Quiz 6 - Market Interventions

Question 1

The buyer pays most of a tax if demand is relatively inelastic because
Select one:
a. there is a black market for this good.
b. the government forces the seller to bear the burden of the tax.
c. the buyer can easily substitute to other markets.
d. the buyer cannot easily substitute to other markets.
e. the seller cannot easily substitute to other goods.

Answer 1

D

Question 2

Discrimination allocates scarce housing
Select one:
a. to those whose names are on waiting lists.
b. to those who are willing and able to pay.
c. to those who are poor.
d. to those who are lucky.
e. based on the self-interest of landlords.

Answer 2

E

Question 3

If enforcement of the law is aimed at buyers of an illegal good, the result will be
Select one:
a. a rise in the price of the good.
b. a decrease in the demand for the good.
c. a decrease in the supply of the good.
d. an increase in the supply of the good.
e. no change in the equilibrium quantity.

Answer 3

B

Question 4

The seller pays most of a tax if demand is relatively elastic because
Select one:
a. the buyer can easily substitute to other markets.
b. the seller can easily substitute to other markets.
c. the seller cannot easily substitute to other goods.
d. there is a black market for this good.
e. the government forces the seller to bear the burden of the tax.

Answer 4

A

Question 5

An effective production quota
Select one:
a. is inefficient because it results in overproduction.
b. is efficient for quantities below the equilibrium quantity and is inefficient for quantities above the equilibrium quantity.
c. is efficient because it results in underproduction.
d. is efficient because it results in overproduction.
e. is inefficient because it results in underproduction.

Answer 5

E

Question 6

Governments tend to tax items with inelastic demand because
Select one:
a. buyers pay most of the tax in these cases.
b. sellers pay most of the tax in these cases.
c. governments wish to avoid big rises in after-tax prices.
d. these goods yield the most tax revenues.
e. none of the above.

Answer 6

D

Question 7

A fact that argues in favour of prohibition and against taxes on illegal drugs is that
Select one:
a. prohibition sends a signal that might influence preferences.
b. penalties for illegal activities with prohibition are less than the penalties for tax evasion.
c. search activity decreases with prohibition.
d. a black market is easier to maintain under prohibition than under the tax code.
e. all of the above.

Answer 7

A

Question 8

In a market with an effective production quota
Select one:
a. marginal social benefit equals marginal social cost.
b. marginal social benefit is less than the equilibrium price.
c. marginal social cost exceeds marginal social benefit.
d. marginal social cost is greater than the equilibrium price.
e. marginal social benefit exceeds marginal social cost.

Answer 8

E

Question 9

In an unregulated housing market with no rent ceiling,
Select one:
a. landlords receive less compared to what they receive in a market with an effective rent ceiling.
b. scarce housing resources are allocated efficiently.
c. consumer surplus equals producer surplus.
d. tenants pay a lower rent compared to what they pay in a market with an effective rent ceiling.
e. scarce housing resources are allocated inefficiently.

Answer 9

B