Chapter 6 Quiz
which of the following statements is true if the government places a price ceiling on gasoline at four dollars per gallon and the equilibrium price is three dollars per gallon?
A significant increase in the demand for gasoline could cause a price ceiling to become a binding constraint
which of the following statements about the burden of a tax is correct?
The distribution of the burden of a tax is determined by the relative elasticities of supply and demand and is not determined by legislation.
which of the following statements about a binding price ceiling is true?
The shortage created by the price ceiling is greater in the long run down in the short run
which of the following takes place when a tax is placed on a good?
an increase in the price buyers pay, a decrease in the price sellers receive, and a decrease in the quantity sold
For a price ceiling to be a binding constraint on the market, the government must set it
below the equilibrium price
The surplus caused by a binding price floor will be greatest if
both supply and demand are elastic
Studies show that a 10% increase in the minimum wage
decreases teenage employment by about 1-3%
Within the supply-and-demand model, a tax collected from the buyers of a good shifts the
demand curve downward by the size of the tax per unit
The burden of a tax falls more heavily on the sellers in a market when
demand is elastic and supply is inelastic
The burden of a tax falls more heavily on the buyers in a market when
demand is inelastic and supply is elastic
for which of the following products would the burden of a tax likely fall more heavily on the sellers?
entertainment
A tax placed on a good that is a necessity for consumers will likely generate a tax burden that
falls more heavily on buyers
which of the following is an example of a price floor?
minimum wage
A tax of one dollar per gallon on gasoline
places a tax wedge of one dollar between the price the buyers pay and the price the sellers receive
Which side of the market is more likely to lobby government for a price floor?
sellers
A price floor
sets a legal minimum on the price at which a good can be sold
A binding price ceiling creates
shortage
Within the supply and demand model, a tax collected from the sellers of a good shifts the
supply curve upward by the size of the tax per unit
Suppose the equilibrium price for apartments is $800 per month and the government imposes rent control of $500. Which of the following is unlikely to occur as a result of the rent controls?
the quality of apartments will improve
When a tax is collected from the buyers in a market,
the tax burden on the buyers and sellers is the same as an equivalent tax collected from the sellers.