Chapter 6

A price ceiling is

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

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

All of the above are correct

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

And the effective price received by sleets both decrease

Price controls

Can gather inequities (lack of fairness) of their own

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

Decrease, and the quantity sold in the market will increase

Which of the following is not public policy?

Equilibrium laws

If the government removes a tax on a good, then the quantity of the good sold will

Increase

Minimum-wage laws dictate

a minimum wage that firms must pay workers

An outcome that can result from either a price ceiling or a price floor is

a nonbinding price control.

A price floor will be binding only if it is set

above the equilibrium price

A shortage results when a

binding price ceiling is imposed on a market

Policy makers use taxes

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

When a tax is levied on buyers of tea

buyers of tea and sellers of tea both are made worse off

A tax on the sellers of coffee mugs

decreases the size of the coffee mug market

If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would

increase by less than $1,000.

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

increase, and the quantity sold in the market will increase

The burden of a luxury tax 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

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

price floor

When a binding price ceiling is imposed on a market to benefit buyers,

some buyers benefit, and some buyers are harmed

When a binding price floor is imposed on a market to benefit sellers,

some sellers benefit, and some sellers are harmed.

If a price ceiling is not binding, then

the equilibrium price is below the price ceiling

If a price ceiling is not binding, then

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