MACRO Problem Set #1
The market for gluten-free breakfast cereal is shown in the graph. The after-tax price paid by buyers and price received by sellers are, respectively,
$6.00 & $4.00
In 1971 a pocket calculator cost more than $75. In 2015 a calculator of the same quality cost less than $10. Which of the following explanations is most consistent with these facts?
A change in technology
Which of the following would shift the supply curve of iPhones to the right?
A decrease in wages paid to workers making the iPhones.
In 2015, the minimum wage according to federal law was $7.25 per hour. Increasing minimum wage to $8 per hour (approximately a 10% increase) will probably lead to:
All of the above
Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy. Further, suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle. Which of the following statements is correct?
All of the above are correct
The market for gluten-free breakfast cereal is shown in the graph above. Suppose the government enacts a $2 tax per unit, imposed on the sellers. The policy will cause:
Buyers and sellers to each bear a $1 burden of the tax.
Suppose that the City of Bloomington imposes a $1 per-tire recycling fee on buyers whenever they purchase a new tire. We can illustrate the tax on a graph by shifting the demand curve
Down by $1; the price paid by buyers would rise by less than $1.
A movement along the downward-sloping demand curve for frozen margaritas can be caused by a change in weather. T/F?
False
A $2 tax levied on the producers of a good has the same effect on buyers and sellers as a $2 tax levied on the consumers of the good. T/F?
True
Changes in the price of cheese, cause a movement along the supply of cheese, whereas changes in input prices cause the supply of cheese to shift. T/F
True
If demand decreases, both the equilibrium price and quantity decrease. T/F?
True
Refer to the labor market graph. The imposition of an $8 minimum wage would cause...
Unemployment of 35 labor hours.
Which of the following is an example of the law of demand?
When tuition at State U rises, fewer students enroll in courses at State U.
A market is a...
a group of buyers and sellers of a particular good or service
Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed?
between $3 and $5
Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?
between $5 and $7
An advance in technology would shift the...
supply curve to the right
Assuming apricots and nectarines are substitutes for peaches. Which of the following would shift the demand curve for peaches to the right?
An increase in the price of apricots
Which of the following would not be a result of a binding price ceiling on child care?
An increase in the quantity of child care supplied.
Suppose that cold temperatures cause a decrease in the supply of tea. What should happen in the market for coffee, assuming tea and coffee are substitutes?
Both the equilibrium price and quantity will increase.
Changes in the price of chocolate cake cause the demand curve for chocolate cake to shift, whereas changes in income cause a movement along the demand curve for chocolate cake. T/F?
False
When the government imposes a binding price ceiling, it causes a surplus of the good. T/F?
False
Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct?
One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers.
This graph illustrates the market for fine wine. If the current price is $50 per bottle, we expect the...
Price to decrease due to the surplus of wine.
This graph illustrates the market for gluten free chocolate cake. If the current price is $30 per cake, we expect the...
Price to increase due to the shortage of cake.
Assuming the graph is drawn to scale, which of the following is true regarding the burden of the tax in market above?
Sellers pay a larger share of the tax because supply is more inelastic than demand.
Rent controls cause...
Shortages of apartments which are larger in the long run than in the short run.
Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the...
Supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20.
Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?
between 50 units and 100 units