Exam 6: Supply, Demand, and Government Policies

Table 6-3 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 Quantity Denanded Quantity Suppplied \ 0 15 0 \ 1 13 3 \ 2 11 6 \ 3 9 9 \ 4 7 12 \ 5 5 15 \ 6 3 18 -Refer to Table 6-3. Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting shortage is

Suppose the government imposes a $40 tax on the buyers of refrigerators. The tax would

When OPEC raised the price of crude oil in the 1970s, it caused the

Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

The quantity sold in a market will decrease if the government

If the minimum wage exceeds the equilibrium wage, then

When a tax is placed on the buyers of lemonade, the

A tax imposed on the buyers of a good will

Figure 6-12 -Refer to Figure 6-12. When the price ceiling applies in this market, and the supply curve for gasoline shifts from S₁ to S₂,

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

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

Price floors are typically imposed to benefit sellers.

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

Figure 6-26 -Refer to Figure 6-26. A price floor set at $40 would create a surplus of 20 units.

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

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

Figure 6-27 -Refer to Figure 6-27. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

A tax burden falls more heavily on the side of the market that

The economy contains many labor markets for different types of workers.

A binding price floor will reduce a firm's total revenue