Exam 6: Supply Demand and Government Policies: Part B

If a tax is imposed on the sellers of a product,then the tax burden will fall entirely on the sellers.

Not all sellers benefit from a binding price floor.

The tax incidence depends on whether the tax is levied on buyers or sellers.

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Most labor economists believe that the supply of labor is much more elastic than the demand.

Advocates of the minimum wage admit that it has some adverse effects,but they believe that these effects are small and that a higher minimum wage makes the poor better off.

Economic policies often have effects that their architects did not intend or anticipate.

A price ceiling set above the equilibrium price causes quantity demanded to exceed quantity supplied.

Since one effect of rent controls is to reduce the supply of available rental properties,rent controls can contribute to the problems of homelessness in cities with rent controls. ​

A tax on sellers reduces the size of a market.

The tax burden falls more heavily on the side of the market that is more inelastic.

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

Minimum-wage laws benefit society by creating a surplus of labor.

Price ceilings are typically imposed to benefit buyers.

Since the FICA tax is split equally between employers and employees,we can conclude that the incidence of this tax is also equally shared. ​

A price ceiling is always a binding price control,whereas a price floor may be either binding or not binding.

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

A tax of $1 on buyers shifts the demand curve downward by exactly $1.

Workers with high skills and much experience are not typically affected by the minimum wage.

In a free market,the price of housing adjusts to eliminate the shortages that give rise to undesirable landlord behavior.