Exam 6: Supply, Demand, and Government Policies

Figure 6-8 -Refer to Figure 6-8. In 1973, OPEC restricted supply and U.S. government regulations limited the price oil companies could charge for gasoline. Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

Figure 6-13 -Refer to Figure 6-13. What is the amount of the tax per unit?

A binding minimum wage creates a shortage of labor.

Most of the burden of a luxury tax falls on the middle class workers who produce luxury goods rather than on the rich who buy them.

Scenario 6-2 Suppose demand for a product is given by the equation Q^D = 120 - 4P and supply for the product is given by the equation Q^S = 4P -Refer to Scenario 6-2. What are the equilibrium price and equilibrium quantity in the market for this product?

A price floor set below the equilibrium price causes a surplus in the market.

The minimum wage has its greatest impact on the market for teenage labor.

A price floor is

Figure 6-13 -Refer to Figure 6-13. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. After paying the tax, Acme receives how much?

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

Under rent control, landlords can cease to be responsive to tenants' concerns about the quality of the housing because

Price controls can generate inequities.

If a price floor is not binding, then it will have no effect on the market.

If the equilibrium price of an airline ticket is $500 and the government imposes a price floor of $400 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

Figure 6-21 ​ -Refer to Figure 6-21. If the government imposes a tax of $6 per unit in this market, who will bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?

If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.

Renters of rent-controlled apartments will likely benefit from both lower rents and higher quality of apartments.

Since one effect of rent controls is to reduce the supply of available rental properties, rent controls can contribute to the problems of homelessness in cities with rent controls. ​

Figure 6-17 ​ -Refer to Figure 6-17. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.