Question 1

The graph shown best represents:

Accepted Answer

A)  a non-binding price ceiling.
B)  a non-binding price floor.
C)  a missing market.
D)  the market for an inferior good.E) C) and D)
F) All of the above

Question 2

The graph shown demonstrates a tax on sellers. What amount of deadweight loss is generated by this tax?

Accepted Answer

A)  $0
B)  $80
C)  $160
D)  $129E) A) and D)
F) None of the above

Question 3

Does a tax on buyers affect the demand curve?

Accepted Answer

A)  Yes; the demand curve shifts down by the amount of the tax.
B)  Yes; the demand curve shifts to the left by the amount of the tax.
C)  Yes; the demand curve shifts up by the amount of the tax.
D)  No; the demand curve does not move, as there is a change in the quantity demanded instead.E) B) and C)
F) A) and D)

Question 4

If sellers bear a smaller tax burden than buyers in a market, which of the following must be true?

Accepted Answer

A)  It must be a market for inferior goods.
B)  It must be a market for luxury items.
C)  The supply curve must be more elastic than the demand curve.
D)  The supply curve must be less elastic than the buyers demand curve.E) B) and C)
F) A) and D)

Question 5

The graph shown best represents:

Accepted Answer

A)  a tax on sellers.
B)  a subsidy to sellers.
C)  a price floor.
D)  a subsidy to buyers.E) A) and B)
F) A) and C)

Question 6

The graph shown demonstrates a tax on sellers. After the tax has been imposed, the sellers produce _______ units, and the post-tax price received for each one sold is _______.

Accepted Answer

A)  15; $16
B)  15; $6
C)  31; $9
D)  31; $19E) C) and D)
F) A) and B)

Question 7

If the intended aim of the price ceiling set at $6, as shown in the graph, was a net increase in the well-being of consumers, then normative analysis would conclude that the policy was:

Accepted Answer

A)  effective because the surplus gained by consumers through lower prices is less than the surplus they lost due to fewer transactions taking place.
B)  ineffective because the surplus gained by consumers through lower prices is less than the surplus they lost due to fewer transactions taking place.
C)  effective because the surplus lost by producers through lower prices is less than the surplus gained by consumers through lower prices.
D)  There is no "right" conclusion to be reached (in a normative sense) because different people will have different opinions concerning what constitutes a better outcome.E) B) and D)
F) A) and B)

Question 8

Government attempts to set prices below market equilibrium can:

Accepted Answer

A)  lead to more producer surplus.
B)  encourage more production.
C)  reduce the total surplus in the market.
D)  always create a better outcome.E) A) and C)
F) All of the above

Question 9

Because a price ceiling causes:

Accepted Answer

A)  a shortage, some form of rationing must occur.
B)  excess supply, some form of rationing must occur.
C)  a shortage, the outcome will be efficient.
D)  excess supply, the outcome will be inefficient.E) B) and C)
F) A) and B)

Question 10

If a price ceiling is set at $8 in the market in the graph shown, the total number of units traded will:

Accepted Answer

A)  fall by 8, relative to equilibrium.
B)  fall by 15, relative to equilibrium.
C)  fall by 23, relative to equilibrium.
D)  increase by 15, relative to equilibrium.E) C) and D)
F) B) and D)

Exam 6: Government Intervention

Because a price ceiling causes:

Correct Answer
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The graph shown best represents:

Correct Answer
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The graph shown demonstrates a tax on sellers. What amount of deadweight loss is generated by this tax?

Correct Answer
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The graph shown best represents:

Correct Answer
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If a price ceiling is set at $8 in the market in the graph shown, the total number of units traded will:

Correct Answer
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Does a tax on buyers affect the demand curve?

Correct Answer
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If sellers bear a smaller tax burden than buyers in a market, which of the following must be true?

Correct Answer
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Government attempts to set prices below market equilibrium can:

Correct Answer
verified

If the intended aim of the price ceiling set at $6, as shown in the graph, was a net increase in the well-being of consumers, then normative analysis would conclude that the policy was:

Correct Answer
verified

The graph shown demonstrates a tax on sellers. After the tax has been imposed, the sellers produce _ units, and the post-tax price received for each one sold is _.

Correct Answer
verified

Exam 6: Government Intervention

Because a price ceiling causes:

Correct AnswerverifiedShow Answer

The graph shown best represents:

Correct AnswerverifiedShow Answer

The graph shown demonstrates a tax on sellers. What amount of deadweight loss is generated by this tax?

Correct AnswerverifiedShow Answer

The graph shown best represents:

Correct AnswerverifiedShow Answer

If a price ceiling is set at $8 in the market in the graph shown, the total number of units traded will:

Correct AnswerverifiedShow Answer

Does a tax on buyers affect the demand curve?

Correct AnswerverifiedShow Answer

If sellers bear a smaller tax burden than buyers in a market, which of the following must be true?

Correct AnswerverifiedShow Answer

Government attempts to set prices below market equilibrium can:

Correct AnswerverifiedShow Answer

If the intended aim of the price ceiling set at $6, as shown in the graph, was a net increase in the well-being of consumers, then normative analysis would conclude that the policy was:

Correct AnswerverifiedShow Answer

The graph shown demonstrates a tax on sellers. After the tax has been imposed, the sellers produce _______ units, and the post-tax price received for each one sold is _______.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The graph shown demonstrates a tax on sellers. After the tax has been imposed, the sellers produce _ units, and the post-tax price received for each one sold is _.

Correct Answer
verified