Exam 6: Supply, Demand and Government Policies

Some countries in the developing world use price controls on rice to make it easier for poor people to afford.Demonstrate the effect of a binding and non-binding price ceiling on the rice market using supply-demand diagrams.

In the aftermath of hurricane Sandy the price of portable electricity generators in New York dramatically increased, in some cases by three to four-hundred percent.Such increases in price are referred to as "price gouging" and often lead to calls for price ceilings to be placed on essential goods in the wake of natural disasters.What are the likely effects of such a policy?

If a tax is imposed on the buyer of a product, the tax incidence will fall entirely on the buyer.

The initial effect of a tax on the sellers of a good is on:

Economists use the term tax incidence to refer to the proportion of tax paid by sellers relative to buyers.

Graph 6-2 -According to Graph 6-2, a binding price ceiling would exist at:

A tax on the sellers of popcorn will:

Since July 1st 2000, Australian states and territories have paid a cash grant to first home buyers.Considering the supply of housing is less elastic than the demand for housing, the benefits of such a grant will:

If a price ceiling is non-binding, it will have no effect on the market.

Graph 6-8 -According to Graph 6-8, the amount of the tax that buyers would pay would be:

The main reason policymakers use price controls is because:

A tax on the sellers of popcorn will cause the price the buyers pay:

A tax on sellers will cause the equilibrium market price to rise but the equilibrium quality sold will fall.

A subsidy paid to the sellers of coffee will:

Graph 6-4 -According to Graph 6-4, when the supply curve for gasoline shifts from S1 to S₂:

Graph 6-10 -In Graph 6-10, the equilibrium price before the tax is:

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.

A subsidy on the sellers of coffee:

Minimum wage laws dictate the:

If a price ceiling is leading to a shortage then: