quiz 4 econ mid term 2

These statements are true about comparative advantage

-the principle of comparative advantage applies to country as well as to individuals -economists use the principle of comparative advantage to emphasize the potential benefits of free trade -a country may have comparative advantage in producing a good, even though it lacks an absolute advantage in producing that good

price floor

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

Which of the following causes a shortage of a good?

Binding price ceiling.

which country has a comparative advantage in producing what product

England- cheese France- wine

France has experienced technological advancement in wine and cheese production. Now, which country has absolute advantage in producing what product

France- both cheese and wine

which of the following is not a rationing mechanism used by landlords in cities with rent control

Price

Which of the following statements is correct?

Who bears the burden of a tax depends on the price elasticities of supply and demand.

A price ceiling is

a legal maximum on the price at which a good can be sold.

The minimum wage was instituted to ensure workers

a minimally adequate standard of living

trade can make everybody better off because it

allows people to specialize according to comparative advantage.

Under rent control, bribery is a potential mechanism to

bring the total price of an apartment (including the bribe) closer to the equilibrium price.

When a tax is placed on the buyers of lemonade, the

burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

If a tax is levied on the sellers of flour, then

buyers and sellers will share the burden of the tax.

A tax on the buyers of cameras encourages

buyers to demand a smaller quantity at every price.

if a tax is levied on the sellers then

buyers will bear more burden of the tax because the demand is more inelastic

which of the following statements about comparative advantage is not true

comparative advantage is determined by which person or group of persons can produce a given quantity of a good using fewest resources.

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

demand is more inelastic than the supply.

suppose the government impose a 50-cent tax on the sellers of packets of chewing gum. the tax would

discourage market activity

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

discourage market activity.

The goal of rent control is to

help individuals with lower income by making housing more affordable.

which of the following is not a result of rent control

higher quality housing

The price ceiling

makes it necessary for sellers to ration the good using a mechanism other than price.

Which of the following is not correct?

minimum wage would be binding for workers with high skills and much experience.

When a tax is placed on the sellers of a product, buyers pay

more, and sellers receive less than they did before the tax.

The presence of a price control in a market for a good or service usually is an indication that

policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers.

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

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

Suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. The tax would shift

supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially sweetened beverages.

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

the U.S. government maintained a price ceiling on gasoline.

The term tax incidence refers to

the distribution of the tax burden between buyers and sellers

In the market for apartments, rent control causes the quantity supplied

to fall and quantity demanded to rise

Under rent control, landlords can cease to be responsive to tenants' concerns about the quality of the housing because

with shortages and waiting lists, they have no incentive to maintain and improve their property.