Exam 6: Supply, Demand, and Government Policies

If the equilibrium price of an airline ticket is $500 and the government imposes a price floor of $400 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

In the United States, before OPEC increased the price of crude oil in 1973, there was

Figure 6-24 -Refer to Figure 6-24. Which of the following statements is correct?

The minimum wage, if it is binding, lowers the incomes of

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

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city. The mayor proposes to collect half the tax from workers and half the tax from firms. The mayor will be able to successfully divide the burden of the tax equally if the

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

When a free market for a good reaches equilibrium, anyone who is willing and able to sell at the market price can sell the good.

Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the

A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied.

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $20 per ticket, then the

One common example of a price ceiling is rent control.

The quantity sold in a market will decrease if the government

The burden of a luxury tax falls

Figure 6-8 -Refer to Figure 6-8. The price of the good would continue to serve as the rationing mechanism if

Which of the following statements is correct concerning the burden of a tax imposed on take-out food?

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $7.25 is

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

If a tax is levied on the sellers of a product, then the demand curve will

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $2 of the tax burden.