Principles of microeconomics: Chapter 6

Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the ( i ) supply is more elastic than the demand . ( ii ) demand in more elastic than the supply . ( iii ) tax is placed on the sellers of the product . ( iv ) tax is placed on the buyers of the product .

( ii ) only

The quantity sold in a market will increase if the government

More than one of the above is correct .

A minimum wage that is set below a market's equilibrium wage will result in an excess

None of the above is correct .

Which of the following is not correct ?

Taxes levied on sellers and taxes levied on buyers are not equivalent .

In the United States , before OPEC increased the price of crude oil in 1973 , there was

a nonbinding price ceiling on gasoline .

Suppose that the demand for picture frames is highly inelastic , and the supply of picture frames is highly elastic . A tax of $ 1 per frame levied on picture frames will increase the price paid by buyers of picture frames by

between $ 0.50 and $ 1 .

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

causes quantity supplied to exceed quantity demanded .

If the government levies a $ 500 tax per car on sellers of cars , then the price received by sellers of cars would

decrease by less than $ 500 .

The mayor of Workerville proposes a local payroll tax to fund a new water park for the city . The mayor proposes to collect half the tax from workers and half the tax from firms . The mayor will be able to successfully divide the burden of the tax equally if the

demand for labor and supply of labor are equally elastic .

Suppose the government imposes a 50 - cent tax on the sellers of packets of chewing gum . The tax would *

discourage market activity .

A tax imposed on the buyers of a good will lower the

effective price received by sellers and lower the equilibrium quantity .

The imposition of a binding price ceiling on a market causes quantity demanded to be

greater than quantity supplied .

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

increase , and the quantity sold in the market will increase .

As a rationing mechanism , discrimination according to seller bias is

inefficient and potentially unfair .

The imposition of a binding price floor on a market , causes quantity demanded to be

less than quantity supplied .

Suppose the equilibrium price of a tube of toothpaste imposes a price floor of $ 3 per tube . As a result of the price floor , the is $ 2 , and the government

quantity demanded of toothpaste decreases , and the quantity of toothpaste that firms want to supply increases .

Over time , housing shortages caused by rent control .

run . increase , because the demand for and supply of housing are more elastic in the long

Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars ?

slow replacement of old rental cars with newer ones

Suppose that a tax is placed on books . If the sellers pay the majority of the tax , then we know that the

supply is more inelastic than the demand .

An alternative to rent - control laws that would not reduce the quantity of housing supplied is

the payment by government of a fraction of a poor family's rent .

If a binding price floor is imposed on the video game market , then

the quantity of video games supplied will increase . the quantity of video games demanded will decrease . a surplus of video games will develop .

The Earned Income Tax Credit is an example of a

wage subsidy .