Chapter 6 Practice
Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?
Between 60 units and 100 units
A tax of $1 on sellers always increases the equilibrium price by $1.
False
A tax on buyers increases the size of a market.
False
If the demand curve is very inelastic and the supply curve is very elastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.
False
Minimum-wage laws benefit society by creating a surplus of labor.
False
Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be lower.
T
A tax burden falls more heavily on the side of the market that is less elastic
True
A tax on golf clubs will cause buyers of golf clubs to pay a higher price, sellers of golf clubs to receive a lower price, and fewer golf clubs to be sold.
True
If a price ceiling of $1.50 per gallon is imposed on gasoline, and the market equilibrium price is $2, then the price ceiling is a binding constraint on the market.
True
Price ceilings are typically imposed to benefit buyers.
True
Refer to Figure 6-17. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.
True
The primary effect of rent control in the short run is to reduce rents.
True
The true burden of a payroll tax has nothing to do with the percentage of the tax that employers are required to pay.
True
When a binding price ceiling is imposed on a market for a good, some people who want to buy the good cannot do so.
True
Who bears the majority of a tax burden depends on the relative elasticity of supply and demand.
True
A price ceiling is
a legal maximum on the price at which a good can be sold.
If a binding price floor is imposed on the video game market, then
a surplus of video games will develop.
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.
A binding minimum wage creates a shortage of labor.
false
Refer to Figure 6-16. A price ceiling set at $70 would create a shortage of 40 units.
false
In the housing market, supply and demand are
more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.
Refer to Figure 6-7. If the government imposes a price ceiling at $6, it would be
nonbinding if market demand is Demand A and binding if market demand is Demand B.
A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.
true
A tax on sellers shifts the supply curve to the left.
true
Policymakers use taxes to raise revenue for public purposes and to influence market outcomes.
true
Refer to Figure 6-17. If the government places a $2 tax in the market, the seller receives $4.
true
Regardless of whether a tax is levied on sellers or buyers, taxes discourage market activity.
true
The effects of rent control in the long run include lower rents and lower-quality housing.
true
Refer to Figure 6-16. A price floor set at $60 would create a surplus of 20 units.
true look at quantity
