practice problems for chapters 4 and 5

practice problems for chapters 4 and 5 - ECON 2100 Practice...

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ECON 2100 Practice Problems for Chapters 4 and 5 Name: __________________________ Date: _____________ 1. The market of apples is in equilibrium at a price of $0.50 per pound. If the government imposes a price floor in the market at a price of $0.40 per pound, then: A) quantity demanded will decrease. B) quantity supplied will increase. C) there will be a shortage of the good. D) the price ceiling will not affect the market price or output. 2. Black markets may develop with price controls because: A) price controls create inefficiency. B) quantity demanded does not equal quantity supplied at the mandated price. C) individuals can profit by illegal exchanges. D) of all of the above. 3. The government decides to impose a price ceiling on a good, because it thinks the market determined price is “too high.” If it imposes the price ceiling above the equilibrium price: A) consumers will respond to the higher price and therefore wish to purchase less of the good than at the equilibrium price. B) producers will respond to the higher price and therefore offer fewer units for sale. C) consumers will purchase less of the good after the price ceiling is imposed. D) there will be no change to either the price of quantity in the market. 4. When a worker earns income, she and her employer pay equal portions of FICA (the Federal Insurance Contributions Act). Which of the following statements is true? A) Both the worker and the employer bear half the burden (incidence) of the tax. B) The employer bears almost all the burden (incidence) of the tax. C) The worker bears almost all the burden (incidence) of the tax Page 1
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D) It's impossible to determine who bears the burden (incidence) of the tax. Use the following to answer question 5: Figure: Shrimp Market 5. (Figure: Shrimp Market) If the government wants to limit shrimp sales to 500 pounds, it could impose a price ______ of ______. A) floor; $15 B) floor; $10 C) ceiling; $10 D) both A and C Page 2
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Use the following to answer question 6: Figure: Market for Yachts 6. (Figure: Market for Yachts) If the government imposes a $60,000 tax on yachts (collected from the producers), consumers will pay ____ of the tax and producers will pay _____. A) $30,000; $30,000 B) $40,000; $20,000 C) $20,000; $40,000 D) $10,000; $50,000 Page 3
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Figure: Rent Controls 7. (Figure: Rent Controls) Without rent controls, the equilibrium rent is _______ and the equilibrium quantity is _______. A) Rent 2 ; Q 1 B) Rent 1 ; Q 1 C) Rent 2 ; Q 2 D) Rent 3 ; Q 3 8. In Europe the minimum wage has led to: A) lower unemployment, especially among young workers. B) a proliferation of large companies in Italy. C) widespread evasion of the minimum wage law in the “black labor” market. D)
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practice problems for chapters 4 and 5 - ECON 2100 Practice...

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