Exam 6: Supply Demand and Government Policies: Part B

Since a tax imposed on buyers of a product only affects demand,such a tax has no impact on sellers in that market. ​

A binding minimum wage raises the incomes of some workers,but it lowers the incomes of workers who cannot find jobs.

In an unregulated labor market,the wage adjusts to balance labor supply and labor demand.

The impact of the minimum wage depends on the skill and experience of the worker.

A price ceiling set below the equilibrium price is nonbinding.

A binding price floor causes quantity supplied to be less than quantity demanded.

A binding price ceiling causes quantity demanded to be less than quantity supplied.

Economists argue that rent control is a highly efficient way to help the poor raise their standard of living.

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.

A tax burden falls more heavily on the side of the market that is less elastic.

A binding minimum wage creates a shortage of labor.

One common example of a price floor is the minimum wage.

The burden that results from a tax on yachts falls more heavily on the buyers of yachts than on the sellers of yachts.

The minimum wage is more often binding for teenagers than for other members of the labor force.

When a tax of $1.00 per gallon is imposed on sellers of gasoline,the supply curve for gasoline shifts upward,but by less than $1.00.

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

A price ceiling caused the gasoline shortage of 1973 in the United States.

The rationing mechanisms that develop under binding price ceilings are usually inefficient.

Figure 6-36 -Refer to Figure 6-36.If the government places a $2 tax in the market,the buyer pays $4.

Rent subsidies and wage subsidies are better than price controls at helping the poor because they have no costs associated with them.