Exam 6: Supply, Demand, and Government Policies

Figure 6-22 -Refer to Figure 6-22. How much tax revenue does this tax generate for the government?

Define a price ceiling.

Table 6-4 The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market. -Refer to Table 6-4. How many units of the good are sold after the imposition of the price floor?

If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will

When OPEC raised the price of crude oil in the 1970s, it caused the United States'

A binding price ceiling causes a shortage in the market.

Figure 6-1 Panel a) Panel b) -Refer to Figure 6-1. The price ceiling shown in panel a)

When a tax is levied on buyers of tea,

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

Figure 6-13 This figure shows the market demand and market supply curves for good X. -Refer to Figure 6-13. Which of the following statements is not correct?

Which of the following causes a surplus of a good?

You have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia. George, who is one of your advisors, says that the best way to avoid a shortage of oranges is to take no action at all. Charles, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop. Otto, a third advisor, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Which of your three advisors is most likely to have studied economics?

Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. A binding price floor is shown in

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.

If a price ceiling is not binding, then

A minimum wage that is set above a market's equilibrium wage will result in an excess

Figure 6-3 Panel a) Panel b) -Refer to Figure 6-3. A nonbinding price floor is shown in

Figure 6-7 -Refer to Figure 6-7. For a price floor to be binding in this market, it would have to be set at

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

Figure 6-19 -Refer to Figure 6-19. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?