employment. Answer:
Topic :
Conceptual
52)
In the of a minimum wage, the long-run adjustment to a decrease in the demand for labor absence is A)
a decrease
B)
in the supply of labor due to the lower wage rate.
a decrease
C)
in the supply of labor due to the shortage of labor.
an increase in the demand for labor due to the lower wage rate. D)
an increase in the demand for labor due to the surplus of labor. Answer:
Topic :
Conceptual
53)
In the
U.S. economy, wage rates for various types of labor are determined primarily by A)
the federal
B)
government.
businesses. C)
the supply
D)
and demand for the various types of labor.
the Labor Relations Board. Answer:
Topic :
Recognition
54)
The initial
effect of a labor-saving invention, such as automatic teller machines in the banking industry, is a ________ shift of the ________ curve for labor. A)
rightward;
B)
demand
leftward;
C)
demand
rightward;
D)
supply
leftward;
supply Answer:
Topic :
Conceptual
55)
In the shortrun,
with no minimum wage, the introduction of labor-saving inventions in a market for low-skilled labor will ________ the equilibrium wage rate and ________ the equilibrium quantity of employment. A)
raise;
B)
increase
raise;
C)
decrease
lower;
D)
increase
lower;
decrease Answer:
Topic :
Analytical
56)
In the long-
run, with no minimum wage, the introduction of labor-saving inventions in a market for low-skilled labor will result in A)
some people acquiring new skills and leaving the market. B)
some people stopping working and staying at home. C)
some people retiring. D)
All of the
Topic :
Recognition
57)
A price
floor is a price A)
below which a seller cannot legally sell. B)
above which a seller cannot legally sell. C)
that creates a surplus of the good if it is set above the equilibrium price. D)
Both
Topic :
Price Floor Skill:
Recognition
58)
An
example of a price floor is a A)
rent control. B)
minimum
C)
wage.
subsidy.
D)
quota.
Answer:
Topic :
Price Floor Skill:
Recognition
59)
minimum wage A)
is an
B)
example of a price ceiling.
can reduce
C)
labor turnover because wages are higher.
result in
D)
more employment than the equilibrium level of employment.
leads to
shortages of low-skilled labor. Answer:
Topic :
Minimum Wage Skill:
Recognition
60)
A m wage is a government-imposed price ________ that is designed to be ________ the minimu equilibrium wage rate. A)
ceiling;
B)
above
ceiling;
C)
below
floor; above D)
floor; below Answer:
Topic :
The Minimum Wage Skill:
Recognition
61)
minimum wage set above the equilibrium wage will A)
create a
B)
shortage of labor.
create a
C)
surplus of labor.
have no effect D)
because the equilibrium level of employment is not affected by a minimum wage above the equilibrium wage.
create a
lower wage rate for skilled workers than for unskilled workers. Answer:
Topic :
Conceptual
62)
Suppos equilibrium wage in the low-skilled labor market is $6.25. Further, suppose the e that federal government raises the minimum wage to $6.00 an hour from its present level the of $5.15. The government's action of increasing the minimum wage will result in A)
a decrease
B)
in unemployment.
an increase in unemployment. C)
a shortage of low-skilled labor. D)
neither a
shortage nor a surplus of labor in the low-skilled labor market. Answer:
Topic :
Conceptual
63)
The
minimum wage A)
is type of of price ceiling. B)
is a type of
C)
price floor.
usually
D)
creates a surplus of labor.
Both
Topic :
Conceptual
64)
The
minimum wage is an example of a A)
price ceiling. B)
tax.
C)
quota.
D)
price floor. Answer:
Topic :
Recognition
65)
Suppos equilibrium wage is $10 per hour. A minimum wage is a ________ and affects e the employment if it is set at ________. A)
price floor;
B)
$12 per hour
price floor;
C)
$8 per hour
price ceiling; $10 per hour D)
price ceiling; $12 per hour Answer:
Topic :
Analytical
66)
If policy believe that the equilibrium wage rate is too low, policy makers can raise wages by makers legislating a "minimum wage," that is, a wage A)
ceiling above the equilibrium wage. B)
ceiling below the equilibrium wage. C)
floor above the equilibrium wage. D)
floor below the equilibrium wage. Answer:
Topic :
Analytical
67)
The
primary goal of policy makers who support minimum wage legislation is to A)
increase
B)
employment levels among low income workers.
increase the earnings of low income workers. C)
reduce the
D)
profit levels of giant corporations.
give small businesses an equal chance in the marketplace with larger businesses. Answer:
Topic :
Analytical
68)
In the above
figure, if the minimum wage is equal to ________, there would be ________ hours of labor employed. A)
$8 per hour; 4,000 B)
$8 per hour; 2,000 C)
$6 per hour; 3,000 D)
$4 per hour; 2,000 Answer:
Topic :
Minimum Wage and Unemployment Skill:
Recognition
69)
In the above figure
suppose a minimum wage of $8 per hour is imposed. As a result, the quantity of labor supplied is ________ hours and the quantity of labor demanded is ________ hours. A)
3,000; 4,000 B)
4,000; 4,000 C)
2,000; 4,000 D)
4,000; 2,000 Answer:
Topic :
Analytical
70)
In the above
figure, if there is no minimum wage, the equilibrium employment is ________; if the government imposed a minimum wage of $8 per hour, employment is ________. A)
4,000 hours; 2,000 hours B)
3,000 hours; 4,000 hours C)
3,000 hours; 2,000 hours D)
4,000 hours; 3,000 hours Answer:
Topic :
Analytical
71)
In the above
figure, if the government imposed a minimum wage of $8 per hour in this labor market, the increase in the hourly wage for those who are able to keep their jobs is A)
$2 per hour. B)
$4 per hour. C)
$6 per hour. D)
$8 per hour. Answer:
Topic :
Recognition
72)
In the above
figure, a minimum wage has an effect on the market for low-skilled labor if it is set at A)
$2.00.
B)
$3.00.
C)
$4.00.
D)
all of the
above Answer:
Topic :
Analytical
73)
In the above
figure, if the minimum wage is set at $5.00 per hour, what effect will it have on the market for low-skilled labor? A)
The
B)
minimum wage will have no effect when set above the equilibrium wage rate.
The
C)
minimum wage will create a surplus of low-skilled labor.
The
D)
minimum wage will create a shortage of low-skilled labor.
The wage will attract more labor to the low-skilled labor market and cause the wage minimum rate to fall. Answer:
Topic :
Analytical
74)
The figure
above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $4 per hour, how many hours do students work? A)
12,000 hours B)
9,000 hours C)
6,000 hours D)
Topic :
Analytical
75)
The figure above
shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $4 per hour, how many hours of students' labor are unemployed? A)
12,000 hours B)
9,000 hours C)
6,000 hours D)
0 hours
Answer:
Topic :
Analytical
76)
The figure
12,000 hours B)
9,000 hours C)
6,000 hours D)
Topic :
Analytical
77)
The figure above
12,000 hours B)
9,000 hours C)
6,000 hours D)
0 hours
Answer:
Topic :
Analytical
78)
The figure
12,000 hours B)
9,000 hours C)
6,000 hours D)
Topic :
Analytical
79)
The figure above
12,000 hours B)
9,000 hours C)
6,000 hours D)
0 hours
Answer:
Topic :
Analytical
80)
In the above
figure, which wage rate could be an effective minimum wage that changes the wage rate and what would be the resulting level of employment? A)
A wage of B)
W2 and L1 of labor would be employed.
A wage of C)
A wage of D)
A wage of W1 and L2 of labor would be employed. Answer:
Topic :
Recognition
81)
The figure above
shows the market for low-skilled labor in Midland city. The government sets a minimum wage at $6 per hour. The minimum wage ________ the employers' surplus by ________ million per year. A)
decreases;
B)
$60
decreases;
C)
$120
increases;
D)
$40
increases; $100 Answer:
Topic :
Analytical*
82)
The figure above shows
the market for low-skilled labor in Midland city. The government sets a minimum wage at $6 per hour. With the minimum wage law enacted, at the quantity of labor employed, the value to the firm of last worker hired is ________ the wage rate for which that person is willing to work. A)
the same as B)
$3 per hour less than C)
$3 per hour greater than D)
$1 per hour greater Answer:
Topic :
Analytical*
83)
The figure above
shows the market for low-skilled labor in Midland city. The government sets a minimum wage at $6 per hour. With the minimum wage law enacted, the potential loss from job search in Midland city is A)
$60 million. B)
$120 million. C)
$40 million. D)
zero.
Answer:
Topic :
Analytical*
84)
If a
minimum wage is set above the equilibrium wage rate, employment A)
will increase. B)
will not
C)
change.
will
D)
decrease.
may increase,
decrease or not change depending on how the supply of labor is affected by the minimum wage. Answer:
Topic :
The Minimum Wage in Practice Skill:
Conceptual
85)
Imposin g a minimum wage that is above the equilibrium wage rate results in A)
higher job
B)
search costs.
lower
C)
unemployment.
the labor
D)
market becoming more efficient.
equilibrium in the labor market. Answer:
Topic :
The Minimum Wage in Practice Skill:
Conceptual
86)
The govern
ment raises the sales tax on shirts. The tax is imposed on sellers. As a result, the ________. A)
supply curve of shirts shifts leftward B)
supply curve of shirts shifts rightward C)
demand
D)
curve for shirts becomes vertical
demand
curve for shirts becomes horizontal Answer:
Topic :
Who Pays the Sales Tax? Skill:
Analytical
87)
As long supply curve for a good is upward sloping and the demand curve is downward as the sloping, a sales tax imposed on sellers shifts the supply curve A)
leftward and definitely raises the equilibrium price. B)
leftward and possibly raises the equilibrium price. C)
rightward
D)
and possibly increases the equilibrium quantity.
rightward and definitely decreases the equilibrium quantity. Answer:
Topic :
Analytical
88)
The y of demand for chocolate chip cookies is 0.6 and the elasticity of supply for these elasticit cookies is 1.9. If a tax is imposed on purchases of chocolate chip cookies, then the A)
consumers
B)
would pay more of the tax.
producers
C)
would pay more of the tax.
tax would be equally shared by the consumers and the producers. D)
consumers the entire tax because their demand is less elastic than the producers' supply. would pay Answer:
Topic :
Tax Incidence and the Elasticity of Demand Skill:
Conceptual
89)
A sales imposed on sellers shifts the supply curve leftward for the taxed good because the tax A)
tax is paid
B)
by the seller to the government and is, therefore, like a cost of production.
tax is
C)
actually shifted entirely onto the buyer who can afford only a smaller supply.
higher price causes entry into the market. D)
tax shifts the demand curve leftward. Answer:
Topic :
Conceptual
90)
When a tax is imposed on sellers, the supply curve shifts so that the vertical distance sales between the old and the new supply curve equals the A)
sales tax
B)
multiplied by the price elasticity of demand.
sales tax
C)
multiplied by the price elasticity of supply.
amount of
D)
the sales tax.
sales tax
divided by the price elasticity of demand. Answer:
Topic :
Conceptual
91)
In the above
figure, the government has imposed a tax on sellers of pizza. The amount of the tax A)
is $10.
B)
is $30.
C)
is $40.
D)
cannot be determined without more information. Answer:
Topic :
Analytical
92)
In the above
figure, the government has imposed a tax on sellers of pizza. The tax increases the A)
price paid by buyers by $10. B)
amount
C)
received by sellers by $30.
after-tax
D)
price by $40.
quantity of pizza sold from 40 million per year to 60 million per year. Answer:
Topic :
Analytical
93)
In the above figure,
the government has imposed a tax on sellers of pizza. After the tax has been imposed, the after-tax price of a pizza is ________ and the equilibrium quantity is ________ per year. A)
$10; 60
B)
million
$20; 40
C)
million
$20; 20
D)
million
$30; 20
million Answer:
Topic :
Analytical
94)
In the above figure,
the government has imposed a tax on sellers of pizza. Before the tax, consumers paid ________ for a pizza and after the tax is imposed, consumers pay ________ for a pizza. A)
$20; $20
B)
$20; $30
C)
$10; $40
D)
$20; $40
Answer:
Topic :
Analytical
95)
In the above
figure, the government has imposed a tax on sellers of pizza. From this tax, the government will receive total tax revenues equal to A)
$2,400
B)
million.
$800 million. C)
$600 million. D)
$200 million. Answer:
Topic :
Analytical
96)
The figure
above shows the market for coffee in Roastboro. If a tax on coffee of 75 cents per pound is imposed on sellers, what is the price that buyers pay? A)
$3.50 a
B)
pound
$3.75 a
C)
pound
$4.50 a
D)
pound
$4.75 a
pound Answer:
Topic :
Analytical
97)
The figure
above shows the market for coffee in Roastboro. If a tax on coffee of 75 cents per pound is imposed on sellers, what is the price that sellers receive and keep? A)
$3.50 a
B)
pound
$3.75 a
C)
pound
$4.50 a
D)
pound
$4.75 a
pound Answer:
Topic :
Analytical
98)
The figure
above shows the market for coffee in Roastboro. If a tax on coffee of 75 cents per pound is imposed on sellers, how many pounds of coffee are sold per day? A)
60 pounds
B)
90 pounds
C)
120 pounds D)
150 pounds Answer:
Topic :
Analytical
99)
The figure
above shows the market for coffee in Roastboro. If a tax on coffee of 75 cents per pound is imposed on sellers, what is the government's tax revenue per day? A)
$67.50
B)
$90
C)
$405
D)
$337.50
Answer:
Topic :
Analytical
100)
The figure
above shows the market for coffee in Roastboro. If a tax on coffee of 75 cents per pound is imposed on sellers, how much of the tax is paid by buyers? A)
75
B)
50
C)
25
D)
Answer:
Topic :
Analytical
101)
The figure
above shows the market for coffee in Roastboro. If a tax on coffee of 75 cents per pound is imposed on sellers, how much of the tax is paid by sellers? A)
75
B)
50
C)
25
D)
Answer:
Topic :
Analytical
102)
In the above
figure, a sales tax of $1 per unit imposed on sellers ________ the price buyers pay and ________ the price that suppliers keep for themselves. A)
affects; does not affect B)
does not
C)
affect; affects
does not
D)
affect; does not affect
affects;
affects Answer:
Topic :
Analytical
103)
In the
above figure, a sales tax of $1 per unit imposed on sellers shifts the A)
demand
B)
curve rightward.
supply curve leftward. C)
demand
D)
curve leftward.
supply curve rightward. Answer:
Topic :
Analytical
104)
A tax is on the sale of a product. As long as neither the supply nor the demand is perfectly imposed elastic or inelastic, A)
there is no
B)
change in the price paid by the consumers.
the price
C)
paid by the consumers increases by the full amount of the tax.
the price
D)
paid by the consumers increases by less than the amount of the tax.
the price
paid by the consumers increases by more than the amount of the tax. Answer:
Topic :
Tax Incidence and Elasticity Skill:
Recognition
105)
The buyers
pay the entire sales tax levied on a good when demand is perfectly ________ or supply is perfectly ________. A)
elastic;
B)
inelastic
elastic;
C)
elastic
inelastic;
D)
inelastic
inelastic;
elastic Answer:
Topic :
Recognition
106)
The sellers
pay the entire sales tax levied on a good when demand is perfectly ________ or supply is perfectly ________. A)
elastic;
B)
inelastic
elastic;
C)
elastic
inelastic;
D)
inelastic
inelastic;
elastic Answer:
Topic :
Recognition
107)
Suppos government places a sales tax on hotel rooms and that the demand for these rooms e the is elastic while the supply is perfectly inelastic. The tax incidence is such that the tax local will be paid by A)
only the
B)
consumers.
equally by
C)
the consumers and the producers.
only the
D)
producers.
the
taxpayers. Answer:
Topic :
Conceptual
108)
Under the following situations would a sales tax on local telephone service be paid for by which of both producers and consumers? A)
Demand for local telephone service is perfectly elastic. B)
Supply of
C)
local telephone service is perfectly elastic.
Demand for local telephone service is perfectly inelastic. D)
In none of the above cases will both the producers and consumers pay part of the tax. Answer:
Topic :
Conceptual
109)
The supply
of oil is more elastic than the demand for oil. If oil is taxed $10 per barrel, how will the tax be divided between the buyers and sellers? A)
The sellers
B)
will pay more of the tax than the buyers.
The buyers
C)
will pay more of the tax than the sellers.
The sellers
D)
and buyers will split the tax evenly.
The sellers will pay the entire tax. Answer:
Topic :
Conceptual
110)
The
incidence of sales tax is determined by the A)
level of
B)
government (for example, local, state, or federal) which imposes the tax.
federal
C)
government in all cases.
greed of the sellers. D)
price
elasticities of supply and demand. Answer:
Topic :
Conceptual
111)
When a tax is imposed on the suppliers of a good or service, then A)
in general
B)
the producers pay all the tax.
in general
C)
the consumers pay all the tax.
the pay a larger part of the tax as the demand for the product becomes less elastic. demanders D)
the pay a larger part of the tax as the demand for the product becomes more demanders elastic. Answer:
Topic :
Analytical
112)
Which
of the following leads to the demanders paying all of a tax? A)
The supply is unit elastic. B)
The supply is perfectly inelastic. C)
The demand is perfectly elastic. D)
The demand is perfectly inelastic. Answer:
Topic :
Analytical
113)
Which
of the following leads to the suppliers paying all of a tax? A)
The supply is perfectly elastic. B)
The supply is perfectly inelastic. C)
The demand is unit elastic. D)
The demand is perfectly inelastic. Answer:
Topic :
Tax Incidence and the Elasticity of Supply Skill:
Analytical
114)
The
amount of a tax paid by the buyers will be larger the A)
more elastic the demand and the more inelastic the supply. B)
more
C)
inelastic the demand and the more elastic the supply.
more
D)
inelastic are both the supply and demand.
more elastic are both the supply and demand. Answer:
Topic :
Tax Incidence Skill:
Conceptual
115)
The
amount of a tax paid by the buyers will be smaller the A)
more elastic the demand and the more inelastic the supply. B)
more
C)
inelastic the demand and the more elastic the supply.
more
D)
inelastic are both the supply and demand.
more elastic are both the supply and demand. Answer:
Topic :
Conceptual
116)
Suppos e a $1 tax is placed on a good. The more elastic the supply of the good, the A)
larger the
B)
increase in the after-tax price.
smaller the decrease in the quantity sold. C)
less of the
D)
tax will be paid by the buyers.
more of the tax will be paid by the sellers. Answer:
Topic :
Conceptual
117)
The of a tax paid by the sellers will be larger the more ________ the demand and the more amount ________ the supply. A)
elastic;
B)
inelastic
inelastic;
C)
elastic
inelastic;
D)
inelastic
elastic;
elastic Answer:
Topic :
Conceptual
118)
The of a tax paid by the sellers will be smaller the more ________ the demand and the amount more ________ the supply. A)
elastic;
B)
inelastic
inelastic;
C)
elastic
inelastic;
D)
inelastic
elastic;
elastic Answer:
Topic :
Conceptual
119)
The govern
ment imposes a sales tax on hot dogs. The tax would be paid entirely by hot dog sellers if the A)
supply is
B)
perfectly elastic.
supply is
C)
perfectly inelastic.
demand is
D)
none of the above Answer:
Topic :
Conceptual
120)
The govern
ment imposes a sales tax on hot dogs. The tax would be paid entirely by the hot dog buyers if the A)
supply is
B)
perfectly elastic.
supply is
C)
demand is
D)
perfectly elastic.
Topic :
Analytical
121)
The govern ment of Healthyl
and imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. With the tax, the price of salt paid by buyers in Healthyland is A)
$0.40 per
B)
pound.
$0.45 per
C)
pound.
$0.35 per
D)
pound.
$0.50 per pound. Answer:
Topic :
Analytical*
122)
and imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the market price of salt is $0.40 per pound. The demand for salt is perfectly inelastic, and the elasticity of supply is 1.5. With the tax, the price that sellers of salt in Healthyland receive and keep is A)
$0.40 per
B)
pound.
$0.35 per
C)
pound.
$0.45 per
D)
pound.
$0.50 per pound. Answer:
Topic :
Analytical*
123)
and imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. How is the salt tax burden shared between buyers and sellers in Healthyland? A)
Sellers pay
B)
the whole tax.
Buyers pay
C)
the whole tax.
Most of the tax is paid by buyers. D)
Most of the tax is paid by sellers. Answer:
Topic :
Analytical*
Hamburgers French fries Pizza Ice cream 124)
Price elastici ty of supply 1.2 1.7 2.0 1.5
Price elastici ty of deman d 1.8 1.4 1.2 1.6
You are in the busines s of
producing and selling hamburgers, french fries, pizza, and ice cream. The mayor plans to impose a tax on one of these products. Based on the elasticities in the above table, as a profit-minded business person who seeks to avoid taxes whenever possible, which good would you most prefer to have taxed? A)
hamburgers B)
pizza
C)
French fries D)
ice cream Answer:
Topic :
Analytical
125)
You are in the busines s of
producing and selling hamburgers, french fries, pizza, and ice cream. The mayor plans to impose a tax on one of these products. Based on the elasticities in the above table, as a profit-minded business person who seeks to avoid taxes whenever possible, which good would you least like to have taxed? A)
hamburgers B)
pizza
C)
French fries D)
ice cream Answer:
Topic :
Analytical
126)
You are s of producing and selling hamburgers, french fries, pizza, and ice cream. The mayor in the plans to impose a tax on one of these products. Based on the elasticities in the above busines table, on which of these goods would your customers least like to be taxed? A)
hamburgers B)
pizza
C)
French fries D)
ice cream Answer:
Topic :
Analytical
127)
You are s of producing and selling hamburgers, french fries, pizza, and ice cream. The mayor in the plans to impose a tax on one of these products. Based on the elasticities in the above busines table, on which of these goods would your customers most prefer to be taxed? A)
hamburgers B)
pizza
C)
French fries D)
ice cream Answer:
Topic :
Analytical
128)
The whether to tax either Good A or Good B. The equilibrium quantity of both is currently govern the same, but the elasticity of demand for Good A is 0.8 while the elasticity of ment is demand for Good B is 1.5. In order to generate the most tax revenues, the deciding government should impose the tax on ________ because its demand is ________. A)
Good A; less elastic B)
Good A;
C)
more elastic
Good B; less elastic D)
Good B;
more elastic Answer:
Topic :
The Sales Tax in Practice Skill:
Conceptual
129)
If a tax
is imposed on buyers in a market in which supply is perfectly inelastic, the A)
buyers pay
B)
the entire tax.
sellers pay
C)
the entire tax.
buyers and the sellers both pay a portion of the tax. D)
neither the buyers nor the sellers pay the tax. Answer:
Topic :
Conceptual
130)
If supply is perfectly elastic, a sales tax imposed on sellers is paid by A)
only the
B)
buyers.
only the
C)
sellers.
both the
D)
buyers and sellers.
Topic :
Analytical
131)
If supply is perfectly inelastic, a sales tax imposed on sellers is paid by A)
only the
B)
buyers.
only the
C)
sellers.
both the
D)
buyers and sellers.
Topic :
Analytical
132)
Which
of the following statements is true about taxes? A)
Taxes always create more deadweight loss than do price ceilings and price floors. B)
Taxes decrease C)
both consumer surplus and producer surplus while creating a deadweight loss.
Government from a tax is always greater than the loss of producer surplus and consumer revenue surplus. D)
Both
Topic :
Taxes, Deadweight Loss Skill:
Analytical
133)
Suppos e a tax is imposed on sellers. The more inelastic the demand for a taxed item, the A)
greater the share of the tax paid by sellers. B)
smaller the deadweight loss from the tax. C)
larger the
D)
decrease in consumption because of the tax.
All of the
Topic :
Recognition
134)
If a
sales tax is placed on sellers of tires, then A)
the
B)
production of tires will decrease.
C)
deadweight loss will be created.
producer
D)
surplus will decrease.
All of the
above will occur in the tire market Answer:
Topic :
Conceptual
135)
Suppos e initially that the
equilibrium price is $10 and the equilibrium quantity is 200. A $0.50 per unit tax is imposed on the sellers of the product which increases the price consumers pay to $10.40 and reduces the quantity sold to 180. The total tax revenue collected by the government is A)
$180.
B)
$100.
C)
$90.
D)
$72.
Answer:
Topic :
Taxes, Government Revenue Skill:
Analytical
136)
The above
figure shows the market for blouses. The government decides to impose the sales tax shown in the figure on sellers. Using the figure, what is the tax per blouse? A)
$10 per
B)
blouse
$20 per
C)
blouse
$30 per
D)
blouse
$40 per
blouse Answer:
Topic :
Recognition
137)
The above figure
shows the market for blouses. The government decides to impose the sales tax shown in the figure on sellers. Using the figure, how much tax revenue does the government raise? A)
$20,000
B)
$40,000
C)
$60,000
D)
$80,000
Answer:
Topic :
Recognition
138)
The above
figure shows the market for blouses. The government decides to impose the sales tax shown in the figure on sellers. The tax decreases consumption by A)
1,000
B)
blouses.
2,000
C)
blouses.
3,000
D)
blouses.
4,000
blouses. Answer:
Topic :
Recognition
139)
The above figure
shows the market for blouses. The government decides to impose the sales tax shown in the figure on sellers. The amount of the tax paid by buyers would be greater than shown in the figure A)
only if the
B)
demand was more elastic.
only if the
C)
demand was more inelastic.
only if the
D)
supply was more elastic.
if either the demand was more inelastic or the supply more elastic. Answer:
Topic :
Analytical
140)
The above figure
shows the market for blouses. The government decides to impose the sales tax shown in the figure on sellers. The amount of the tax paid by blouse producers would be greater than shown in the figure if A)
the demand was more elastic. B)
the demand was more inelastic. C)
the supply
D)
was more elastic.
Both
Topic :
Analytical
141)
The above figure
shows the market for blouses. The government decides to impose the sales tax shown in the figure on sellers. The government would raise more tax revenue from this excise tax if A)
the demand was more inelastic. B)
it places a
C)
price ceiling on blouses in addition to the tax.
it places a
D)
price floor on blouses in addition to the tax.
all of the
above Answer:
Topic :
Sales Tax in Practice Skill:
Analytical
142)
The above
figure shows the market for blouses. The government decides to impose the sales tax shown in the figure on sellers. How much deadweight loss results? A)
$10,000
B)
$20,000
C)
$30,000
D)
$40,000
Answer:
Topic :
Taxes and Efficiency Skill:
Analytical
143)
The above
figure shows the market for blouses. The government decides to impose the sales tax shown in the figure on sellers. How much consumer surplus is lost? A)
$10,000
B)
$20,000
C)
$25,000
D)
$40,000
Answer:
Topic :
Analytical
144)
The above
figure shows the market for blouses. The government decides to impose the sales tax shown in the figure on sellers. How much producer surplus is lost? A)
$10,000
B)
$20,000
C)
$25,000
D)
$40,000
Answer:
Topic :
Taxes Skill:
Analytical
145)
The above
figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. What is the amount of the tax? A)
$1 per gallon B)
$2 per gallon C)
$3 per gallon D)
$4 per gallon Answer:
Topic :
Recognition
146)
The above figure
shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. How much tax revenue does the government raise from this tax? A)
$2,000
B)
$3,000
C)
$4,000
D)
$6,000
Answer:
Topic :
Recognition
147)
The above figure
shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. The sales tax on anti-freeze decreases the quantity of antifreeze that automobile owners purchase by A)
0 gallons.
B)
1000
C)
gallons.
2000
D)
gallons.
3000
gallons. Answer:
Topic :
Recognition
148)
The above figure
shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. Automobile owners would pay a larger part of this tax than what is shown in the figure if the A)
demand
B)
were more elastic.
demand
C)
were more inelastic.
supply were more inelastic. D)
None of the above because the buyers always pay the entire amount of the tax. Answer:
Topic :
Analytical
149)
The above figure
shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. Anti-freeze sellers would pay a larger part of this tax than what is shown in the figure if the A)
demand
B)
were more inelastic.
demand
C)
curve was steeper.
supply were more inelastic. D)
supply were more elastic. Answer:
Topic :
Analytical
150)
The above
figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. What is the deadweight loss from this tax? A)
$1,500
B)
$3,000
C)
$4,500
D)
$6,000
Answer:
Topic :
Analytical
151)
In
agricultural markets, once the crop has been harvested, the supply is A)
perfectly
B)
inelastic.
perfectly
C)
elastic.
elastic but
D)
not perfectly elastic.
unit elastic. Answer:
Topic :
An Agricultural Market Skill:
Conceptual
152)
Suppos is a bumper harvest of soybeans, demand is inelastic for soybeans, and momentary e there supply is perfectly inelastic. Then, the bountiful harvest will result in A)
an increase in soybean farmers' revenue. B)
an increase in the momentary supply of soybeans. C)
a rise in the price of soybeans. D)
a decrease in the production of soybeans. Answer:
Topic :
Conceptual
153)
Assume demand for wheat is inelastic and that the momentary supply of wheat is perfectly that the inelastic. Then, a poor harvest will result in which of the following? A)
an increase in wheat farmers' revenue B)
an increase in the momentary supply of wheat C)
a fall in the price of wheat D)
an increase in the demand for wheat because it is in short supply Answer:
Topic :
Conceptual
154)
Suppos weather conditions are ideal so that farmers experience a bumper crop. A bumper e crop ________ total farm revenue because the demand for farm products is ________. A)
raises;
B)
elastic
raises;
C)
inelastic
lowers;
D)
elastic
lowers;
inelastic Answer:
Topic :
Analytical
155)
Which of the
following accurately describes which curve shifts in the corn market following a drought? A)
The perfectly elastic long-run supply decreases. B)
The perfectly inelastic long-run supply decreases. C)
The perfectly elastic momentary supply decreases. D)
The perfectly inelastic momentary supply decreases. Answer:
Topic :
Conceptual
156)
When
the supply curve of corn shifts leftward, farmers' revenue ________ because ________. A)
decreases;
B)
demand is elastic
increases;
C)
demand is inelastic
decreases;
D)
supply is elastic
increases; supply is inelastic Answer:
Topic :
Conceptual
157)
When
the supply curve of corn shifts rightward, farmers' revenue ________ because ________. A)
decreases;
B)
demand is inelastic
increases;
C)
demand is elastic
decreases;
D)
supply is inelastic
increases; supply is elastic Answer:
Topic :
Conceptual
158)
bumper crop decreases farmers' revenue if A)
supply is
B)
elastic.
supply is
C)
inelastic.
demand is
D)
elastic.
demand is inelastic. Answer:
Topic :
Conceptual
159)
In the with normal weather conditions the price is $3.00 per bushel and the quantity is 10 market million bushels each year. Using the above figure, if a drought occurs so the for corn, momentary supply curve shifts to MSDrought, what happens to total farm revenue? A)
It decreases. B)
It increases. C)
It does not
D)
change.
It may there is not enough information in the above figure to determine what occurs. change but Answer:
Topic :
Analytical
160)
In the market for corn, with
normal weather conditions the price is $3.00 per bushel and the quantity is 10 million bushels each year. Using the above figure, if the growing conditions are excellent so that the momentary supply curve shifts to MSBumper, what happens to total farm revenue? A)
It decreases. B)
It increases. C)
It does not
D)
change.
It may there is not enough information in the above figure to determine what occurs. change but Answer:
Topic :
Analytical
161)
Govern ments often intervene in agricultural markets by A)
granting
B)
subsidies.
setting
C)
quotas that will increase production.
setting price floors that reduce prices for buyers. D)
imposing
heavy taxes on farm products. Answer:
Topic :
Subsidies Skill:
Conceptual
162)
The figure
above shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced, what is the price that consumers pay? A)
$3.00 a
B)
gallon
$3.50 a
C)
gallon
$4.00 a
D)
gallon
$4.50 a
gallon Answer:
Topic :
Subsidies Skill:
Analytical
163)
The figure above
shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced, what is the amount, including the subsidy, that suppliers keep per gallon? A)
$3.00 a
B)
gallon
$3.50 a
C)
gallon
$4.00 a
D)
gallon
$4.50 a
gallon Answer:
Topic :
Subsidies Skill:
Analytical*
164)
The figure
above shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced, how many gallons are sold per year? A)
200 million
B)
250 million
C)
300 million D)
350 million Answer:
Topic :
Subsidies Skill:
Analytical
165)
The figure above
shows the market for milk in Cowland. A subsidy paid to producers of $1 per gallon of milk is introduced. If there are no external costs and no external benefits, the quantity of milk sold is A)
50 million
B)
gallons greater than the efficient level of output.
50 million
C)
gallons less than the efficient level of output.
100 million gallons greater than the efficient level of output. D)
the efficient level of output. Answer:
Topic :
Subsidies and Efficiency Skill:
Analytical*
166)
The figure above
shows the market for milk in Cowland. A subsidy paid to producers of $1 per gallon of milk is introduced. If there are no external costs and no external benefits, the marginal cost of the last gallon of milk produced is A)
$3.00 a
B)
gallon.
$3.50 a
C)
gallon.
$4.00 a
D)
gallon.
$4.50 a
gallon. Answer:
Topic :
Analytical
167)
The figure above
shows the market for milk in Cowland. A subsidy paid to producers of $1 per gallon of milk is introduced. If there are no external costs and no external benefits, the marginal benefit of the last gallon of milk consumed is A)
$3.50 a
B)
gallon.
$4.00 a
C)
gallon.
$4.50 a
D)
gallon.
$5.00 a
gallon. Answer:
Topic :
Analytical
168)
To try to governments help I. set production quotas farmers, II. set price ceilings A)
B)
II
C)
I and II
D)
neither I nor II Answer:
Topic :
Production Quotas Skill:
Recognition
169)
If a on quota is set below the equilibrium quantity, at the quota quantity, marginal producti benefit is ________ marginal cost and the level of production is ________. A)
greater than; inefficient B)
greater than; efficient C)
less than;
D)
inefficient
equal to;
efficient Answer:
Topic :
Production Quota and Efficiency Skill:
Conceptual
170)
The figure above
shows the market for cotton in Georgestan. The government regulates the market with a production quota set at 8 million pounds per year. The price of cotton in Georgestan is A)
30 cents per pound. B)
40 cents per pound. C)
60 cents per pound. D)
50 cents per pound. Answer:
Topic :
Analytical*
171)
The figure above
shows the market for cotton in Georgestan. The government regulates the market with a production quota set at 8 million pounds per year. The introduction of the quota has A)
not affected the level of cotton production in Georgestan. B)
increased
C)
the production of cotton in Georgestan by 8 million pounds.
decreased
D)
the production of cotton in Georgestan by 4 million pounds.
decreased the production of cotton in Georgestan by 8 million pounds. Answer:
Topic :
Analytical*
172)
The figure above shows
the market for cotton in Georgestan. The government regulates the market with a production quota set at 8 million pounds per year. With the quota in place, the amount of cotton produced in Georgestan is ________ because the marginal social cost of a pound of cotton is ________ the marginal social benefit of a pound of cotton. A)
inefficient;
B)
less than
inefficient;
C)
greater than
efficient; less than D)
efficient;
equal to Answer:
Topic :
Production Quota and Efficiency Skill:
Analytical*
173)
In
general, a fine on selling a product leads to the A)
supply curve shifting rightward. B)
supply curve shifting leftward. C)
demand
D)
curve shifting rightward.
demand
curve shifting leftward. Answer:
Topic :
A Market for Illegal Goods, Penalties on Sellers Skill:
Conceptual
174)
If s are imposed on the sellers of illegal goods or services, then the equilibrium price penaltie ________ and the equilibrium quantity ________. A)
rises;
B)
increases
rises;
C)
decreases
falls;
D)
increases
falls;
decreases Answer:
Topic :
Analytical
175)
When a ment fines and/or imprisons convicted drug dealers, it is attempting to reduce the govern illegal drug trade by shifting the ________ curve for illegal drugs ________. A)
demand;
B)
rightward
demand;
C)
leftward
supply;
D)
rightward
supply;
leftward Answer:
Topic :
Markets For Illegal Goods, Penalties on Sellers Skill:
Conceptual
176)
If selling a good is made illegal, the A)
demand
B)
curve shifts rightward.
supply curve shifts rightward. C)
demand
D)
curve shifts leftward.
supply curve shifts leftward. Answer:
Topic :
Markets For Illegal Goods, Penalties on Sellers Skill:
Conceptual
177)
When a fines and/or imprisons persons convicted of using illegal drugs, the government is govern attempting to decrease the illegal drug trade by shifting the ________ curve for illegal ment drugs ________. A)
demand;
B)
rightward
demand;
C)
leftward
supply;
D)
rightward
supply;
leftward Answer:
Topic :
Markets For Illegal Goods, Penalties on Buyers Skill:
Conceptual
178)
In
general, a fine on smoking cigarettes shifts the ________ curve of cigarettes ________. A)
supply;
B)
rightward
supply;
C)
leftward
demand;
D)
rightward
demand;
leftward Answer:
Topic :
Conceptual
179)
If s are imposed only on the buyers of illegal drugs, the equilibrium price of illegal penaltie drugs will ________ and the equilibrium quantity will ________. A)
rise; increase B)
rise;
C)
decrease
fall; increase D)
fall;
decrease Answer:
Topic :
Recognition
180)
In
general, a fine on buying a product leads to the A)
supply curve shifting rightward. B)
supply curve shifting leftward. C)
demand
D)
curve shifting rightward.
demand
curve shifting leftward. Answer:
Topic :
A Market for Illegal Goods, Penalties on Buyers Skill:
Conceptual
181)
If s are imposed on the buyers of illegal goods or services, then the equilibrium price penaltie ________ and the equilibrium quantity ________. A)
rises;
B)
increases
rises;
C)
decreases
falls;
D)
increases
falls;
decreases Answer:
Topic :
Analytical
182)
When a ment imposes penalties on both sellers and buyers of an illegal good, the price of the govern good ________ and the quantity ________. A)
falls;
B)
decreases
falls; might
C)
increase, decrease, or not change
rises; might increase, decrease, or not change D)
might rise, fall, or not change; decreases Answer:
Topic :
Markets For Illegal Goods, Penalties on Buyers and Sellers Skill:
Analytical
183)
If
penalties for trading illegal drugs are instituted on both buyers and sellers, the A)
quantity
B)
might increase or decrease but the price will rise.
price might rise or fall, but the quantity will decrease. C)
price and the quantity will both decrease. D)
price and the quantity will both increase. Answer:
Topic :
Markets For Illegal Goods, Penalties on Buyers and Sellers Skill:
Conceptual
184)
When a good is made illegal, which of the following definitely results in the price rising? A)
a much
B)
higher fine on sellers than on buyers
a much
C)
higher fine on buyers than on sellers
any fine
D)
imposed on both buyers or sellers
any fine
imposed on buyers Answer:
Topic :
A Market for Illegal Goods, Penalties on Both Sellers and Buyers Skill:
Analytical
185)
When a good is made illegal, which of the following definitely results in the price falling? A)
a much
B)
a much
C)
any fine
D)
imposed on buyers while sellers are not penalized
Both
answers B and C are correct. Answer:
Topic :
Analytical
186)
Compar the situation in which a good is legal, making the good illegal and imposing ________ ed to results in less being sold. A)
a much
B)
a much
C)
any fine on either the buyer or the seller D)
all of the
above Answer:
Topic :
Analytical
187)
If the same
fine is imposed on buyers and sellers of an illegal good so that the cost of breaking the law is the same for both, then A)
there is more government revenue collected than with an excise tax on the good. B)
there is no loss in this market because the extra producer surplus will exactly offset the lost deadweight consumer surplus. C)
the supply
D)
and demand curves both shift leftward by equal amounts.
the
equilibrium price of the good definitely increases. Answer:
Topic :
Analytical
188)
If s are imposed on both the buyers and the sellers of illegal goods or services, then an penaltie effect in the market for the illegal good or service would definitely be A)
an increase in the equilibrium price. B)
a decrease
C)
in the equilibrium price.
a decrease
D)
in the equilibrium quantity.
an increase in the equilibrium quantity. Answer:
Topic :
Analytical
189)
If
enforcement is aimed at buyers of an illegal good, the result will be A)
an increase in the short-run supply of the good. B)
a decrease
C)
in the short-run supply of the good.
a decrease
D)
in demand for the good.
an increase in the price of the good. Answer:
Topic :
Analytical
190)
If the govern
ment makes a good illegal and then imposes stiffer penalties on illegal drug buyers than on sellers, the price of the good ________ and the quantity ________. A)
falls;
B)
increases
rises;
C)
decreases
falls;
D)
decreases
does not
change; decreases Answer:
Topic :
Analytical
191)
If imposed only on sellers (but not on buyers) of marijuana, the equilibrium price of penaltie marijuana will ________, and the equilibrium quantity of marijuana sold will ________. s are A)
rise;
B)
increase
rise;
C)
decrease
fall; increase D)
fall;
decrease Answer:
Topic :
Analytical*
192)
If s are imposed only on buyers (but not on sellers) of marijuana, the equilibrium price penaltie of marijuana ________, and the equilibrium quantity of marijuana sold ________. A)
rise;
B)
increase
rise;
C)
decrease
fall; increase D)
fall;
decrease Answer:
Topic :
Analytical*
193)
Suppos imposed on both buyers and sellers of marijuana, but the cost of breaking the law to e sellers is greater than that to buyers. This measure will ________ the equilibrium price penaltie of marijuana and ________ the equilibrium quantity of marijuana sold. s are A)
lower;
B)
increase
raise;
C)
increase
raise;
D)
decrease
not change; will decrease Answer:
Topic :
Analytical*
194)
Using the
above figure, CBL is the cost of breaking the law. What is the equilibrium price and quantity if beer is legal? A)
$5 per quart and 300 quarts of beer B)
$3 per quart and 500 quarts of beer C)
$3 per quart and 100 quarts of beer D)
$1 per quart and 300 quarts of beer Answer:
Topic :
A Market for Illegal Goods Skill:
Recognition
195)
Suppos e the govern ment
has declared beer to be an illegal substance and imposes a fine on any person caught selling a beer. Buying beer, however, remains legal. Using the above figure, in which CBL is the cost of breaking the law, what is the equilibrium price and quantity with this new law in effect? A)
Topic :
Analytical
196)
has declared beer to be an illegal substance and has imposed penalties on any person caught selling a beer. Buying a beer, however, remains legal. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by A)
200 quarts. B)
300 quarts. C)
400 quarts. D)
500 quarts. Answer:
Topic :
Analytical
197)
has declared beer to be an illegal substance and imposes a fine on anyone caught buying a beer. Selling beer, however, remains legal. Using the above figure, in which CBL is the cost of breaking the law, what is the equilibrium price and quantity with this new law in effect? A)
Topic :
Analytical
198)
has declared beer to be an illegal substance and has imposed penalties on any person caught buying a beer. Selling a beer, however, remains legal. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by A)
200 quarts. B)
300 quarts. C)
400 quarts. D)
500 quarts. Answer:
Topic :
Analytical
199)
has declared beer to be an illegal substance and has imposed equal penalties on any person caught buying a beer and on any person caught selling a beer. Using the above figure, in which CBL is the cost of breaking the law, what is the equilibrium price and quantity with this new law in effect? A)
Topic :
Analytical
200)
has declared beer to be an illegal substance and has imposed equal penalties on any person caught buying a beer and on any person caught selling a beer. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by A)
200 quarts. B)
300 quarts. C)
400 quarts. D)
500 quarts. Answer:
Topic :
Analytical
201)
Which
of the following is a correct statement about markets for prohibited goods? A)
Penalizing illegal good decreases supply and penalizing buyers decreases demand. sellers of an B)
Penalizing
C)
either buyers or sellers of an illegal good decreases the quantity bought.
Taxing a good at a D)
sufficiently high rate can achieve the same consumption level as prohibition.
All of the
above are correct statements. Answer:
Topic :
Markets For Illegal Goods Skill:
Conceptual
202)
Rather than
prohibiting a good or service, the government might tax it. Imposing such a tax on a good or service ________ the equilibrium price and ________ the equilibrium quantity. A)
raises;
B)
increases
raises;
C)
decreases
lowers;
D)
increases
lowers;
decreases Answer:
Topic :
Markets For Illegal Goods Skill:
Analytical

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Microeconomics, 8e (Parkin) Testbank 2

Chapter 6 Markets in Action

The Market Response to a Decrease in Supply Skill:

in demand for housing due to higher rent.

in demand for housing due to the initial shortage.

an increase in the supply of housing due to profits. D)

an increase in the supply of housing due to the initial surplus. Answer:

The Market Response to a Decrease in Supply Skill:

Rent (dollar s per month) 200 300 400 500 600 3)

Quanti ty of apartm ents supplie d (per month) 20 40 60 80 100

Quanti ty of apartm ents deman ded (per month) 100 80 60 40 20

there would be a surplus of apartments. B)

there would be a shortage of apartments. C)

would reach equilibrium at the quantity of 60 housing units.

the supply of housing would increase. Answer:

A Regulated Housing Market Skill:

there would be a surplus of apartments. B)

there would be a shortage of apartments. C)

would reach equilibrium at the quantity of 60 housing units.

the supply of housing would increase. Answer:

A Regulated Housing Market Skill:

The Market Response to a Decrease in Supply Skill:

ceiling results in a shortage. As a result, which of the following do you expect? A)

The shortage will persist as long as the ceiling is in effect. B)

A black market for D)

above would be expected. Answer:

A Regulated Housing Market Skill:

equilibrium rent that would prevail in the absence of a rent ceiling.

consumer surplus. Answer:

A Regulated Housing Market Skill:

ceiling results in a shortage. As a result, which of the following do you expect? A)

A shortage of applicants for the apartments available. B)

A black market for D)

Black Markets Skill:

A Housing Market Skill:

equilibrium quantity of apartments rented would increase beyond 3,000. D)

The Market Response to a Decrease in Supply Skill:

some renters and hurt other renters. C)

landlords and hurt other landlords. Answer:

A Regulated Housing Market Skill:

renters and hurt other renters.

effect at all on the Bigtown rental market. Answer:

A Regulated Housing Market Skill:

The above figure

$500.00 monthly. Answer:

A Regulated Housing Market Skill:

The above figure

in the search time and expense of finding an apartment

an increase in the search time and expense of finding an apartment C)

an increase in producer surplus but a decrease in consumer surplus D)

an increase in efficiency Answer:

Search Activity Skill:

Inefficiency of Rent Ceilings Skill:

None of the above answers is correct. Answer:

A Regulated Housing Market Skill:

None of the above answers is correct. Answer:

A Regulated Housing Market Skill:

a shortage of 3,000 units of rental housing. B)

a shortage of 6,000 units of rental housing. C)

a surplus of 3,000 units of rental housing. D)

shortage nor a surplus of rental housing. Answer:

A Regulated Housing Market Skill: