Exam 6: Supply, Demand, and Government Policies

The price paid by buyers in a market will increase if the government i) increases a binding price floor in that market. Ii) increases a binding price ceiling in that market. Iii) decreases a tax on the good sold in that market.

Tax incidence

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

Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

When a tax is placed on the buyers of a product, buyers pay

Table 6-3 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 $2 above the equilibrium price in this market. -Refer to Table 6-3. Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is

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

Scenario 6-2 Suppose demand for a product is given by the equation and supply for the product is given by the equation -Refer to Scenario 6-2. Suppose the government sets a price floor at $13 for this product. Initially, is this price floor binding? Suppose that for some reason demand were to decrease to Would the $13 price floor be binding after the shift in the demand curve? If so, what is the size of the resulting shortage/surplus?

Consider the market for gasoline. Buyers

One disadvantage of government subsidies over price controls is that subsidies

Which of the following causes a shortage of a good?

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 price floors would be binding in this market?

Figure 6-18 The vertical distance between points A and B represents the tax in the market. -Refer to Figure 6-18. The amount of the tax per unit is

If the demand curve is more price elastic than the supply curve in a particular market, will the buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?

Which of the following is correct? A tax burden

Suppose there is currently a tax of $50 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the

The minimum wage is an example of a

If a price ceiling is not binding, then

Figure 6-16 -Refer to Figure 6-16. In this market, a minimum wage of $2.75 is

Figure 6-28 -Refer to Figure 6-28. Suppose a tax of $4 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?