Microeconomics: Chapter 6 Quiz

Which of the following statements is true if the government places a price ceiling on gasoline at $4.00 per gallon and the equilibrium price is $3.00 per gallon?

A significant increase in the demand for gasoline could cause the price ceiling to become a binding constrain

A binding price ceiling creates

a shortage

For a price ceiling to be a binding constraint on the market, the government must set it

below the equilibrium price

The surplus caused by a binding price floor will be greatest if

both supply and demand are elastic

A tax of $1.00 per gallon on gasoline

places a tax wedge of $1.00 between the price the buyers pay and the price the sellers receive

A price floor

sets a legal minimum on the price at which a good can be sold

Within the supply-and-demand model, a tax collected from the sellers of a good shifts the

supply curve upward by the size of the tax per unit

Which of the following statements about the burden of a tax is correct?

The distribution of the burden of a tax is determined by the relative elasticities of supply and demand and is not determined by legislation

Suppose the equilibrium price for apartments is $800 per month and the government imposes rent controls of $500. Which of the following is unlikely to occur as a result of the rent controls?

The quality of apartments will improve

Which of the following statements about a binding price ceiling is true?

The shortage created by the price ceiling is greater in the long run than in the short run

Which of the following takes place when a tax is placed on a good?

an increase in the price buyers pay, a decrease in the price sellers receive, and a decrease in the quantity sold

Studies show that a 10 percent increase in the minimum wage

decreases teenage employment by about 1 to 3 percent

Within the supply-and-demand model, a tax collected from the buyers of a good shifts the

demand curve downward by the size of the tax per unit

The burden of a tax falls more heavily on the sellers in a market when

demand is elastic and supply is inelastic

The burden of a tax falls more heavily on the buyers in a market when

demand is inelastic and supply is elastic

For which of the following products would the burden of a tax likely fall more heavily on the sellers?

entertainment

A tax placed on a good that is a necessity for consumers will likely generate a tax burden that

falls more heavily on buyers

Which of the following is an example of a price floor?

the minimum wage

Which side of the market is more likely to lobby government for a price floor?

the sellers

When a tax is collected from the buyers in a market,

the tax burden on the buyers and sellers is the same as an equivalent tax collected from the sellers