Supply, Demand, and Government Policies

According to Chapter 6, when policymakers believe the market price of a good or service is unfair to buyers or sellers, they may enact what type of policy?

What is a price ceiling?

A price ceiling is considered 'not binding' when:

What is the direct result of a binding price ceiling?

The case study on rent control in Chapter 6 demonstrates that:

What is a price floor?

A binding price floor causes:

The case study on the minimum wage in Chapter 6 concludes that its greatest impact is on which market?

According to economists' analysis in Chapter 6, what is tax incidence?

When a tax of $0.50 is levied on the sellers of ice-cream cones, what happens to the market?

A key conclusion from comparing a tax on buyers to a tax on sellers is that:

The 'flypaper theory' of tax incidence, which economists often mock, suggests that:

If supply is very elastic and demand is very inelastic, who bears most of the burden of a tax?

The case study 'Who Pays the Luxury Tax?' illustrates that a tax on yachts fell heavily on the suppliers (firms and workers) because:

In the example from Figure 1 of a market for ice-cream cones with an equilibrium price of $3, what would be the effect of a price floor set at $2?

In the ice cream market from Figure 4, panel (b), a binding price floor is set at $4. If the equilibrium price is $3, quantity supplied at the floor is 120 and quantity demanded is 80, what is the size of the surplus?

Which of the following is NOT a rationing mechanism that might develop as a result of a binding price ceiling?

In the example of a $0.50 tax levied on sellers of ice cream (Figure 6), the price buyers pay rises from $3.00 to $3.30. What is the burden of the tax on the buyers?

In the same example of a $0.50 tax on sellers (Figure 6), the price sellers receive after paying the tax is $2.80. What is the burden of the tax on the sellers?

According to the case study on the FICA tax, why does the legal division of the payroll tax burden between firms and workers not reflect the true economic incidence?

Economists generally oppose price controls because:

If a government levies a tax on a good, the quantity of the good sold will:

In the case study about the 1973 gasoline shortage, what do economists blame for the long lines at gas stations?

Most labor economists believe that the supply of labor is much less elastic than the demand for labor. This implies that the burden of a payroll tax falls mostly on:

If a binding price floor is imposed on a market, which of the following outcomes is expected?

Chapter 6 argues that policies like rent subsidies and wage subsidies are often preferred by economists over price controls because:

What does a tax on a good create between the price paid by buyers and the price received by sellers?

In the ice cream example, the equilibrium price is $3 and equilibrium quantity is 100. A $0.50 tax is imposed. The new equilibrium quantity is 90, buyers pay $3.30, and sellers receive $2.80. The tax revenue for the government is:

If a tax is imposed on a market with very inelastic supply and very elastic demand, who will bear most of the burden?

According to the case study on unpaid internships, the debate centers on whether such internships violate which laws?

If a government imposes a binding price ceiling on a market, the quantity sold in the market will be:

If a government imposes a binding price floor on a market, the quantity sold in the market will be:

What is a primary long-run effect of rent control that differs from its short-run effect?

A tax on a good affects the price paid by buyers and the price received by sellers by:

If a government wants to discourage consumption of a certain good, which of the following policies would an economist most likely favor based on efficiency?

Suppose the market for gasoline is in equilibrium. The government then repeals a law that limited the price of gasoline. What is the likely result?

In a market with a binding price floor, what mechanism determines which sellers get to sell their goods?

Why do typical studies find that a 10 percent increase in the minimum wage depresses teenage employment by only 1 to 3 percent?

If a tax is imposed on a good and neither the supply nor the demand is perfectly elastic or perfectly inelastic, what is the outcome for the price paid by buyers and the price received by sellers?

A tax on which of the following goods would likely have the smallest impact on the quantity sold?

If a government wants to raise revenue with the least possible distortion to the market, it should tax goods with:

In the ice cream market from Figure 1, the equilibrium price is $3 and quantity is 100. If the government imposes a price ceiling of $4, what happens to the market price and quantity sold?

In the ice cream market from Figure 4, the equilibrium price is $3. If the government imposes a binding price floor of $4, what is the quantity of ice cream sold?

If a government wishes to implement a policy that benefits sellers, which of the following would it choose?

In the case study on rent control, the short-run supply of housing is inelastic. This means that in the short run, a binding rent control will cause:

When a tax is levied on a good, the 'wedge' between the price buyers pay and the price sellers receive is equal to:

If the government wants to enact a policy that is most likely to cause long lines of buyers, it should implement:

Which of the following statements about the minimum wage is accurate according to the analysis in Chapter 6?

If a tax of $1 per unit is imposed on a good, and the price paid by buyers increases by $0.70, what can be concluded?

Which statement best describes the effect of a tax on a good?