Chapter 6 Econ

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor.

If a binding price ceiling is imposed on the baby formula market, then

a. the quantity of baby formula demanded will increase. b. the quantity of baby formula supplied will decrease. c. a shortage of baby formula will develop.

A $3 tax levied on the buyers of shoes will cause the

buyers and sellers to share in the cost of the $3 tax.

if a tax is imposed on a market with inelastic demand and elastic supply, then

buyers will bear most of the burden of the tax.

A tax on the sellers of coffee will increase the price of coffee paid by buyers,

decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

If the government removes a binding price floor from a market, then the price paid by buyers will

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

The price paid by buyers in a market will decrease if the government

decreases a binding price floor in that market.

The quantity sold in a market will increase if the government

decreases a binding price floor in that market.

Tax revenue

depends on the elasticities of supply and demand.

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

is relatively steep, and the supply curve is relatively flat.

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

more than $0.50 but less than $1.

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

not change, and the price received by sellers will not change.

A tax imposed on the sellers of a good will raise the

price paid by buyers and lower the equilibrium quantity.

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

quantity demanded of physicals increases, and the quantity supplied of physicals decreases.

if a price floor is not binding, then

the equilibrium price is above the price floor.