Exam 6: Supply, Demand, and Government Policies

A tax on golf clubs will cause buyers of golf clubs to pay a higher price, sellers of golf clubs to receive a lower price, and fewer golf clubs to be sold.

A price ceiling set above the equilibrium price causes a surplus in the market.

Because the supply and demand of housing are inelastic in the short run, the initial shortage caused by rent control is large.

Figure 6-32 -Refer to Figure 6-32. If the government set a price ceiling at $50, would there be a shortage or surplus, and how large would be the shortage/surplus?

A surplus results when a

When a tax is placed on the sellers of cell phones, the size of the cell phone market

Consider the market for gasoline. Buyers

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

Whether a tax is levied on sellers or buyers, buyers and sellers usually share the burden of taxes.

Table 6-5 -Refer to Table 6-5. Which of the following price ceilings would be binding in this market?

Which of the following would not interfere with market equilibria?

Table 6-6 -Refer to Table 6-6. In this market, over what range of prices would a price ceiling set by the government be binding?

Which of the following is correct?

If a price ceiling is not binding, then it will have no effect on the market.

A binding minimum wage tends to

Buyers of a good bear the larger share of the tax burden when the i) supply is more elastic than the demand for the product. Ii) demand in more elastic than the supply for the product. Iii) tax is placed on the sellers of the product. Iv) tax is placed on the buyers of the product.

Price ceilings are typically imposed to benefit sellers.

Advocates of the minimum wage

Define a price floor.

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