Exam 6: Supply, Demand, and Government Policies

The Earned Income Tax Credit, a government program that supplements the incomes of low-wage workers, is an example of a

One common example of a price floor is the minimum wage.

The United States is the only country in the world with minimum-wage laws.

The goal of the minimum wage is to ensure workers a minimally adequate standard of living.

Which of the following causes a shortage of a good?

If the government removes a tax on a good, then the price paid by buyers will

Table 6-2 $\begin{array} { | l | l | l | } \hline \text { Price (\$) } & \begin{array} { l } \text { Quantity } \\\text { Demanded }\end{array} & \begin{array} { l } \text { Quantity } \\\text { Supplied }\end{array} \\\hline 0 & 21 & 0 \\\hline 1 & 18 & 4 \\\hline 2 & 15 & 8 \\\hline 3 & 12 & 12 \\\hline 4 & 9 & 16 \\\hline 5 & 6 & 20 \\\hline 6 & 3 & 24 \\\hline 7 & 0 & 28 \\\hline\end{array}$ -Refer to Table 6-2. If the government set a price ceiling at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

Economic policies often have effects that their architects did not intend or anticipate.

Rent controls only affect the demand side of the rental market. ​

If a tax is levied on the sellers of shrimp, then

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

A price ceiling set below the equilibrium price causes a shortage in the market.

If a price ceiling is binding, then

Does a binding price ceiling result in a shortage or a surplus in the market?

To be binding, a price ceiling must be set above the equilibrium price.

Figure 6-7 -Refer to Figure 6-7. Which of the following statements is not correct?

A tax on sellers reduces the size of a market.

If a binding price floor is imposed on the video game market, then

Figure 6-21 ​ -Refer to Figure 6-21. If the government imposes a tax of $6 per unit in this market, how much is the burden of the tax on the buyers in this market?

Price ceilings are typically imposed to benefit sellers.