MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1) A price ________ is a regulated ________ that must be set below the equilibrium price to have an 1)

effect.

A) floor; quantity C) ceiling; quantity

2) The opportunity cost of buying a good includes I. the price of the good. II. the value of time spent searching for the good.

A) only I B) only II

B) floor; price D) ceiling; price

C) neither I nor II

2)

D) both I and II

3) In the figure above, the demand curve shifts rightward from D0 to D1 so that D1 is the relevant 3)

demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will be

A) a shortage of 200,000 apartments. B) a shortage of 400,000 apartments. C) a shortage of 500,000 apartments. D) no shortage nor a surplus of apartments.

4) A minimum wage is a government-imposed price ________ that is designed to be ________ the 4)

equilibrium wage rate. A) ceiling; below B) floor; below

C) ceiling; above D) floor; above

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Wage rate (dollars per hour)

Labor supplied (millions of workers)

Labor demanded (millions of workers

11 6 4 10 5 5 946 837 728

5) In the table above, what is the level of unemployment (in millions of workers) if the minimum 5) wage is set at $8 per hour?

A) 0. B) 4. C) 1. D) 3.

6) In the above figure, a minimum wage of ________ would result in employment of ________. 6)

A) W1;L2 B) W1;L1

C) W2;L1 D) W2;L2

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7) In the figure above, if a minimum wage of $6 per hour has been imposed and the labor demand 7) curve then shifts from D0 to D1 the wage rate ________ and the amount of employment ________.

A) does not change; decreases B) falls; increases C) does not change; increases D) falls; decreases

8) A sales tax is imposed on the sellers of gasoline. This tax shifts 8) A) the supply of gasoline curve rightward.

B) both the supply curve of gasoline and demand curve for gasoline leftward. C) the demand for gasoline curve leftward. D) the supply of gasoline curve leftward.

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9) In the above figure, a sales tax of $1 per unit imposed on sellers ________ the price buyers pay and 9) ________ the price that suppliers keep for themselves.

A) does not affect; does not affect B) affects; affects C) does not affect; affects D) affects; does not affect

10) In the above figure, the price paid by the buyer before the tax is ________ per compact disc, and the 10) price paid by the buyer after the tax is ________ per compact disc.

A) $20; $30 B) $20; $20 C) $30; $20 D) $30; $30

11) In the above figure, the price received by the seller before the tax is ________ per compact disc, and 11) the price received and kept by the seller after the tax is ________ per compact disc.

A) $30; $20 B) $30; $10

C) $20; $20 D) $20; $10

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12) In the above figure, what is the amount of the tax per compact disc?

A) $40 B) $30 C) $10

13) In the above figure, what is the total tax revenue collected by the government? A) $40 million B) $20 million C) $200 million

14) In the above figure, who pays the larger share of the tax? A) buyers

D) $20

12)

13) D) $400 million

14)

B) sellers C) Buyers and sellers each pay the same amount of the tax and each pays $10 per compact disc. D) Buyers and sellers each pay the same amount of the tax, but the amount each pays is different

than $10 per compact disc.

15) The amount of a tax paid by the sellers will be smaller the more ________ the demand and the more 15) ________ the supply.

A) inelastic; elastic B) elastic; inelastic C) inelastic; inelastic D) elastic; elastic

16) The sellers pay the entire sales tax levied on a good when demand is perfectly ________ or supply 16)

is perfectly ________. A) elastic; elastic C) inelastic; inelastic

B) elastic; inelastic D) inelastic; elastic

17) A sales tax is divided so that the A) sellers pay the full amount if demand is perfectly elastic.

B) buyers pay the full amount if demand is perfectly elastic. C) buyers pay the full amount if supply is perfectly inelastic. D) sellers pay the full amount if supply is perfectly elastic.

17)

18) If penalties are imposed on the sellers of illegal goods or services, then the equilibrium price 18) ________ and the equilibrium quantity ________.

A) rises; decreases B) falls; increases C) falls; decreases D) rises; increases

19) When a government imposes penalties on both sellers and buyers of an illegal good, the price of the 19) good ________ and the quantity ________.

A) might rise, fall, or not change; decreases B) falls; decreases C) rises; might increase, decrease, or not change

D) falls; might increase, decrease, or not change

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20) In the above figure, CBL is the cost of breaking the law. If it is illegal to buy, but not illegal to sell, 20)

then the price per unit will be

A) $400. B) $200.

C) $500. D) $300.