Exam 6: Supply, Demand, and Government Policies

Which of the following observations would be consistent with the imposition of a price ceiling that is higher than equilibrium price? After the price ceiling is established,

When a price floor is binding, is the price floor set above or below the market equilibrium price?

​The distribution of the burden of a tax depends strictly on the elasticity of supply.

Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the

The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.

In the market for apartments, rent control causes the quantity supplied

The imposition of a binding price ceiling on a market causes

A tax of $1 on buyers shifts the demand curve downward by exactly $1.

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

Figure 6-8 -Refer to Figure 6-8. When the price ceiling is enforced in this market, and the supply curve for gasoline shifts from S₁ to S₂, the resulting quantity of gasoline that is bought and sold is

Figure 6-15 Graph (a) Graph (b) Graph (c) ​ ​ -Refer to Figure 6-15. In which market will the majority of the tax burden fall on buyers?

A $1.55 tax levied on the buyers of milkshakes will shift the demand curve

Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

Workers determine the supply of labor, and firms determine the demand for labor.

When policymakers set prices by legal decree, they obscure the signals that normally guide the allocation of society's resources.

One common example of a price ceiling is rent control.

Figure 6-13 -Refer to Figure 6-13. Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on sellers, the tax on buyers would result in

Table 6-1 The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $2 above the equilibrium price in this market. ​ Price (Dollars per unit) Quantity Demanded (Units) Quantity Supplied (Units) 0 15 0 1 13 3 2 11 6 3 9 9 4 7 12 5 5 15 6 3 18 -Refer to Table 6-1. How many units of the good are purchased after the imposition of the price floor?

Figure 6-6 -Refer to Figure 6-6. 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