Exam 6: Supply, Demand and Government Policies

Some countries use price floors for their domestic farmers to guarantee them a high return on their production. Suppose there is a price floor on wool that is binding. What will be the effect on the wool market? Identify who benefits from this policy and who bears the cost. Are there instances of this occurring in Australia's history?

Suppose that the government places a tax of $5 per tyre on the buyers of automobile tyres. Use a supply-demand diagram to show the effect of the tax on the tyre market and the incidence of taxation on buyers and sellers. Now suppose that the government switches to a tax of $5 per tyre on the sellers of automobile tyres. Use a second supply-demand diagram to show the effects of this tax on the tyre market and the incidence of taxation on buyers and sellers. Can you say anything about the relative effects of the two alternative taxes on the tyre market and on the incidence of taxation?

A tax on the sellers of coffee:

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

Russia has put on export tax on timber harvested from its Siberian forests into China. Given that Russian exporters are legally liable for the tax but Chinese buyers are not, is it true the incidence of tax falls entirely on the Russian exporters?

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

Graph 6-10 -In Graph 6-10, the price sellers receive after the tax is:

If buyers of a product are required to pay a tax, the demand curve for the product will shift downward by exactly the size of the tax.

The term tax incidence refers to the:

Graph 6-1 -In which panel(s) in Graph 6-1 would there be a shortage for a good at the market price?

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

The tax burden generally falls on to the side of the market that is relatively more elastic.

Suppose the price floor is set below the equilibrium price. This will lead to the quantity supplied exceeding the quantity demanded.

Minimum wage laws dictate the:

When sellers are legally required to pay a tax, the burden of the tax falls solely on the sellers.

If a price ceiling is binding:

If a price ceiling results in a shortage of the good, which of the following will NOT ration the demand:

A price ceiling that is not binding:

Suppose a price ceiling is placed on rice. The price ceiling is set above the equilibrium price. This will result in the quantity demanded of rice exceeding the quantity supplied.

If a price ceiling is a binding constraint on the market: