Quiz 6: Government Actions in Markets
Business
Q 1Q 1
The time spent looking for someone with whom to do business is called
A)elasticity of time.
B)market time.
C)search activity.
D)opportunity time.
E)development time.
Free
Multiple Choice
C
Q 2Q 2
Use the figure below to answer the following questions. Figure 6.1.1
-Consider the market for rental housing illustrated in Figure 6.1.1 when the demand curve is D0.The equilibrium in an unregulated market is
A)1,500 rooms rented at $150 a month.
B)1,500 rooms rented at $200 a month.
C)1,750 rooms rented at $175 a month.
D)1,750 rooms rented at $200 a month.
E)2,000 rooms rented at $150 a month.
Free
Multiple Choice
A
Q 3Q 3
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
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.
Free
Multiple Choice
C
Q 4Q 4
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 there is a strictly enforced rent ceiling of $150 per room,
A)the number of rooms rented will increase to 2,000.
B)the number of rooms rented is 1,500.
C)there is a housing surplus of 500 rooms.
D)the number of rooms rented decreases to 1,000.
E)the rent is $175 per room.
Free
Multiple Choice
Q 5Q 5
Use the figure below to answer the following questions. Figure 6.1.1
-Refer to Figure 6.1.1.Suppose the demand for rental housing is shown by demand curve D1,and there is a rent ceiling of $150 per room.What is the highest rent that would be charged in a black market?
A)$150 a month
B)$175 a month
C)$200 a month
D)$100 a month
E)cannot be determined from the graph,but it is greater than $200
Free
Multiple Choice
Q 6Q 6
Use the figure below to answer the following questions. Figure 6.1.1
-Refer to Figure 6.1.1.Suppose the demand for rental housing is shown by demand curve D1,and there is a rent ceiling of $150 per room.What is the potential loss from housing search?
A)$300,000
B)$225,000
C)$50
D)$75,000
E)$0
Free
Multiple Choice
Q 7Q 7
An illegal market in which the equilibrium price exceeds the price ceiling is
A)a rental market.
B)a capital market.
C)a black market.
D)an efficient market.
E)a housing market.
Free
Multiple Choice
Q 8Q 8
If the government imposes a maximum rent for housing that is above the equilibrium rent,then the
A)law will have no effect in the rental market.
B)law will generate a shortage of housing.
C)law will create a surplus of housing.
D)demand curve for housing shifts rightward.
E)supply curve of housing shifts leftward.
Free
Multiple Choice
Q 9Q 9
When a price ceiling is set below the equilibrium price,
A)the demand curve shifts leftward.
B)the quantity supplied exceeds the quantity demanded.
C)the quantity supplied equals the quantity demanded.
D)the supply curve shifts rightward.
E)the quantity demanded exceeds the quantity supplied.
Free
Multiple Choice
Q 10Q 10
Use the figure below to answer the following questions. Figure 6.1.2
-Refer to Figure 6.1.2.If a rigorously enforced price ceiling is set at $10,then
A)100 units will be sold at a price of $20 each.
B)100 units will be sold at a price of $15 each.
C)150 units will be sold at a price of $15 each.
D)200 units will be sold at a price of $10 each.
E)100 units will be sold at a price of $10 each.
Free
Multiple Choice
Q 11Q 11
Use the figure below to answer the following questions. Figure 6.1.2
-Refer to Figure 6.1.2.What would be the maximum black market price of the good if a price ceiling is set at $10 a unit?
A)$10
B)$15
C)$20
D)50 goods sold at $10 and 50 goods sold at $20
E)50 goods sold at $10 and 50 goods sold at $15
Free
Multiple Choice
Q 12Q 12
Which one of the following is not likely to be an outcome of a rent ceiling?
A)a black market for rent-controlled housing
B)long waiting lists of potential renters for rent-controlled housing
C)a shortage of housing
D)a black market price below the rent ceiling
E)increased search activity for rent-controlled housing
Free
Multiple Choice
Q 13Q 13
If a rent ceiling imposed by the government is greater than the equilibrium rent for housing,then
A)the supply of rental housing will increase.
B)a shortage of housing will occur.
C)a surplus of housing will occur.
D)the equilibrium rent will prevail as long as all else remains constant.
E)the equilibrium rent will rise.
Free
Multiple Choice
Q 14Q 14
Which one of the following is likely to be the outcome of a rent ceiling imposed below the equilibrium rent?
A)a black market for rent-controlled housing
B)an increase in the demand for rent-controlled housing
C)a surplus of housing
D)a decrease in search activity
E)a decrease in the supply of rent-controlled housing
Free
Multiple Choice
Q 15Q 15
A price ceiling set below the equilibrium price will result in
A)excess supply.
B)excess demand.
C)the equilibrium price.
D)an increase in supply.
E)a decrease in demand.
Free
Multiple Choice
Q 16Q 16
Daisy and Donald live in a community with rent ceilings.Both are looking for an apartment to rent.Daisy has a job paying $10 per hour and Donald has a job paying $8 per hour.Both value an apartment equally.What is the most likely outcome?
A)Daisy will spend more time than Donald searching for an apartment.
B)Donald will spend more time than Daisy searching for an apartment.
C)Both of them will spend the same amount of time searching for an apartment.
D)Daisy will find the apartment.
E)Donald will find the apartment.
Free
Multiple Choice
Q 17Q 17
In an unregulated housing market with no rent ceiling,the rent is determined by the
A)landlords only.
B)tenants only.
C)government only.
D)market.
E)landlords,tenants,and the government.
Free
Multiple Choice
Q 18Q 18
An effective rent ceiling
A)increases consumer surplus.
B)increases producer surplus.
C)creates a deadweight loss.
D)decreases the supply of housing.
E)increases the supply of housing.
Free
Multiple Choice
Q 19Q 19
In an unregulated housing market with no rent ceiling,
A)scarce housing resources are allocated inefficiently.
B)scarce housing resources are allocated efficiently.
C)tenants pay a lower rent compared to what they pay in a market with an effective rent ceiling.
D)landlords receive less compared to what they receive in a market with an effective rent ceiling.
E)consumer surplus equals producer surplus.
Free
Multiple Choice
Q 20Q 20
In an unregulated housing market with no rent ceiling,
A)marginal social cost is greater than marginal social benefit.
B)marginal social benefit is greater than marginal social cost.
C)marginal social benefit equals marginal social cost.
D)marginal social benefit is negative.
E)marginal social cost is negative.
Free
Multiple Choice
Q 21Q 21
According to the fair result view of fairness,a fair outcome in the housing market
A)is the one that blocks voluntary exchange of housing.
B)cannot be created in the housing industry.
C)is one that allocates scarce housing resources to those who are willing and able to pay.
D)is one that allocates scarce housing resources by lottery.
E)is one that allocates scarce housing resources to the poorest.
Free
Multiple Choice
Q 22Q 22
According to the fair rules view of fairness,a fair outcome in the housing market
A)is one that does not block voluntary exchanges of housing.
B)cannot be created in housing industry.
C)is one that allocates scarce housing resources to those who are willing and able to pay.
D)is one that allocates scarce housing resources by lottery.
E)is one that allocates scarce housing resources to the poorest.
Free
Multiple Choice
Q 23Q 23
When rent is not permitted to allocate scarce rental housing,what other mechanisms are available?
A)a lottery
B)first-come,first-served
C)discrimination
D)both A and B are correct
E)A,B and C are correct
Free
Multiple Choice
Q 24Q 24
A lottery allocates housing to those
A)who are poor.
B)who share similar views to the owner of the housing.
C)who are rich.
D)whose names are on waiting lists.
E)who are lucky.
Free
Multiple Choice
Q 25Q 25
First-come,first-served allocates housing to those
A)whose names are on waiting lists.
B)who share similar views to the owner of the housing.
C)who are rich.
D)who are poor.
E)who are lucky.
Free
Multiple Choice
Q 26Q 26
Discrimination allocates scarce housing
A)to those who are poor.
B)based on the self-interest of landlords.
C)to those who are lucky.
D)to those whose names are on waiting lists.
E)to those who are willing and able to pay.
Free
Multiple Choice
Q 27Q 27
Suppose the government introduces a ceiling on the fees that lawyers are permitted to charge.This fee ceiling
A)is always inefficient.
B)results in an inefficient use of resources when the ceiling is above the equilibrium fee.
C)results in an efficient use of resources when the ceiling is above the equilibrium fee.
D)results in an efficient use of resources when the ceiling is below the equilibrium fee.
E)is always efficient.
Free
Multiple Choice
Q 28Q 28
An effective rent ceiling
A)increases producer surplus.
B)results in a producer surplus of zero.
C)sometimes increases producer surplus and sometimes decreases producer surplus.
D)decreases producer surplus.
E)decreases the supply of housing.
Free
Multiple Choice
Q 29Q 29
A rent ceiling
A)results in a shortage of housing if the rent ceiling is below the equilibrium rent.
B)results in a surplus of housing if the rent ceiling is above the equilibrium rent.
C)always results in a shortage of housing.
D)always results in a surplus of housing.
E)Both A and B are correct.
Free
Multiple Choice
Q 30Q 30
Use the table below to answer the following questions.
Table 6.1.1
-Refer to Table 6.1.1,which gives the demand schedule and the supply schedule for the apartment market in Anytown,Alberta.If a rent ceiling of $300 is imposed in the apartment market,then
A)there is a shortage of 40 apartments.
B)there is a surplus of 40 apartments.
C)the supply of apartments will increase.
D)the supply of apartments will decrease.
E)the quantity of apartments supplied is 60 units.
Free
Multiple Choice
Q 31Q 31
Use the table below to answer the following questions.
Table 6.1.1
-Refer to Table 6.1.1,which gives the demand schedule and the supply schedule for the apartment market in Anytown,Alberta.If a rent ceiling of $600 is imposed in the apartment market,then
A)there is a shortage of 80 apartments.
B)there is a surplus of 80 apartments.
C)the supply of apartments will increase.
D)the supply of apartments will decrease.
E)the quantity of apartments supplied is 60 units.
Free
Multiple Choice
Q 32Q 32
Use the table below to answer the following questions.
Table 6.1.1
-Refer to Table 6.1.1,which gives the demand schedule and the supply schedule for the apartment market in Anytown,Alberta.If a rent ceiling of $300 is imposed in the apartment market,then
A)the maximum amount someone is willing to pay for an apartment in the black market is $500.
B)there is a surplus of 40 apartments.
C)the supply of apartments will increase.
D)the demand for apartments will decrease.
E)the quantity of apartments supplied is 60 units.
Free
Multiple Choice
Q 33Q 33
Use the figure below to answer the following questions. Figure 6.2.1
-Refer to Figure 6.2.1.What is the equilibrium wage rate per hour in an unregulated market?
A)$4
B)$6
C)$8
D)$10
E)$12
Free
Multiple Choice
Q 34Q 34
Use the figure below to answer the following questions. Figure 6.2.1
-Refer to Figure 6.2.1.Suppose a $10 per hour minimum wage is in force.What is the lowest wage per hour an unemployed person would be willing to accept?
A)$4
B)$6
C)$8
D)$10
E)$2
Free
Multiple Choice
Q 35Q 35
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 $4 per hour,what is the level of unemployment in millions of hours?
A)50
B)40
C)20
D)10
E)0
Free
Multiple Choice
Q 36Q 36
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 $12 per hour,what is the level of unemployment in millions of hours?
A)50
B)40
C)20
D)10
E)0
Free
Multiple Choice
Q 37Q 37
Suppose a minimum wage of $15 an hour is in force,resulting in unemployment of 10 million hours.Then the demand for labour increases such that supply and demand curves intersect at a wage rate of $17 per hour.What will happen to the equilibrium wage rate and employment?
A)The wage rate is $17 an hour and there will be no unemployment.
B)The wage rate is $17 an hour and there will be a surplus of labour.
C)The wage rate is $15 an hour and there will be a surplus of labour.
D)The wage rate is $15 an hour and there will be no unemployment.
E)The wage rate is $15 an hour and there will be unemployment.
Free
Multiple Choice
Q 38Q 38
Use the table below to answer the following questions.
Table 6.2.1
-Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.In an unregulated market,
A)there is no teenage unemployment and the wage rate is $16 per hour.
B)there is no teenage unemployment and the wage rate is $15 per hour.
C)teenage unemployment is 400 hours and the wage rate is $16 per hour.
D)teenage unemployment is 400 hours and the wage rate is $15 per hour.
E)the minimum wage is $17 per hour.
Free
Multiple Choice
Q 39Q 39
Use the table below to answer the following questions.
Table 6.2.1
-Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.Suppose the Genoa City Council sets a minimum wage of $16 per hour.Teenage unemployment is ________ hours a week.
A)800
B)600
C)400
D)200
E)zero
Free
Multiple Choice
Q 40Q 40
Use the table below to answer the following questions.
Table 6.2.1
-Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.Suppose the Genoa City Council sets a minimum wage of $14 per hour.Teenage unemployment is ________ hours a week.
A)800
B)600
C)400
D)200
E)zero
Free
Multiple Choice
Q 41Q 41
Use the table below to answer the following questions.
Table 6.2.1
-Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.There is a minimum wage set at $16 per hour.Suppose a new fast food restaurant opens and increases the quantity demanded of teenage labour by 400 hours per week at each wage rate.The result is
A)elimination of teenage unemployment and a wage rate of $17 per hour.
B)elimination of teenage unemployment,but the wage rate remains at $16 per hour.
C)some teenage unemployment with the wage rate remaining at $16 per hour.
D)no change in teenage unemployment because the wage rate rises to $17 per hour.
E)a surplus of teenage labour.
Free
Multiple Choice
Q 42Q 42
Use the table below to answer the following questions.
Table 6.2.1
-Table 6.2.1 gives the supply and demand schedules for teenage labour in Genoa City.Suppose a new fast food restaurant opens and increases the quantity demanded of teenage labour by 400 hours per week at each wage rate.If the teenage labour market is unregulated,there is an increase in teenage employment to
A)1,000 hours per week and a wage of $15 per hour.
B)1,000 hours per week and a wage of $17 per hour.
C)800 hours per week and a wage of $16 per hour.
D)600 hours per week and a wage of $17 per hour.
E)400 hours per week and a wage of $17 per hour.
Free
Multiple Choice
Q 43Q 43
Which one of the following statements is false?
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.
Free
Multiple Choice
Q 44Q 44
Use the table below to answer the following questions.
Table 6.2.2
-Table 6.2.2 gives the labour demand and labour supply schedules for low-skilled labour.What is the level of unemployment in millions of hours if the minimum wage is set at $13 per hour?
A)70
B)40
C)30
D)20
E)zero
Free
Multiple Choice
Q 45Q 45
Use the table below to answer the following questions.
Table 6.2.2
-Table 6.2.2 gives the labour demand and labour supply schedules for low-skilled labour.What is the level of unemployment in millions of hours if the minimum wage is set at $17 per hour?
A)40
B)30
C)20
D)10
E)zero
Free
Multiple Choice
Q 46Q 46
Use the table below to answer the following questions.
Table 6.2.2
-Table 6.2.2 gives the labour demand and labour supply schedules for low-skilled labour.What is the equilibrium wage rate in an unregulated market?
A)$15.00 per hour
B)$15.50 per hour
C)$16.00 per hour
D)$16.50 per hour
E)$17.50 per hour
Free
Multiple Choice
Q 47Q 47
Complete the following sentence.A price floor set below the equilibrium price results in
A)a surplus.
B)a shortage.
C)the equilibrium price.
D)an increase in supply.
E)a decrease in demand.
Free
Multiple Choice
Q 48Q 48
When a minimum wage is set above the equilibrium wage rate,
A)unemployment decreases.
B)job search activity decreases.
C)the supply of workers decreases.
D)unemployment increases.
E)the supply of workers increases.
Free
Multiple Choice
Q 49Q 49
The government sets a price floor for corn,which is above the equilibrium price of corn.As a result
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.
Free
Multiple Choice
Q 50Q 50
Suppose the equilibrium wage is $10 an hour.A minimum wage is a price ________ that will change the quantity of employment if it is set at ________ an hour.
A)floor;$12
B)ceiling;$12
C)floor;$8
D)ceiling;$8
E)floor;$10
Free
Multiple Choice
Q 51Q 51
An effective minimum wage ________ the firms' surplus and ________ the workers' surplus.
A)decreases;increases
B)increases;increases
C)decreases;decreases
D)increases;decreases
E)has no effect on;has no effect on
Free
Multiple Choice
Q 52Q 52
Consider the effect of a minimum wage imposed in an unregulated labour market.Which of the following statements is correct? i.A minimum wage set above the equilibrium wage increases the quantity of labour supplied.
Ii.A minimum wage set above the equilibrium wage increases the supply of labour.
Iii.A minimum wage set above the equilibrium wage decreases the demand for labour.
A)i only
B)ii only
C)iii only
D)ii and iii only
E)i,ii,and iii
Free
Multiple Choice
Q 53Q 53
Suppose the demand for gasoline is inelastic,but not perfectly inelastic,and the supply is elastic,but not perfectly elastic.A tax on gasoline is paid
A)mostly by buyers.
B)mostly by sellers.
C)equally by buyers and sellers.
D)totally by buyers.
E)totally by sellers.
Free
Multiple Choice
Q 54Q 54
Suppose the demand for CDs is elastic,but not perfectly elastic,and the supply is inelastic,but not perfectly inelastic.A tax on CDs is paid
A)equally by buyers and sellers.
B)mostly by sellers.
C)mostly by buyers.
D)by neither buyers nor sellers.
E)totally by sellers.
Free
Multiple Choice
Q 55Q 55
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.The tax on each frisbee is
A)$0.40.
B)$0.60.
C)$1.00.
D)$5.60.
E)$6.60.
Free
Multiple Choice
Q 56Q 56
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
A)$0.40.
B)$0.60.
C)$1.00.
D)$5.60.
E)$6.60.
Free
Multiple Choice
Q 57Q 57
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 buyers' share of the tax is
A)$0.40.
B)$0.60.
C)$1.00.
D)$5.60.
E)$6.60.
Free
Multiple Choice
Q 58Q 58
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
A)$4,000.
B)$5,000.
C)$22,400.
D)$26,400.
E)$30,000.
Free
Multiple Choice
Q 59Q 59
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.At a quantity of 4,500 frisbees,supply is
A)inelastic.
B)unit elastic.
C)elastic.
D)perfectly elastic.
E)perfectly inelastic.
Free
Multiple Choice
Q 60Q 60
If the price of a good is not affected by a tax,then
A)supply is perfectly elastic.
B)demand is perfectly elastic.
C)the elasticity of supply is greater than the elasticity of demand.
D)demand is unit elastic.
E)supply is unit elastic.
Free
Multiple Choice
Q 61Q 61
The burden of the tax on buyers is greater the more (1)elastic is demand.
(2)inelastic is demand.
(3)elastic is supply.
(4)inelastic is supply.
A)(2)only
B)(1)and (3)
C)(1)and (4)
D)(2)and (3)
E)(2)and (4)
Free
Multiple Choice
Q 62Q 62
The burden of tax on sellers is greater the more (1)elastic is demand.
(2)inelastic is demand.
(3)elastic is supply.
(4)inelastic is supply.
A)(2)only
B)(1)and (3)
C)(1)and (4)
D)(2)and (3)
E)(2)and (4)
Free
Multiple Choice
Q 63Q 63
Suppose your province raises the provincial sales tax by 1 percent.You predict that the prices of taxed goods (including the tax)will
A)rise by 1 percent.
B)rise by more than 1 percent.
C)rise by an amount between zero and 1 percent.
D)not change at all.
E)fall by an amount between zero and 1 percent.
Free
Multiple Choice
Q 64Q 64
Use the figure below to answer the following questions. Figure 6.3.2
-Refer to Figure 6.3.2.The amount of the tax per unit is
A)zero.
B)$0.50.
C)$1.00.
D)$1.50.
E)$2.00.
Free
Multiple Choice
Q 65Q 65
Use the figure below to answer the following questions. Figure 6.3.2
-Refer to Figure 6.3.2.The buyers' share of the tax is
A)zero.
B)$0.50.
C)$1.00.
D)$1.50.
E)$2.00.
Free
Multiple Choice
Q 66Q 66
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
A)zero.
B)$0.50.
C)$1.00.
D)$1.50.
E)$2.00.
Free
Multiple Choice
Q 67Q 67
Use the figure below to answer the following questions. Figure 6.3.2
-Refer to Figure 6.3.2.Government revenue from the tax is
A)zero.
B)$100.
C)$300.
D)$400.
E)$600.
Free
Multiple Choice
Q 68Q 68
Use the figure below to answer the following questions. Figure 6.3.2
-Refer to Figure 6.3.2.The deadweight loss from the sales tax is
A)$50.
B)$100.
C)$200.
D)$1,000.
E)$150.
Free
Multiple Choice
Q 69Q 69
Use the figure below to answer the following questions. Figure 6.3.2
-Refer to Figure 6.3.2.At a quantity of 250 units,demand is
A)inelastic.
B)unit elastic.
C)elastic.
D)perfectly inelastic.
E)perfectly elastic.
Free
Multiple Choice
Q 70Q 70
The seller pays most of a tax if demand is relatively elastic because
A)the buyer can easily substitute to other markets.
B)the seller 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.
Free
Multiple Choice
Q 71Q 71
The buyer pays most of a tax if demand is relatively inelastic because
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.
Free
Multiple Choice
Q 72Q 72
The buyer pays most of a tax if supply is relatively elastic because
A)the buyer cannot easily substitute to other markets.
B)the seller can easily substitute to other markets.
C)the government forces the seller to bear the burden.
D)there is a black market for this good.
E)the seller cannot easily substitute to other goods.
Free
Multiple Choice
Q 73Q 73
If a sales tax is imposed on food,who is likely to pay most of the tax?
A)mostly the buyer
B)mostly the seller
C)neither the seller nor the buyer
D)the buyer and the seller equally
E)The burden of the tax depends on the size of the tax.
Free
Multiple Choice
Q 74Q 74
Use the figure below to answer the following questions. Figure 6.3.3
-Refer to Figure 6.3.3.Suppose a tax of $1 is imposed.In which market would the seller pay the highest portion of the tax?
A)(a)
B)(b)
C)(c)
D)(d)
E)all markets equally
Free
Multiple Choice
Q 75Q 75
Use the figure below to answer the following questions. Figure 6.3.3
-Refer to Figure 6.3.3.Suppose a tax of $1 is imposed.In which market would the buyer pay the highest portion of the tax?
A)(a)
B)(b)
C)(c)
D)(d)
E)all markets equally
Free
Multiple Choice
Q 76Q 76
Use the figure below to answer the following questions. Figure 6.3.3
-Refer to Figure 6.3.3.Suppose a tax of $1 is imposed.In which market would tax revenue be the lowest?
A)(a)
B)(b)
C)(c)
D)(d)
E)all markets equally
Free
Multiple Choice
Q 77Q 77
Use the figure below to answer the following questions. Figure 6.3.3
-Refer to Figure 6.3.3.Suppose a tax of $1 is imposed.In which market would tax revenue be the highest?
A)(a)
B)(b)
C)(c)
D)(d)
E)all markets equally
Free
Multiple Choice
Q 78Q 78
Governments tend to tax items with inelastic demand because
A)governments wish to avoid big rises in after-tax prices.
B)sellers pay most of the tax in these cases.
C)buyers pay most of the tax in these cases.
D)these goods yield the most tax revenues.
E)these goods are luxury goods.
Free
Multiple Choice
Q 79Q 79
If the supply of a good is perfectly elastic,then a tax on the good will be paid
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.
Free
Multiple Choice
Q 80Q 80
If the supply of a good is perfectly inelastic,then a tax on the good will be paid
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.
Free
Multiple Choice
Q 81Q 81
If the demand for a good is perfectly elastic,then a tax on the good will be paid
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.
Free
Multiple Choice
Q 82Q 82
If the demand for a good is perfectly inelastic,then a tax on the good will be paid
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.
Free
Multiple Choice
Q 83Q 83
A $10 per-unit tax on game consoles raises the equilibrium price paid by consumers by $5 per console.The quantity sold before the tax was 5,000 per year.The revenue from the tax is
A)zero.
B)positive but less than $50,000 per year.
C)$50,000 per year.
D)more than $50,000 per year.
E)greater the more elastic is demand.
Free
Multiple Choice
Q 84Q 84
A 3 cents per-unit tax on bread leads to no change in the quantity bought and sold.The tax is paid
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.
Free
Multiple Choice
Q 85Q 85
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.The new price paid by consumers is $ ________ and ________ units are sold.
A)$6;400
B)$7;700
C)$7;500
D)$6.50;500
E)$6.50;700
Free
Multiple Choice
Q 86Q 86
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.The buyers' share of the tax is
A)$2.00.
B)$1.50.
C)$1.00.
D)zero.
E)$2.50.
Free
Multiple Choice
Q 87Q 87
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.The sellers' share of the tax is
A)$2.00.
B)$1.50.
C)$1.00.
D)$0.
E)$2.50.
Free
Multiple Choice
Q 88Q 88
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
A)$1,200.
B)$1,000.
C)$800.
D)$600.
E)zero.
Free
Multiple Choice
Q 89Q 89
The ________ principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by government. The ________ principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.
A)benefits;ability-to-pay
B)equality;fairness
C)services;burden
D)ability-to-pay;benefits
E)efficient;inefficient
Free
Multiple Choice
Q 90Q 90
When a sales tax is imposed on sellers,the supply curve shifts so that the vertical distance between the original supply curve and supply plus tax curve equals the
A)sales tax multiplied by the price elasticity of demand.
B)sales tax multiplied by the price elasticity of supply.
C)sales tax divided by the price elasticity of demand.
D)amount of the sales tax per unit.
E)sales tax divided by the price elasticity of supply.
Free
Multiple Choice
Q 91Q 91
The demand for a good and the supply of a good are each neither perfectly elastic nor perfectly inelastic.If a sales tax on sellers of the good is imposed,the tax is paid by
A)the buyers only.
B)both the buyers and the sellers.
C)the sellers only.
D)the buyers only if demand for the good increases.
E)the suppliers only if the supply of the good increases.
Free
Multiple Choice
Q 92Q 92
Use the table below to answer the following questions.
Table 6.3.2
-Refer to Table 6.3.2.You are in the business of producing and selling hamburgers,French fries,pizza,and ice cream.The mayor of your city plans to impose a sales tax on one of these products.Based on the elasticities in the table,on which of these goods would your customers least like to be taxed?
A)hamburgers
B)French fries
C)pizza
D)ice cream
E)Your customers are indifferent about which good is taxed.
Free
Multiple Choice
Q 93Q 93
Use the table below to answer the following questions.
Table 6.3.2
-Refer to Table 6.3.2.You are in the business of producing and selling hamburgers,French fries,pizza,and ice cream.The mayor of your city plans to impose a sales tax on one of these products.Based on the elasticities in the table,on which of these goods would your customers prefer to be taxed?
A)hamburgers
B)French fries
C)pizza
D)ice cream
E)Your customers are indifferent about which good is taxed.
Free
Multiple Choice
Q 94Q 94
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
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.
Free
Multiple Choice
Q 95Q 95
A subsidy is a
A)tax imposed by the government on imported goods.
B)payment made by the government to a producer.
C)tax imposed by the government on a producer.
D)payment made by a consumer to a producer.
E)payment made by foreign governments to domestic farmers.
Free
Multiple Choice
Q 96Q 96
A subsidy
A)lowers the price received by farmers.
B)decreases the quantity supplied in the market.
C)raises the price received by farmers.
D)prevents the deadweight loss from underproduction.
E)decreases total revenue received by farmers.
Free
Multiple Choice
Q 97Q 97
A subsidy
A)raises marginal social benefit above marginal social cost.
B)makes marginal social cost equal marginal social benefit.
C)results in efficient production.
D)raises marginal social cost above marginal social benefit.
E)makes world prices higher than domestic prices.
Free
Multiple Choice
Q 98Q 98
A production quota
A)is a lower limit to the quantity of a good that can be produced in a specified period.
B)is an upper limit to the quantity of a good that can be produced in a specified period.
C)is a payment made by a consumer to a producer.
D)is a payment made by a producer to a consumer.
E)is a payment made by the government to a producer.
Free
Multiple Choice
Q 99Q 99
Suppose the Canadian Dairy Commission sets a production quota for dairy production above the equilibrium quantity.Then,
A)the quantity of milk produced in Canada increases.
B)the price of milk rises.
C)the policy has no impact on the dairy industry.
D)revenue received by dairy producers increases.
E)revenue received by dairy producers decreases.
Free
Multiple Choice
Q 100Q 100
An effective production quota
A)increases the marginal social cost of production.
B)lowers the price and increases the marginal social cost of production.
C)increases demand for the good.
D)raises the price and decreases the marginal social cost of production.
E)makes production more efficient.
Free
Multiple Choice
Q 101Q 101
An effective production quota is
A)efficient because it results in overproduction.
B)efficient because it results in underproduction.
C)inefficient because it results in underproduction.
D)inefficient because it results in overproduction.
E)efficient for quantities below the equilibrium quantity and is inefficient for quantities above the equilibrium quantity.
Free
Multiple Choice
Q 102Q 102
In a market with an effective production quota,
A)marginal social benefit exceeds marginal social cost.
B)marginal social benefit equals marginal social cost.
C)marginal social cost exceeds marginal social benefit.
D)marginal social cost is greater than the equilibrium price.
E)marginal social benefit is less than the equilibrium price.
Free
Multiple Choice
Q 103Q 103
When an effective production quota is applied in the market for wheat,the quantity produced ________ and the price ________.The marginal social benefit ________ the marginal social cost.
A)increases;rises;exceeds
B)decreases;falls;is less than
C)decreases;rises;exceeds
D)increases;falls;is less than
E)decreases;rises;is less than
Free
Multiple Choice
Q 104Q 104
Use the figure below to answer the following question. Figure 6.4.1
-Refer to Figure 6.4.1.The graph shows the market for tomatoes.When the government introduces a subsidy for tomatoes at $4 a kilogram,the quantity produced is ________ because ________.
A)efficient;marginal social cost is less than marginal social benefit
B)efficient;marginal social benefit equals marginal social cost
C)inefficient;marginal social cost is less than marginal social benefit
D)inefficient;marginal social benefit is less than marginal social cost
E)inefficient;marginal social cost is zero
Free
Multiple Choice
Q 105Q 105
Use the table below to answer the following questions.
Table 6.4.1
-Refer to Table 6.4.1.The table shows the demand and supply schedules for rice.The market for rice is in equilibrium.With a subsidy of $0.30 a box,the price of a box of rice is ________,the marginal cost of producing rice is ________ a box,and the quantity of rice produced is ________ boxes.
A)$1.40;$1.40;2,500
B)$1.20;$1.50;2,500
C)$1.20;$1.50;3,000
D)$1.50;$1.20;3,000
E)$1.50;$1.20;2,500
Free
Multiple Choice
Q 106Q 106
Use the table below to answer the following questions.
Table 6.4.1
-Refer to Table 6.4.1.The table shows the demand and supply schedules for rice.With a production quota of 2,000 boxes a week,the price of a box of rice is ________,the marginal cost of producing rice is ________ a box,and the quantity of rice produced is ________ boxes a week.
A)$1.30;$1.60;2,000
B)$1.60;$1.30;2,000
C)$1.40;$1.40;2,500
D)$1.40;$1.40;2,000
E)$1.60;$1.30;2,500
Free
Multiple Choice
Q 107Q 107
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 ________.
A)less than;efficient
B)greater than;efficient
C)less than;inefficient
D)greater than;inefficient
E)equal to;efficient
Free
Multiple Choice
Q 108Q 108
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 ________.
A)less than;efficient
B)greater than;efficient
C)less than;efficient
D)less than;inefficient
E)equal to;efficient
Free
Multiple Choice
Q 109Q 109
An effective subsidy paid to soybean farmers ________ the market price of soybeans and ________ the farmers' marginal cost of production.
A)lowers;increases
B)lowers;decreases
C)raises;increases
D)raises;decreases
E)raises;does not change
Free
Multiple Choice
Q 110Q 110
If enforcement is aimed at sellers of an illegal good,the
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.
Free
Multiple Choice
Q 111Q 111
If enforcement is aimed at buyers of an illegal good,the
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.
Free
Multiple Choice
Q 112Q 112
Which one of the following statements about illegal goods is true?
A)Taxes are more effective in changing preferences than prohibition.
B)Prohibition is more effective in generating revenue than an equivalent tax.
C)Taxes and penalties cannot be set to yield equivalent outcomes.
D)Taxes generate revenues while prohibition sends a signal that might influence preferences.
E)Taxes and prohibition eliminate the market for illegal goods.
Free
Multiple Choice
Q 113Q 113
Consider a market for an illegal good.If the government imposes the cost of breaking the law on the buyer of the good,then price will be
A)higher and quantity lower compared to imposing the same cost on the seller.
B)higher and quantity higher compared to imposing the same cost on the seller.
C)lower and quantity lower compared to imposing the same cost on the seller.
D)lower and quantity the same compared to imposing the same cost on the seller.
E)higher and quantity the same compared to imposing the same cost on the seller.
Free
Multiple Choice
Q 114Q 114
Suppose the cost of breaking the law is imposed on the buyers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is
A)inelastic or the supply is inelastic.
B)elastic or the supply is elastic.
C)elastic or the supply is inelastic.
D)inelastic or the supply is elastic.
E)perfectly inelastic.
Free
Multiple Choice
Q 115Q 115
Suppose the cost of breaking the law is imposed on the sellers of an illegal good.This action will have its biggest impact on quantity if the demand for the good is
A)inelastic or the supply is inelastic.
B)elastic or the supply is elastic.
C)elastic or the supply is inelastic.
D)inelastic or the supply is elastic.
E)perfectly inelastic.
Free
Multiple Choice
Q 116Q 116
Use the table below to answer the following questions.
Table 6.5.1
The Market for a Prohibited Good
-Refer to Table 6.5.1.Which one of the following costs of breaking the law imposed on the buyers of the good would reduce the quantity to zero?
A)$1
B)$2
C)$4
D)$6
E)$8
Free
Multiple Choice
Q 117Q 117
Use the table below to answer the following questions.
Table 6.5.1
The Market for a Prohibited Good
-Refer to Table 6.5.1.If a $2-per-unit cost of breaking the law is imposed on buyers,the new price is ________ and the new equilibrium quantity is ________ units.
A)$8;400
B)$8;300
C)$7;300
D)$9;300
E)$8;200
Free
Multiple Choice
Q 118Q 118
Use the table below to answer the following questions.
Table 6.5.1
The Market for a Prohibited Good
-Refer to Table 6.5.1.If a $2-per-unit cost of breaking the law is imposed on sellers,the new price is ________ and the new equilibrium quantity is ________ units.
A)$8;400
B)$8;300
C)$7;300
D)$9;300
E)$8;200
Free
Multiple Choice
Q 119Q 119
Use the table below to answer the following questions.
Table 6.5.1
The Market for a Prohibited Good
-Refer to Table 6.5.1.If a $2-per-unit cost of breaking the law is imposed on sellers,the price received by sellers (net of the cost of breaking the law)would be
A)$8.
B)$7.
C)$9.
D)$10.
E)$6.
Free
Multiple Choice
Q 120Q 120
Use the table below to answer the following questions.
Table 6.5.1
The Market for a Prohibited Good
-Refer to Table 6.5.1.If a $2-per-unit cost of breaking the law is imposed on both the buyers and the sellers,the new price is ________ and the new equilibrium quantity is ________ units.
A)$8;400
B)$8;300
C)$7;300
D)$9;300
E)$8;200
Free
Multiple Choice
Q 121Q 121
If enforcement of the law is aimed at buyers of an illegal good,the result will be
A)an increase in the supply of the good.
B)a decrease in the supply of the good.
C)a decrease in the demand for the good.
D)a rise in the price of the good.
E)no change in the equilibrium quantity.
Free
Multiple Choice
Q 122Q 122
All of the following statements about legalizing and taxing drugs are true except
A)legalizing and taxing drugs would eliminate the black market in drugs.
B)the quantity of a drug bought could be decreased if the drug was legalized and taxed.
C)a sufficiently high tax could be imposed to decrease supply,raise the price,and achieve the same decrease in the quantity bought as with a prohibition of drugs.
D)an extremely high tax rate would be needed to cut the quantity of drugs bought to the level prevailing with a prohibition.
E)tax revenue can be used to make law enforcement more effective.
Free
Multiple Choice
Q 123Q 123
A fact that argues in favour of prohibition and against taxes on illegal drugs is that
A)prohibition sends a signal that might influence preferences.
B)penalties for illegal activities with prohibition are less than the penalties for tax evasion.
C)a black market is easier to maintain under prohibition than under the tax code.
D)search activity decreases with prohibition.
E)prohibition raises more government income.
Free
Multiple Choice
Q 124Q 124
Suppose that buying and selling a certain good is made illegal.In the market for this good,the demand curve shifts ________ and the supply curve shifts ________.
A)rightward;rightward
B)leftward;leftward
C)rightward;leftward
D)leftward;rightward
E)neither leftward nor rightward;neither leftward nor rightward
Free
Multiple Choice
Q 125Q 125
If the penalty on sellers of an illegal good is less than the penalty on buyers of an illegal good,then supply of the good will ________ by ________ demand and the price of the good will ________.
A)decrease;more than;rise
B)decrease;less than;rise
C)decrease;less than;fall
D)decrease;more than;fall
E)increase;less than;rise
Free
Multiple Choice