Exam 6: Supply, Demand, and Government Policies

Suppose the government has imposed a price ceiling on sliced sandwich bread. Which of the following events could transform the price ceiling from one that is binding to one that is not binding?

Figure 6-22 -Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

A price floor set above the equilibrium price causes quantity supplied to exceed quantity demanded.

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would

Figure 6-25 -Refer to Figure 6-25. The equilibrium price in the market before the tax is imposed is

The tax burden will fall most heavily on sellers of the good when the demand curve

Which of the following is not a function of prices in a market system?

A tax on sellers usually causes buyers to pay more for the good and sellers to receive less for the good than they did before the tax was levied.

Figure 6-9 -Refer to Figure 6-9. At which price would a price floor be nonbinding?

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the sellers in this market?

Figure 6-7 -Refer to Figure 6-7. Suppose a price ceiling of $5 is imposed on this market. As a result,

If a price ceiling is a binding constraint on a market, then

A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

A nonbinding price floor (i) Causes a surplus. (ii) Causes a shortage.(iii) Is set at a price above the equilibrium price.(iv) Is set at a price below the equilibrium price.

Which of the following is not a rationing mechanism used by landlords in cities with rent control?

A binding price floor may not help all sellers, but it does not hurt any sellers.

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the