Test 2 Highlighted Answers for Avenue

Test 2 Highlighted Answers for Avenue - Page 1 of 9...

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Page 1 of 9 McMaster University Department of Economics ECON 1B03 Fall 2011 Test 2 ANSWERS Saturday November 12, 2011 90 minutes Instructor: H Holmes MULTIPLE CHOICE Answer all questions on the scan sheet using HB pencil. Calculators are permitted. Hand in the scan and this sheet separately. TOTAL MC MARKS AVAILABLE: 40 NAME:__________________________________________________________________________ STUDENT #:_____________________________________________________________________
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2 of 9 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. A binding price ceiling causes a. a shortage, which cannot be eliminated through market adjustment. b. a surplus, which cannot be eliminated through market adjustment. c. a shortage, which is temporary, since market adjustment will cause price to rise. d. a surplus, which is temporary, since market adjustment will cause price to rise. ____ 2. A price ceiling that is not binding will a. cause a surplus in the market. b. cause a shortage in the market. c. cause the market to be less efficient. d. have no effect on the market price. ____ 3. A newly imposed minimum wage set above the equilibrium wage in a labor market will a. cause the equilibrium wage in the market to rise. b. make every worker who is earning a wage below the minimum better off. c. cause some workers to get a raise and some workers to lose their jobs. d. make workers earning more than the minimum wage worse off. ____ 4. Assume that the demand and supply curves for cars are elastic. If the government imposed a $500 tax on the buyer of each car, we can assume that the a. equilibrium price of a car would decrease by less than $500. b. price of a car would decrease by exactly $500. c. price of a car would decrease by more than $500. d. price of a car would not change if both curves were elastic. ____ 5. A tax placed on the seller of a product will a. raise equilibrium price and lower equilibrium quantity. b. raise both equilibrium price and quantity. c. lower equilibrium price and raise equilibrium quantity. d. lower both equilibrium price and quantity. ____ 6. If a tax is imposed on a market with inelastic demand and elastic supply, a. buyers will bear most of the burden of the tax. b. sellers will bear most of the burden of the tax. c. the burden of the tax will be shared equally between buyers and sellers. d. it is impossible to determine how the burden of the tax will be shared. e. the burden of the tax will depend on whether it is imposed on the buyers or the sellers. ____ 7. Suppose that a tax is placed on books. If the buyer pays the majority of the tax we know that the a. supply curve is more inelastic than the demand curve. b. demand curve is more inelastic than the supply curve.
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This note was uploaded on 03/11/2012 for the course SCIENCE Various taught by Professor Various during the Fall '12 term at McMaster University.

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Test 2 Highlighted Answers for Avenue - Page 1 of 9...

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