Exam 6: Supply, Demand, and Government Policies

Figure 6-31 -Refer to Figure 6-31. If the government set a price ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

As rationing mechanisms, prices

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. How many units of the good are sold after the imposition of the price floor?

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

Suppose the government has imposed a price ceiling on laptop computers. Which of the following events could transform the price ceiling from one that is not binding into one that is binding?

Price floors are typically imposed to benefit sellers.

A price floor set below the equilibrium price causes a surplus in the market.

If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

If a price ceiling is not binding, then

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Figure 6-6 -Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism?

If a tax is levied on the buyers of dog food, then

An outcome that can result from either a price ceiling or a price floor is

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

The economy contains many labor markets for different types of workers.

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,

A tax on the buyers of personal computer external hard drives encourages

A binding price floor causes a shortage in the market.

If a price ceiling is a binding constraint on a market, then

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1. What are the equilibrium price and quantity in the market for good X?