Econ Midterm two Review Questions Set 6

If a price floor is not binding, then

the equilibrium price is above the price floor

When a tax is placed on the sellers of cell phones, the size of the cell phone market

and the effective price received by sellers both decrease.

Which of the following is correct? a. Rent control and the minimum wage are both examples of price ceilings. b. Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor. c. Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling. d. Rent control and the minimum wage are both examples of price floors.

b. Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor.

A shortage results when a

binding price ceiling is imposed on a market.

A surplus results when a

binding price floor is imposed on a market.

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 fish, then

buyers and sellers will share the burden of the tax.

A tax on the buyers of smart watches encourages

buyers to demand a smaller quantity at every price.

Which of the following is not a result of rent control? a. Fewer new apartments offered for rent b. Less maintenance provided by landlords c. Bribery d. Higher quality housing

d. Higher quality housing

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 tax on a good, then the price paid by buyers will

decrease, and the price received by sellers will increase.

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.

To say that a price ceiling is nonbinding is to say that the price ceiling

is set above the equilibrium price.

If a price ceiling is not binding, then

there will be no effect on the market price or quantity sold.

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

either buyers or sellers of gasoline

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.

Which of the following causes the price paid by buyers to be different than the price received by sellers? Binding price floor Binding price ceiling Tax on the good Nonbinding price control

Tax on the good

Which of the following is not correct? Taxes levied on sellers and taxes levied on buyers are not equivalent. A tax places a wedge between the price that buyers pay and the price that sellers receive. The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers. In the new after-tax equilibrium, buyers and sellers share the burden of the tax.

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

The burden of a luxury tax usually falls

more on the middle class than on the rich.

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.

If the government levies a $700 tax per motorcycle on sellers of motorcycles, then the price paid by buyers of motorcycles would

increase by less than $700.

Which of the following statements is correct? a. A tax levied on buyers will never be partially paid by sellers. b. Who bears the burden of a tax depends on the price elasticities of supply and demand. c. Government can decide who ultimately pays a tax. d. A tax levied on sellers always will be passed on completely to buyers.

B

You receive a paycheck from your employer, and your pay stub indicates that $300 was deducted to pay the FICA (Social Security/Medicare) tax. Which of the following statements is correct? a. You will owe $300 per paycheck to pay the FICA tax for the remainder of the fiscal year regardless of your wages. b. Your employer is required by law to pay $150 to match half the $300 deducted from your check. c. This type of tax is an example of a sales tax. d. The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee.

The $300 that you paid is not necessarily the true burden of the tax that falls on you, the employee.

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling is established,

a larger quantity of the good is demanded.

A price ceiling is

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

A price floor is

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

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

a surplus of drones will develop.

If a tax is levied on the sellers of a product, then the demand curve will

not shift.

Which of the following is not a rationing mechanism used by landlords in cities with rent control? a. Waiting lists b. Race c. Price d. Bribes

price

Suppose the equilibrium price of a stick of deodorant is $4, and the government imposes a price floor of $5 per stick. As a result of the price floor, the

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

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

The imposition of a binding price ceiling on a market causes

quantity demanded to be greater than quantity supplied.

If a nonbinding price floor is imposed on a market, then the

quantity sold in the market will stay the same.

Suppose that in a particular market, the supply curve is highly inelastic and the demand curve is highly elastic. If a tax is imposed in this market, then the

sellers will bear a greater burden of the tax than the buyers

If a price floor is not binding, then

there will be no effect on the market price or quantity sold.

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