Exam 6: Supply Demand and Government Policies: Part B

A binding minimum wage creates unemployment.

Buyers and sellers rarely share the burden of a tax equally.

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.

A tax on buyers shifts the demand curve to the right.

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

A tax on sellers shifts the supply curve to the left.

Taxes levied on sellers and taxes levied on buyers are equivalent.

Regardless of whether a tax is levied on sellers or buyers,taxes discourage market activity.

A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.

A binding price ceiling causes a shortage in the market.

States in the U.S.may mandate minimum wages above the federal level.

Price controls are usually enacted when policymakers believe that the market price of a good or service is unfair to buyers or sellers.

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

A price floor set below the equilibrium price causes a surplus in the market.

Price is the rationing mechanism in a free,competitive market.

All buyers benefit from a binding price ceiling.

Rent controls only affect the demand side of the rental market. ​

Most economists are in favor of price controls as a way of allocating resources in the economy.

A price floor set above the equilibrium price is binding.

Price controls often hurt those they are trying to help.