Exam 6: Supply, Demand, and Government Policies

Binding price ceilings benefit consumers because they allow consumers to buy all the goods they demand at a lower price.

A nonbinding price ceiling (i) causes a surplus. (ii) causes a shortage. (iii) is set at a price above the equilibrium price. (iv) is set at a price below the equilibrium price.

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

Table 6-6 -Refer to Table 6-6. If the government set a price floor at $4, would there be a shortage or surplus, and how large would be the shortage/surplus?

When a binding price floor is imposed on a market to benefit sellers,

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

A tax on the sellers of coffee mugs

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

In "Venezuela Versus the Market," the price control placed on coffee

A payroll tax is a

A price floor set above the equilibrium price is not binding.

If a price ceiling is not binding, then

When a binding price floor is imposed on a market to benefit sellers,

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling,

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

Figure 6-25 -Refer to Figure 6-25. The equilibrium price in the market before the tax is imposed is

A binding price floor may not help all sellers, but it does not hurt any sellers.

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,

The primary effect of rent control in the short run is to reduce rents.

If the supply curve is more price elastic than the demand curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.