Exam 6: Supply, Demand, and Government Policies

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

Price ceilings are typically imposed to benefit buyers.

Which of the following statements is correct?

When free markets ration goods with prices, it is both efficient and impersonal.

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

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

How is the burden of a tax divided?

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

If a price ceiling is not binding, then

All buyers benefit from a binding price ceiling.

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

If the government removes a binding price ceiling from a market, then the price received by sellers will

When a free market for a good reaches equilibrium, anyone who is willing and able to pay the market price can buy the good.

A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded.

A legal minimum on the price at which a good can be sold is called a

A tax of $1 on sellers always increases the equilibrium price by $1.

When a binding price ceiling is imposed on a market for a good, some people who want to buy the good cannot do so.

A binding minimum wage raises the incomes of some workers, but it lowers the incomes of workers who cannot find jobs.

When a binding price floor is imposed on a market to benefit sellers,

The price received by sellers in a market will decrease if the government