Reference no: EM132169489

1. Monopoly or market power/control might cause what?

A. A price ceiling above the market equilibrium price.

B. The market to produce a quantity that is less than optimal.

C. A subsidy to low income consumers.

D. None of the above.

2. If a certain good or service has a price elasticity that equals zero (0), better known as perfectly inelastic, then what could one expect if the price of the good or service increased by 10 percent?

A. Demand would decrease.

B. The price increase would have no affect on demand.

C. Demand would increase.

D. Demand will fall to zero.

3. A major factor contributing to the growth in employee based health insurance in the U.S. has been:

A. The tax free treatment of health insurance as an employee benefit.

B. The tradition of providing generous benefit packages to U.S. workers.

C. Economic growth.

D. The generosity of employers.

4. The dead weight loss from an excise tax:

A. Is the lost surplus that results from higher prices and lower output resulting from the tax.

B. Is greater if demand is perfectly inelastic.

C. Is the difference between consumer surplus and producer surplus.

D. Is of little concern to policy makers since all excise taxes are sin taxes.