Exam 6: Supply, Demand, and Government Policies

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-6 -Refer to Figure 6-6. Which of the following price ceilings would be binding in this market?

Table 6-6 -Refer to Table 6-6. If the government set a price ceiling at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. If the government imposes a price floor of $3 on this market, then there will be

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $9, would there be a shortage or surplus, and how large would be the shortage/surplus?

The minimum wage does not apply to

Prices are inefficient rationing devices.

Figure 6-8 -Refer to Figure 6-8. When a certain price control is imposed on this market, the resulting quantity of the good that is actually bought and sold is such that buyers are willing and able to pay a maximum of P₁ dollars per unit for that quantity and sellers are willing and able to accept a minimum of P₂ dollars per unit for that quantity. If P₁ - P₂ = $3, then the price control is

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following statements is not correct?

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The amount of the tax per unit is

Figure 6-8 -Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

Figure 6-20 -Refer to Figure 6-20. Suppose a tax of $5 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Scenario 6-2 Suppose demand for a product is given by the equation and supply for the product is given by the equation -Refer to Scenario 6-2. Suppose the government sets a price ceiling at $12 for this product. Is this price ceiling binding, and what will be the size of the shortage/surplus in this market?

Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $6 per unit is imposed on this market. What will be the new equilibrium quantity in this market?

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $7.25 is

When free markets ration goods with prices, it is both efficient and impersonal.

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. Workers will bear