Econ Test 6

(Figure 6-12) How much tax revenue does this tax produce for the government?

$24

(Figure 6-12) The price paid by buyers after the tax is imposed is..

$7.

(Figure 6-1) Suppose the government imposes a price. ceiling of $1 on this market. What will be the size shortage in this market?

8 units

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.

Which of the following is correct?

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

(Figure 6-12) Which of the following is correct?

Two thirds of the burden of the tax falls on buyers and one-third of the burden of the tax falls on sellers.

(Figure 6-4) Which of the following price controls would cause a shortage of 20 units of the good?

a price ceiling of $5

(Figure 6-4) Which of the following price controls would cause a surplus of 20 units of the good?

a price floor of $7

A price floor is binding when it is set..

above the equilibrium price, causing a surplus.

A minimum wage that is set above a market's equilibrium wage will result in..

an excess supply of labor, that is, unemployment.

(Figure 6-4) For a price floor to be binding in this market, it would have to be set at..

any price above $6.

A price ceiling is binding when it is set...

below the equilibrium price, causing a shortage.

Policymakers use taxes..

both to raise revenue for public purposes and to influence market outcomes.

Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s?

buyer of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price.

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

floor.

(Figure 6-8) When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2, the resulting quantity of gasoline that is bought and sold is..

less than Q3.

In a free, competitive market, what is the rationing mechanism?

price

In a competitive market free of government regulation,

price adjusts until quantity demanded equals quantity supplied.

In response to a shortage caused by the imposition of a binding price ceiling on a market,

sellers could ration the good or service according to their own personal biases. long lines of buyer may develop. the market will experience a disequilibrium. all of these are correct.

(Figure 6-12) For every unit of the good that is sold..

sellers send three dollars to the government and buyers are required to send nothing to the government.