Chapter 6 (When governments intervene in markets)

A subsidy is a:

a government payment designed to encourage particular purchases or productive activities.

A tax on buyers causes which of the following?(i) a leftward shift of the demand curve(ii) a decrease in quantity sold(iii) an increase in the price buyers pay

(i), (ii), and (iii)

A tax on sellers causes which of the following?(i) a leftward shift of the supply curve(ii) a decrease in quantity sold(iii) an increase in the price buyers pay

(i), (ii), and (iii)

Which of the following is an example of a quantity quota?

A city enforces zoning laws that restrict the number of housing units.

A binding price floor in a market is removed. Which of the following is likely to occur as a result?

The market price will fall.

A binding price floor is:

always above the equilibrium price.

The economic burden of a tax is the:

burden created by the change in after-tax prices faced by buyers and sellers.

In 2016, Amazon began charging a 5.75% sales tax on products it sells in the District of Columbia. Holding all else constant, the effect of this tax would be to _____ in the District of Columbia.

decrease Amazon sales

A subsidy for buyers of a product shifts the:

demand curve to the right

Buyers bear a smaller incidence of the tax when:

demand is more elastic than supply

The statutory burden of a tax is the:

government-designated burden of a tax payment.

A quantity regulation is a:

minimum or maximum quantity that can be sold.

In 2017, eBay started charging a 20% value-added tax on fees charged to small businesses in the United Kingdom. Holding all else constant, this would _____ in the United Kingdom.

raise the prices that eBay sellers charge their customers

A tax on sellers shifts the:

supply curve to the left.

A price ceiling is:

the maximum price that a seller can charge in a market.