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Exam 6: Supply, Demand, and Government Policies

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Question 81

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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 correct?

A) A price ceiling set at $6 would be binding, but a price ceiling set at $4 would not be binding.
B) A price floor set at $4 would be binding, but a price ceiling set at $4 would not be binding.
C) A price ceiling set at $3.50 would result in a surplus.
D) A price floor set at $6.50 would result in a surplus.

E) A) and B)
F) A) and C)

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Question 82

Multiple Choice

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When a tax is imposed in a market, it will​

A) ​alter the behavior of buyers.
B) ​alter the behavior of sellers.
C) ​have no effect on the behavior or either buyers or sellers.
D) ​affect the behavior of both buyers and sellers.

E) A) and B)
F) C) and D)

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Question 83

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The effects of rent control in the long run include lower rents and lower-quality housing.

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $1 of the tax burden.

Figure 6-25 -Refer to Figure 6-25. As the figure is drawn, who sends the tax payment to the government?

Figure 6-36 -Refer to Figure 6-36. If the government places a $2 tax in the market, the buyer bears $2 of the tax burden.

The tax burden will fall most heavily on buyers of the good when the demand curve

The goal of rent control is to

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

A binding price ceiling may not help all consumers, but it does not hurt any consumers.

Figure 6-21 -Refer to Figure 6-21. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. Acme is left with how much money?

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?

Table 6-1 -Refer to Table 6-1. Suppose the government imposes a price ceiling of $40 on this market. What will be the size of the shortage in this market?

The distribution of the burden of a tax depends strictly on the elasticity of demand.​

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

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

A tax on the buyers of cameras encourages

If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour, then a shortage of labor will exist.

Opponents of the minimum wage point out that the minimum wage