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.