Exam 6: Supply, Demand, and Government Policies

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

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The per-unit burden of the tax on sellers is

A price floor set above the equilibrium price is binding.

Figure 6-31 -Refer to Figure 6-31. If the government set a price floor at $15, would there be a shortage or surplus, and how large would be the shortage/surplus?

The demand for salt is inelastic, and the supply of salt is elastic. The demand for caviar is elastic, and the supply of caviar is inelastic. Suppose that a tax of $1 per pound is levied on the sellers of salt, and a tax of $1 per pound is levied on the buyers of caviar. We would expect that most of the burden of these taxes will fall on

Figure 6-25 -Refer to Figure 6-25. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. After the sellers are required to pay the tax, relative to the case depicted in the graph, the burden on buyers will be

Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $40, would there be a shortage or surplus, and how large would be the shortage/surplus?

A tax on buyers will shift the

A price ceiling will be binding only if it is set

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $2.75 creates a labor

A tax on the sellers of coffee will increase the price of coffee paid by buyers,

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

When a tax is placed on the sellers of a product, buyers pay

Which of the following is correct? A tax burden

Price floors are typically imposed to benefit buyers.

Figure 6-2 -Refer to Figure 6-2. The price ceiling

When a tax is placed on the sellers of energy drinks, the

Figure 6-2 -Refer to Figure 6-2. The price ceiling

Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the seller receives $6.