Exam 6: Supply, Demand, and Government Policies

If a good or service is sold in a competitive market free of government regulation, then the price of the good or service adjusts to balance supply and demand.

How does elasticity affect the burden of a tax? Justify your answer using supply and demand diagrams.

How is the burden of a tax divided? i) When the tax is levied on the sellers, the sellers bear a higher proportion of the tax burden. Ii) When the tax is levied on the buyers, the buyers bear a higher proportion of the tax burden. Iii) Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear an equal proportion of the tax burden. Iv) Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear some proportion of the tax burden.

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

Figure 6-24 -Refer to Figure 6-24. The per-unit burden of the tax on buyers of the good is

If a tax is imposed on a market with inelastic supply and elastic demand, then

Which of the following would be the least likely result of a binding price ceiling imposed on the market for rental cars?

Studies of the effects of the minimum wage typically find that a 10 percent increase in the minimum wage depresses teenage employment by about

A price ceiling is a legal minimum on the price at which a good or service can be sold.

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much will sellers receive per unit after the tax is imposed?

Figure 6-25 -Refer to Figure 6-25. How much tax revenue does this tax generate for the government?

To say that a price ceiling is binding is to say that the price ceiling

All buyers benefit from a binding price ceiling.

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

Figure 6-8 -Refer to Figure 6-8. If the government imposes a price ceiling of $2 on this market, then there will be

Figure 6-7 -Refer to Figure 6-7. Suppose a price floor of $8 is imposed on this market. As a result,

In a competitive market free of government regulation,

Figure 6-30 Panel a) Panel b) Panel c) -Refer to Figure 6-30. In which market will the majority of the tax burden fall on sellers?

When a tax is placed on the sellers of a product, the

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