If the government passes a law requiring sellers of mopeds to send $200 to the
government for every moped they sell, then
a. the supply curve for mopeds shifts downward by $200.
b. sellers of mopeds receive $200 less per moped than they were receiving before the
tax.
c. buyers of mopeds are unaffected by the tax.
d. None of the above is correct.
Figure 95
The figure illustrates the market for tricycles in a country.
Refer to Figure 95. Total surplus with trade exceeds total surplus without trade by
a. $640.
b. $1,280.
c. $2,560.
d. $3,840.
Long lines
a. and discrimination according to seller bias are both inefficient rationing mechanisms
because they both waste buyers’ time.
b. and discrimination according to seller bias are both inefficient rationing mechanisms
because the good does not necessarily go to the buyer who values it most highly.
c. are an inefficient rationing mechanism because they waste buyers’ time, and
discrimination according to seller bias is an inefficient rationing mechanism because the
good does not necessarily go to the buyer who values it most highly.
d. are an inefficient rationing mechanism because the good does not necessarily go to
the buyer who values it most highly, and discrimination according to seller bias is an
inefficient rationing mechanism because it wastes buyers’ time.
A tax imposed on the buyers of a good will
a. raise both the price buyers pay and the effective price sellers receive.
b. raise the price buyers pay and lower the effective price sellers receive.
c. lower the price buyers pay and raise the effective price sellers receive.
d. lower both the price buyers pay and the effective price sellers receive.
Which of the following is an important cause of inflation in an economy?
a. increases in productivity in the economy
b. the influence of positive externalities on the economy
c. lack of property rights in the economy
d. growth in the quantity of money in the economy
Tom produces baseball gloves and baseball bats. Steve also produces baseball gloves
and baseball bats, but Tom is better at producing both goods. In this case, trade could
a. benefit both Steve and Tom.
b. benefit Steve, but not Tom.
c. benefit Tom, but not Steve.
d. benefit neither Steve nor Tom.
If the government allowed a free market for transplant organs such as kidneys to exist,
critics argue that such a market would
a. not reduce the shortage of organs.
b. benefit rich people but not poor people.
c. be inefficient because markets are not good at allocating scarce resources.
d. be inferior to a plan imposed by a benevolent dictator.
Figure 812
Refer to Figure 812. Suppose a $3 perunit tax is placed on this good. The perunit
burden of the tax on buyers is
a. $1.
b. $2.
c. $3.
d. $4.
Figure 719
Refer to Figure 719. At the equilibrium price, producer surplus is
a. $300.
b. $150.
c. $450.
d. $125.
At present, the maximum legal price for a human kidney is $0. The price of $0
maximizes
a. consumer surplus but not producer surplus.
b. producer surplus but not consumer surplus.
c. both consumer and producer surplus.
d. neither consumer nor producer surplus.
Figure 723
Refer to Figure 723. At equilibrium, total surplus is represented by the area
a. A+B+C.
b. A+B+D+F.
c. A+B+C+D+H+F.
d. A+B+C+D+H+F+G+I.
When a tax is imposed on a good for which both demand and supply are very elastic,
a. sellers effectively pay the majority of the tax.
b. buyers effectively pay the majority of the tax.
c. the tax burden is equally divided between buyers and sellers.
d. None of the above is correct; further information would be required to determine how
the burden of the tax is distributed between buyers and sellers.
Table 326
Assume that Japan and Korea can switch between producing cars and producing
airplanes at a constant rate.
Hours Needed to Make 1Quantity Produced in 2400 Hours
CarAirplaneCarsAirplanes
Japan301508016
Korea501504816
Refer to Table 326. Japan’s opportunity cost of one airplane is
a. 1/5 car and Korea’s opportunity cost of one airplane is 1/3 car.
b. 1/5 car and Korea’s opportunity cost of one airplane is 3 cars.
c. 5 cars and Korea’s opportunity cost of one airplane is 1/3 car.
d. 5 cars and Korea’s opportunity cost of one airplane is 3 cars.
Figure 614
Refer to Figure 614. If the horizontal line on the graph represents a price floor, then the
price floor is
a. binding and creates a shortage of 20 units of the good.
b. binding and creates a shortage of 40 units of the good.
c. not binding but creates a shortage of 40 units of the good.
d. not binding, and there will be no surplus or shortage of the good.
Which of the following is the least likely to be a competitive market?
a. ice cream
b. soybeans
c. cable television
d. new houses
Figure 22
Refer to Figure 22. If the outer loop of this circularflow diagram represents flows of
dollars, then the inner loop includes
a. flows of goods and services from households to firms.
b. flows of inputs from households to firms.
c. flows of rent payments paid to owners of land.
d. flows of wages and salaries paid to workers.
Figure 86
The vertical distance between points A and B represents a tax in the market.
Refer to Figure 86. Without a tax, the equilibrium price and quantity are
a. $16 and 300.
b. $10 and 600.
c. $10 and 300.
d. $6 and 300.
Buyers of a good bear the larger share of the tax burden when the
(i)supply is more elastic than the demand for the product.
(ii)demand in more elastic than the supply for the product.
(iii)tax is placed on the sellers of the product.
(iv)tax is placed on the buyers of the product.
a. (i) only
b. (ii) only
c. (i) and (iii) only
d. (i) and (iv) only
One disadvantage of government subsidies over price controls is that subsidies
a. prevent the attainment of equilibrium in the markets in which they are imposed.
b. make higher taxes necessary.
c. are always unfair to those with low incomes.
d. cause unemployment.
A market supply curve shows
a. the total quantity supplied at all possible prices.
b. the average quantity supplied by producers at all possible prices.
c. how quantity supplied changes when consumer income changes.
d. suppliers’ responses, in terms of the amounts they will supply, to the demands of
buyers.
If the quantity supplied is the same regardless of price, then supply is
a. elastic.
b. perfectly elastic.
c. perfectly inelastic.
d. inelastic.
Figure 711
Refer to Figure 711. If the supply curve is S, the demand curve is D, and the
equilibrium price is $100, what is the producer surplus?
a. $625
b. $1,250
c. $2,500
d. $5,000
Economists tend to see ticket scalping as
a. a way for a few to profit without producing anything of value.
b. an inequitable interference in the orderly process of ticket distribution.
c. a way of increasing the efficiency of ticket distribution.
d. an unproductive activity which should be made illegal everywhere.
If a tax is levied on the sellers of flour, then
a. buyers will bear the entire burden of the tax.
b. sellers will bear the entire burden of the tax.
c. buyers and sellers will share the burden of the tax.
d. the government will bear the entire burden of the tax.
Figure 69
Refer to Figure 69. At which price would a price ceiling be nonbinding?
a. $4
b. $5
c. $3
d. $7
What you give up to obtain an item is called your
a. opportunity cost.
b. explicit cost.
c. monetary cost.
d. direct cost.
In the markets for goods and services in the circularflow diagram,
a. households provide firms with savings for investment.
b. households provide firms with labor, land, and capital.
c. firms provide households with output.
d. firms provide households with profit.
There are very few, if any, good substitutes for automotive tires. Therefore, the demand
for automotive tires would tend to be
a. elastic.
b. unit elastic.
c. inelastic.
d. highly responsive to changes in income as well as changes in prices.
The size of a tax and the deadweight loss that results from the tax are
a. positively related.
b. negatively related.
c. independent of each other.
d. equal to each other.
Sellers of a product will bear the larger part of the tax burden, and buyers will bear a
smaller part of the tax burden, when the
a. tax is placed on the sellers of the product.
b. tax is placed on the buyers of the product.
c. supply of the product is more elastic than the demand for the product.
d. demand for the product is more elastic than the supply of the product.
Figure 712
Refer to Figure 712. If the equilibrium price is $350, what is the producer surplus?
a. $60,000
b. $15,000
c. $30,000
d. $70,000
Table 54
The following table shows the demand schedule for a particular good.
PriceQuantity
$200
$163
$126
$89
$412
$015
Refer to Table 54. Using the midpoint method, when price falls from $8 to $4, the
price elasticity of demand is
a. 0.43
b. 0.67
c. 1
d. 2.33