1. The effect of a quantity restriction is generally
- higher taxes to fund government programs to buy the excess.
- a higher price.
- an increase in quantity supplied.
- a decrease in demand.
2. Black markets generally develop when there are
- price quotas.
- price subsidies.
- price ceilings.
- price floors.
3. In a market-based economy, the role of a price system is
- to address scarcity.
- to create surpluses.
- to make goods and services costly for most.
- to create shortages.
4. When prices are regulated by the government, in the way they are with price ceilings and price floors,
- this results in greater efficiency in the market.
- this interferes with the rationing function of prices in a free market system.
- this does not result in any change in the equilibrium set by the market.
- this assists with the efficient allocation of resources in the market.
5. Opponents of the "Fight for $15" movement that seeks to increase the minimum wage argue that minimum wages set above the market equilibrium
- result in upper-level management lay-offs.
- increase the demand for skilled labor.
- decrease the quantity of labor supplied, resulting in labor shortages.
- increase unemployment, particularly among unskilled workers.
6. If the price for grain set by the market is $3.50 a bushel, but the government sets a price of $5 a bushel,
- a shortage of grain will result.
- farmers will hold off on planting the new crop until the market arrives at a $5 price.
- the government will have to purchase the surplus in order to maintain the higher price
- demand will increase until a new market equilibrium of $5 is reached.
7. When demand increases while supply remains constant,
- the market price rises and the equilibrium quantity falls.
- the market price falls and the equilibrium quantity rises.
- the market price falls and the equilibrium quantity falls.
- the market price rises and the equilibrium quantity rises.
8. Which of the following goods provided by the government is a true public? good?
- flood control
- tax collection
- the United States Postal Service
- bridges where tolls are collected
9. The study of collective decision?-making, or the process through which? voters, politicians and other interested parties influence non-market choices is known as
- private choice theory.
- the exclusion principle.
- antitrust legislation.
- public choice theory.
10. A cost or benefit that flows from an activity that has an impact on an? individual's well-being, even though that individual was not directly involved in the? activity, is known as?
- a capital loss.
- a public good.
- an externality.
- a free-rider.
11. The following are all economic functions of government EXCEPT
- promoting competition.
- ensuring economy-wide stability.
- providing public goods.
- deciding which states may or may not impose income taxes.
12. nts made by the government to individuals for which no goods or services are rendered are known as
- demerit payments.
- black market payments.
- merit payments.
- transfer payments.
13. What is the structure of the U.S. federal income tax? system?
- It is a system that only considers the average tax rate for an individual taxpayer.
- It is a regressive tax system since taxpayers with higher incomes pay a higher tax.
- It is a progressive tax system which uses a marginal tax rate.
- It a proportional tax system because all people with the same income pay the same tax.
14. In the U.S., the corporate income tax
- does not apply to profits earned on exports.
- only taxes retained earnings.
- results in taxpayers being doubly taxed on corporate earnings.
- excludes dividends paid out to shareholders.
15. If a government were to adopt an income tax system which taxed all income at 30?%, with the first ?$30,000 of income being tax-exempt, such a system would be ?
- regressive.
- proportional.
- progressive.
- confiscatory.