Micro 6,7,8,10
The Incidence of a Tax is
The manner in which the burden of a tax is shared among market participants
______determine the supply of labor, and _______ determine the demand for labor.
Workers, firms
Price ceiling
a legal maximum on the price of a good or service
Price Floor
a legal minimum on the price of a good or service
A minimum wage causes a _________________, which causes a _______________
binding price floor, surplus of workers
When a tax is levied on sellers of tea,
both sellers and buyers of tea are made worse off.
a tax on buyers shifts the _____________ curve down by the amount of the tax.
demand
Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per ticket to $30 per ticket, then the
demand curve will shift upward by $20, and the effective price received by sellers will increase by less than $20
If the government wants to reduce the burning of fossil fuels, it should impose a tax on
either buyers or sellers of gasoline.
If the government levies a $5 tax per ticket on buyers of NFL game tickets, then the price paid by buyers of NFL game tickets would
increase by less than $5
Tax incidence __________________ by whether the government makes buyers or sellers pay the tax.
is not affected
A price floor is binding when
it is above the equilibrium price
A price ceiling is binding when
it is below the equilibrium price
In the long run, when supply and demand are more price-elastic, the shortage caused by a binding price ceiling is
larger
Rent control may lead to lower rents for those who find housing, but the quality of the housing may also be
lower
example of price floor
minimum wage
When a tax is placed on the buyers of a product, buyers pay___________ and sellers receive _________ than they did before the tax
more, less
Who bears the majority of a tax burden depends on the __________________ of supply and demand.
relative elasticity
example of price ceiling
rent control
binding price ceilings create a
shortage
a tax on sellers shifts the _____________ curve up by the amount of tax
supply
Buyers of a good bear the larger share of the tax burden when the
supply is more elastic than the demand for the product
binding price floors create a
surplus
The minimum wage is more often binding for __________ than for other members of the labor force.
teenagers