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1

In 1991 Congress imposed a 10 percent luxury tax paid by producers. Because of the uproar from consumers, the tax was repealed in 1993. What was the effect of the two events on equilibrium price and quantity of luxury boats?
A)Price rose and then fell; quantity sold also rose and then fell.
B)Price rose and then fell; quantity sold fell and then rose.
C)Price fell and then rose; quantity sold rose and then fell.
D)Price fell and then rose; quantity sold also fell and then rose.
2

An increase in price and quantity is consistent with a:
A)rightward shift in demand and no shift in supply.
B)leftward shift in supply and no shift in demand.
C)leftward shift in supply and a leftward shift in demand.
D)rightward shift in supply and a rightward shift in demand.
3

Suppose you wish to purchase a blanket at a shop in Mexico. If the cost of one peso is $0.10 and the cost of the blanket is 200 pesos, then the dollar cost of the blanket is:
A)$2,000
B)$1,000
C)$10
D)$20
4

If a price ceiling is set above the equilibrium price:
A)a surplus of the product will occur.
B)a shortage of the product will occur.
C)a black market will emerge.
D)neither equilibrium price or quantity will be affected.
5

Students at State U pay $60 per year for a parking permit, but many complain that they are not able to find a parking place in designated university lots. This suggests that:
A)$60 is above the equilibrium price.
B)student incomes are too low.
C)$60 is below the equilibrium price.
D)State U should make parking free.
6

The best explanation for the existence of a "black market" is:
A)shortages due to a price floor.
B)surpluses due to a price ceiling.
C)surpluses due to a price floor.
D)shortages due to a price ceiling.
7

If rent control is applied to apartment housing, the prediction of basic supply and demand analysis is that:
A)the market will return to equilibrium by an increase in the supply of housing.
B)there will be an excess supply of apartment housing.
C)there will be an excess demand for apartment housing.
D)the market will return to equilibrium by a decrease in the demand for housing.
8

An excise tax is a tax that is levied:
A)only on imported goods.
B)on income.
C)on a specific good.
D)only on exported goods.
9

The introduction of a tariff is expected to:
A)increase the quantity of goods imported.
B)increase the price of the imported good and the domestic competing good.
C)decrease the quantity of competing goods produced by domestic firms.
D)decrease the price of domestic competing goods.
10

Under a third-party payer system:
A)buyers have no say in how much they will purchase.
B)the person who chooses how much to purchase doesn't pay the entire cost.
C)the person who chooses how much to purchase must pay more than the true cost.
D)the quantity demanded always falls.





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