Economics Homework 3

A $0.10 tax levied on the sellers of chocolate bars will cause the Select one: a. supply curve for chocolate bars to shift up by $0.10. b. demand curve for chocolate bars to shift down by $0.10. c. demand curve for chocolate bars to shift up by $0.10. d. supply curve for chocolate bars to shift down by $0.10.

a

In principle, we can Select one: a. confirm or refute positive statements by examining evidence. b. confirm or refute normative statements by examining evidence. c. ignore positive statements when choosing among various public policy alternatives. d. ignore normative statements when choosing among various public policy alternatives.

a

Minimum wage laws Select one: a. may encourage some teenagers to drop out and take jobs. b. have the greatest impact in the market for skilled labor. c. create labor shortages. d. All of the above are correct.

a

Normative conclusions Select one: a. involve value judgments. b. are based on ignorance of positive analysis. c. reflect the economist's role as scientist. d. come from positive analysis alone.

a

Which of the following observations would be consistent with the imposition of a binding price floor on a market? After the price floor becomes effective, Select one: a. a smaller quantity of the good is bought and sold. b. a larger quantity of the good is demanded. c. a smaller quantity of the good is supplied. d. the price falls below the equilibrium price.

a

Which of the following statements is correct? Select one: a. Who actually pays a tax depends on the price elasticities of supply and demand. b. A tax levied on sellers always will be passed on completely to buyers. c. Government can decide who actually pays a tax. d. A tax levied on buyers will never be partially paid by sellers.

a

Which of the following was not a result of the luxury tax imposed by Congress in 1990? Select one: a. The tax was never repealed or even modified. b. A larger part of the tax burden fell on the middle class than on the rich. c. Even the wealthy demanded fewer luxury goods. d. The larger part of the tax burden fell on sellers.

a

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve Select one: a. downward by exactly $2.00. b. upward by exactly $2.00. c. upward by less than $2.00. d. downward by less than $2.00.

b

A binding price ceiling (i) causes a surplus. (ii) causes a shortage. (iii) is set at a price above the equilibrium price. (iv) is set at a price below the equilibrium price. Select one: a. (i) and (iii) only b. (ii) and (iv) only c. (ii) only d. (iv) only

b

A legal maximum on the price at which a good can be sold is called a price Select one: a. support. b. ceiling. c. subsidy. d. floor.

b

A tax on the buyers of sofas Select one: a. may increase, decrease, or have no effect on the size of the sofa market. b. decreases the size of the sofa market. c. increases the size of the sofa market. d. has no effect on the size of the sofa market.

b

Economists generally believe that rent control is Select one: a. an efficient way to allocate housing, but not a good way to help the poor. b. a highly inefficient way to help the poor raise their standard of living. c. an efficient and fair way to help the poor. d. inefficient but the best available means of solving a serious social problem.

b

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the Select one: a. sellers will bear a greater burden of the tax than the buyers. b. buyers will bear a greater burden of the tax than the sellers. c. buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information. d. buyers and sellers are likely to share the burden of the tax equally.

b

When studying how some event or policy affects a market, elasticity provides information on the Select one: a. number of market participants who are directly affected by the event or policy. b. magnitude of the effect on the market. c. speed of adjustment of the market in response to the event or policy. d. equity effects on the market by identifying the winners and losers.

b

A binding minimum wage tends to Select one: a. have the greatest impact in the market for teenage labor. b. cause unemployment. c. All of the above are correct. d. cause a labor surplus.

c

A tax burden falls more heavily on the side of the market that Select one: a. is closer to unit elastic. b. has a fewer number of participants. c. is more inelastic. d. is less inelastic.

c

If a nonbinding price floor is imposed on a market, then the Select one: a. price in the market will decrease. b. price in the market will increase. c. quantity sold in the market will stay the same. d. quantity sold in the market will decrease.

c

When OPEC raised the price of crude oil in the 1970s, it caused the Select one: a. demand for gasoline to increase. b. demand for gasoline to decrease. c. supply of gasoline to decrease. d. supply of gasoline to increase.

c

In general, elasticity is a measure of Select one: a. the extent to which a market is competitive. b. how firms' profits respond to changes in market prices. c. the extent to which advances in technology are adopted by producers. d. how much buyers and sellers respond to changes in market conditions.

d