159. Figure 4-1 illustrates the market for compact discs. If the government imposes a price floor of $25 for
compact discs, which of the following will be true?
a.
Consumers would wish to purchase 1,000 compact discs.
b.
Producers would wish to sell 5,000 compact discs.
c.
There would be a surplus of 4,000 compact discs.
d.
All of the above are true.
Figure 4-2
160. Given the demand and supply conditions shown in Figure 4-2, if the government imposes a price
ceiling of a, indicate the quantity consumers would like to buy and the amount producers would be
willing to supply.
a.
Consumers would want to buy t; producers would be willing to sell r.
b.
Consumers would want to buy r; producers would be willing to sell t.
c.
Consumers would want to buy t; producers would be willing to sell s.
d.
Consumers would want to buy s; producers would be willing to sell s.
Figure 4-3
161. Figure 4-3 indicates the demand (D) and supply (S) for the rental housing market in a large city. If the
government imposed a price ceiling of a, which of the following would be true?
a.
The quantity of rental housing demanded would be t.
b.
The quantity of rental housing supplied would be r.
c.
There would be a shortage of rental housing.
d.
All of the above are true.
Use the figure below to answer the following question(s).
Figure 4-4
162. Given the demand and supply conditions shown in Figure 4-4, if the government imposes a price
ceiling of a, which of the following would be true?
a.
Consumers would want to buy r units.
b.
Consumers would want to buy s units.
c.
Producers would wish to sell s units.
d.
Producers would wish to sell r units.
163. Given the demand and supply conditions shown in Figure 4-4, what will happen as the result of
imposing a price ceiling of a?
a.
Demand for the product will decline.
b.
Supply will increase.
c.
There will be a shortage of the product.
d.
Over time, the quality of the product offered by suppliers will increase.
Figure 4-5
164. Figure 4-5 represents the market for gasoline before and after a per-gallon tax. What does the
triangular area ABC represent?
a.
the amount of revenue raised due to imposing the tax
b.
the loss in consumer surplus due to imposing the tax
c.
the loss in producer surplus due to imposing the tax
d.
the deadweight loss (or excess burden) caused by the tax
Use the figure below illustrating the impact of an excise tax to answer the following question(s).
Figure 4-6
165. Refer to Figure 4-6. The amount of the excise tax I is
a.
$.50.
b.
$1.50.
c.
$1.00.
d.
$2.00.
166. Refer to Figure 4-6. The amount of the actual tax burden paid by consumers and producers is
a.
$1.00 for consumers and $.50 for producers
b.
$1.00 for consumers and $1.00 for producers.
c.
$.25 for consumers and $.75 for producers.
d.
$.50 for consumers and $.50 for producers.
167. The deadweight loss of the tax illustrated in Figure 4-6 is given by the area
a.
ABEH.
b.
DFE.
c.
EKG.
d.
EFG.
168. The revenue generated by the tax illustrated in Figure 4-6 is given by the area
a.
ACLH.
b.
BEKM.
c.
ACFG.
d.
0AGJ.
169. Refer to Figure 4-7. The supply curve S1 and the demand curve D indicate initial conditions in the
market for gasoline. A $.60-per-gallon excise tax on gasoline is levied, which shifts the supply curve
from S1 to S2. Imposing the tax causes the equilibrium price of gasoline to increase from
a.
$.80 to $1.40.
b.
$.80 to $1.50.
c.
$.90 to $1.50.
d.
$.90 to $1.40.
170. Refer to Figure 4-7. The supply curve S1 and the demand curve D indicate initial conditions in the
market for gasoline. A $.60-per-gallon excise tax on gasoline is levied, which shifts the supply curve
from S1 to S2. Which of the following states the actual burden of the tax?
a.
$.50 for buyers and $.10 for sellers
b.
$.50 for sellers and $.10 for buyers
c.
The entire $.60 falls on sellers.
d.
The entire $.60 falls on buyers.
171. Refer to Figure 4-7. The supply curve S1 and the demand curve D indicate initial conditions in the
market for gasoline. A $.60-per-gallon excise tax on gasoline is levied. How much revenue does the
$.60-per-gallon tax generate for the government?
a.
$40 billion
b.
$48 billion
c.
$50 billion
d.
$60 billion
172. Refer to Figure 4-7. Which of the following is true for the tax illustrated?
a.
The tax increases the price of gasoline by $.60.
b.
Since the demand for gasoline is more inelastic than the supply, consumers bear most of
the burden of the tax.
c.
Since the demand for gasoline is more elastic than the supply, consumers bear most of the
burden of the tax.
d.
Since the supply of gasoline is highly inelastic, the primary burden of the tax is imposed
on the suppliers of gasoline.
Use the figure below to answer the following question(s).
Figure 4-8
173. Refer to Figure 4-8. The supply curve S1 and the demand curve D indicate initial conditions in the
market for soft coal. A $40-per-ton tax on soft coal is levied, shifting the supply curve from S1 to S2.
Imposing the tax increases the equilibrium price of soft coal from
a.
$20 to $60 per ton.
b.
$20 to $50 per ton.
c.
$50 to $60 per ton.
d.
$50 to $90 per ton.
174. Refer to Figure 4-8. The supply curve S1 and the demand curve D indicate initial conditions in the
market for soft coal. A $40-per-ton tax on soft coal is levied, shifting the supply curve from S1 to S2.
Which of the following states the actual burden of the tax?
a.
$10 for buyers and $30 for sellers
b.
$30 for buyers and $10 for sellers
c.
The entire $40 falls on sellers.
d.
The entire $40 falls on buyers.
175. Refer to Figure 4-8. How much revenue does the $40-per-ton tax generate for the government?
a.
$600 million
b.
$700 million
c.
$2.4 billion
d.
$2.8 billion
176. Refer to Figure 4-8. Which of the following is true?
a.
The tax increases the price of soft coal by $40 per ton.
b.
Since the demand for soft coal is more inelastic than the supply, consumers bear most of
the burden of the tax.
c.
Since the demand for soft coal is more elastic than the supply, suppliers of soft coal bear
most of the burden of the tax.
d.
Since the supply of soft coal is highly inelastic, the primary burden of the tax is imposed
on the consumers of soft coal.
Use the figure below to answer the following question(s).
Figure 4-9
177. Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point b. If a $.40 excise tax
was imposed,
a.
the supply of gasoline would shift to S2.
b.
the price of gasoline to consumers would increase from $1.20 per gallon to $1.40 per
gallon.
c.
the net price received by producers of gasoline would decline from $1.20 per gallon to
$1.00 per gallon.
d.
all of the above would occur.
178. Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point b and a $.40 excise
tax is illustrated. How much revenue would the $.40 gasoline tax raise?
a.
$18 million
b.
$36 million
c.
$72 million
d.
$100 million
179. Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point b and a $.40 excise
tax is illustrated. Which of the following states the actual burden of the tax?
a.
$.20 for buyers and $.20 for sellers
b.
$.30 for buyers and $.10 for sellers
c.
The entire $.40 falls on sellers.
d.
The entire $.40 falls on buyers.
180. Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point b and a $.40 excise
tax is illustrated. What does the triangular area abc represent?
a.
the revenue the government derives from the tax
b.
the tax paid by consumers
c.
the tax paid by producers
d.
the deadweight loss (or excess burden) created by the tax
Use the figure below to answer the following question(s).
Figure 4-10
181. Figure 4-10 shows the market for a good before and after an excise tax is imposed. What does the
triangular area C represent?
a.
the deadweight loss accompanying the tax
b.
the tax revenue derived from sellers
c.
the tax revenue derived from buyers
d.
the total tax revenue generated by the tax
182. Refer to Figure 4-10. The accompanying graph shows the market for a good before and after an excise
tax is imposed. The total tax revenue generated is indicated by
a.
area A + area B + area D.
b.
area A + area B + area C.
c.
area A + area B.
d.
area D only.
Use the figure below to answer the following question(s).
Figure 4-11
183. Refer to Figure 4-11. On the Laffer curve shown, tax revenue could be increased by
a.
decreasing the marginal tax rates if we were currently at point A.
b.
decreasing the marginal tax rates if we were currently at point C.
c.
increasing the marginal tax rates if we were currently at point B.
d.
increasing the marginal tax rates if we were currently at point C.
184. Refer to Figure 4-11. On the Laffer curve shown, which of the following is true?
a.
Tax revenue would increase if marginal tax rates were lowered from point C.
b.
Tax revenue would decrease if marginal tax rates were lowered from point A.
c.
Tax revenues are maximized at a tax rate corresponding to point B.
d.
All of the above are true.
Use the figure below to answer the following question(s).
Figure 4-12
185. Refer to Figure 4-12. The supply curve S and the demand curve D1 indicate initial conditions in the
market for college textbooks. A new government program is implemented that grants students a $30
per textbook subsidy on every textbook they purchase, shifting the demand curve from D1 to D2.
Which of the following is true for this subsidy given the information provided in the exhibit?
a.
Textbook buyers will receive an actual benefit of $10 from the subsidy, while textbook
sellers will receive an actual benefit of $20 from the subsidy.
b.
Textbook buyers will receive an actual benefit of $20 from the subsidy, while textbook
sellers will receive an actual benefit of $10 from the subsidy.
c.
Textbook buyers will receive the full $30 benefit from the subsidy.
d.
Textbook sellers will receive the full $30 benefit from the subsidy.
186. Refer to Figure 4-12. The exhibit illustrates the impact of granting a subsidy on a particular good.
Which of the following is true for this subsidy given the information provided in the exhibit?
a.
The subsidy has been statutorily (legally) paid to buyers.
b.
The subsidy results in an increase in the selling price of the good.
c.
Sellers will receive a larger proportion of the benefit from this subsidy than buyers.
d.
All of the above are true.
187. Refer to Figure 4-12. The supply curve S and the demand curve D1 indicate initial conditions in the
market for college textbooks. A new government program is implemented that grants students a $30
per textbook subsidy on every textbook they purchase, shifting the demand curve from D1 to D2.
Which of the following is true for this subsidy given the information provided in the exhibit?
a.
The original average selling price of textbooks was $100, and after the subsidy it rises to
$120.
b.
$90 represents the net price a buyer must pay for a textbook after taking into account the
subsidy payment.
c.
Textbook buyers will receive an actual benefit of $10 from the subsidy, while textbook
sellers will receive an actual benefit of $20 from the subsidy.
d.
All of the above are true.
Use the figure below to answer the following question(s).
Figure 4-13
188. Refer to Figure 4-13. The supply curve S and the demand curve D1 indicate initial conditions in the
market for flu shots. A new government program is implemented that grants buyers a $25 subsidy
when they buy a flu shot, shifting the demand curve from D1 to D2. Which of the following is true for
this subsidy given the information provided in the exhibit?
a.
Buyers of flu shots will receive an actual benefit of $10 from the subsidy, while sellers of
flu shots will receive an actual benefit of $15 from the subsidy.
b.
Buyers of flu shots will receive an actual benefit of $15 from the subsidy, while sellers of
flu shots will receive an actual benefit of $10 from the subsidy.
c.
Buyers of flu shots will receive the full $25 benefit from the subsidy.
d.
Sellers of flu shots will receive the full $25 benefit from the subsidy.
189. Refer to Figure 4-13. The exhibit illustrates the impact of granting a subsidy on a particular good.
Which of the following is true for this subsidy given the information provided in the exhibit?
a.
The subsidy has been statutorily (legally) paid to sellers.
b.
The subsidy results in a decrease in the market selling price of the good.
c.
Sellers will receive a larger proportion of the benefit from this subsidy than buyers.
d.
The subsidy results in a reduction in the quantity purchased.
190. Refer to Figure 4-13. The supply curve S and the demand curve D1 indicate initial conditions in the
market for flu shots. A new government program is implemented that grants buyers a $25 subsidy
when they buy a flu shot, shifting the demand curve from D1 to D2. Which of the following is true for
this subsidy given the information provided in the figure?
a.
The original price of a flu shot was $75, and after the subsidy, it rises to $90.
b.
$65 represents the net price a buyer must pay for a flu shot after taking into account the
subsidy payment.
c.
Buyers of flu shots will receive an actual benefit of $10 from the subsidy, while sellers of
flu shots will receive an actual benefit of $15 from the subsidy.
d.
All of the above are true.