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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.

Correct Answer

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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.

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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

Correct Answer

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Use the figure below to answer the following questions. 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 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

Correct Answer

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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.

Correct Answer

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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.

Correct Answer

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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.

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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.

Correct Answer

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Use the figure below to answer the following questions. 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 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

Correct Answer

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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.

Correct Answer

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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.

Correct Answer

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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.

Correct Answer

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Use the table below to answer the following questions. Table 6.2.1 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. -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.

Correct Answer

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Use the figure below to answer the following questions. 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 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

Correct Answer

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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.

Correct Answer

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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

Correct Answer

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Use the table below to answer the following questions. Table 6.2.2 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 -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

Correct Answer

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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.

Correct Answer

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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.

Correct Answer

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Use the table below to answer the following questions. Table 6.3.1 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. -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.

Correct Answer

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