Question

When economists use the term "big tradeoff" when discussing efficiency they are referring to the tradeoff between

producer surplus and consumer surplus.

efficiency and fairness.

deadweight loss and producer/consumer surplus.

marginal cost and marginal benefits.

external costs and external benefits.

Imposing a sales tax on sellers of a product has an effect that is similar to which of the following?

anything that decreases the demand and shifts the demand curve leftward

an increase in demand for the good

a decrease in people's willingness to work

an increase in the costs of production

a decrease in consumers' preferences for the good

The inefficiency of a sales tax on a good is ultimately the result of the

buyers being unable to avoid paying the tax.

increase in the consumer surplus that is more than offset by the decrease in the producer surplus.

low tax revenue earned by the government relative to the cost of collection.

sellers being unable to avoid paying the tax.

wedge between what buyers pay for the good and what sellers receive for the good.

A rent ceiling set below the equilibrium rent

ensures the availability of enough low-rent apartments in a city.

ensures that landlords earn a reasonable rate of profit on apartments.

creates a situation in which the quantity demanded of housing is greater than quantity supplied.

eliminates discrimination by landlords.

results in all renters and potential renters being better off.

The "fair results" view of fairness says that a minimum wage law set above the equilibrium wage rate is unfair because the minimum wage

benefits only those workers who are able to find and keep a job.

cannot be enforced.

does not apply to all workers.

benefits nobody.

boosts the income of highly skilled workers.

Which of the following is true regarding a price support set above the equilibrium price?
i. The price support increases the price consumers pay.
ii. The price support creates a deadweight loss.
iii. The price support decreases output.

iii only

i and iii

i only

i, ii, and iii

i and ii

Answer 1

1. When economists use the term "big tradeoff" when discussing efficiency they are referring to the tradeoff between Efficiency and fairness.

Correct ans Option B. Efficiency and fairness.

2. Imposing a sales tax on sellers of a product has an effect that is similar to which of the following?

An increase in the costs of production.

Reason-

When sales tax is imposed on sellers it results increase in cost of tax payment hence cost of production also increase and price of a good increases.

3. The inefficiency of a sales tax on a good is ultimately the result of the wedge between what buyers pay for the good and what sellers receive for the good.

The correct option is E wedge between what buyers pay for the good and what sellers receive for the good.

4. A rent ceiling set below the equilibrium rent creates a situation in which the quantity demanded of housing is greater than quantity supplied.

The correct option is C creates a situation in which the quantity demanded of housing is greater than quantity supplied.

Reason-

When a price ceiling is applied to a housing market it is called a rent ceiling. Rent ceiling is below equilibrium then it has pwerful effects on household.

5. The "fair results" view of fairness says that a minimum wage law set above the equilibrium wage rate is unfair because the minimum wage benefits only those workers who are able to find and keep a job.

The correct option is A benefits only those workers who are able to find and keep a job.

6. Which of the following is true regarding a price support set above the equilibrium price?

i. The price support increases the price consumers pay.&

ii. The price support creates a deadweight loss.

The correct option is E i and ii

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