micro chapter 6

Refer to Figure 6-13. What is the amount of the tax per unit? Question options: -$1 -$2 -$3 -$4

$4

which of the following is correct? -Rent control and the minimum wage are both examples of price ceilings. -Rent control is an example of a price ceiling, and the minimum wage is an example of a price floor. -Rent control is an example of a price floor, and the minimum wage is an example of a price ceiling. -Rent control and the minimum wage are both examples of price floors.

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

Which of the following is not correct? -Taxes levied on sellers and taxes levied on buyers are not equivalent -.A tax places a wedge between the price that buyers pay and the price that sellers receive. -The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers. -In the new after-tax equilibrium, buyers and sellers share the burden of the tax.

Taxes levied on sellers and taxes levied on buyers are not equivalent.

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 increase -increases, but the effective price received by sellers decreases. -decreases, but the effective price received by sellers increases. -and the effective price received by sellers both decrease.

and the effective price received by sellers both decrease.

Refer to Figure 6-9. -In this market, a minimum wage of $6 is binding and creates a labor shortage. -binding and creates unemployment. -nonbinding and creates a labor shortage. -nonbinding and creates neither a labor shortage nor unemployment.

binding and creates unemployment.

A shortage results when a -nonbinding price ceiling is imposed on a market. -nonbinding price ceiling is removed from a market. -binding price ceiling is imposed on a market. -binding price ceiling is removed from a market.

binding price ceiling is imposed on a market.

Refer to Figure 6-5. A government-imposed price of $12 in this market is an example of a binding price ceiling that creates a shortage -nonbinding price ceiling that creates a shortage -binding price floor that creates a surplus. -nonbinding price floor that creates a surplus

binding price floor that creates a surplus.

Refer to Figure 6-13. Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on sellers, the tax on buyers would result in -buyers bearing a larger share of the tax burden. -sellers bearing a larger share of the tax burden. -a decrease in the armount of tax revenue for the government. -an increase in the amount of tax revenue for the government.

buyers bearing a larger share of the tax burden.

Price ceilings and price floors that are binding -are desirable because they make markets more efficient and more fair -.cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price. -can have the effect of restoring a market to equilibrium. -are imposed because they can make the poor in the economy better off without causing adverse effects.

cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price.

If the government levies a $800 tax per motorcycle on sellers of motorcycles, then the price paid by buyers of motorcycles would -decrease by an indeterminate amount. -increase by more than $800. -increase by less than $800. -increase by exactly $800.

increase by less then $800

If a nonbinding price floor is imposed on a market, then the -quantity sold in the market will decrease -.quantity sold in the market will stay the same. -price in the market will increase. -price in the market will decrease.

quantity sold in the market will stay the same.

Suppose that in a particular market, the supply curve is highly inelastic and the demand curve is highly elastic. If a tax is imposed in this market, then the -sellers will bear a greater burden of the tax than the buyers. -buyers will bear a greater burden of the tax than the sellers. -buyers and sellers are likely to share the burden of the tax equally. -buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

sellers will bear a greater burden of the tax than the buyers.

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that -:OPEC raised the price of crude oil in world markets -.U.S. gasoline producers raised the price of gasoline. -the U.S. government maintained a price ceiling on gasoline. -Americans typically commuted long distances.

the U.S. government maintained a price ceiling on gasoline.

If a price ceiling is not binding, then -there will be a surplus in the market -there will be a shortage in the market. -the market will be less efficient than it would be without the price ceiling. -there will be no effect on the market price or quantity sold.

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

Refer to Figure 6-13. How is the burden of the tax shared between buyers and sellers? Buyers bear -three-fourths of the burden, and sellers bear one-fourth of the burden.- two-thirds of the burden, and sellers bear one-third of the burden -.one-half of the burden, and sellers bear one-half of the burden -one-fourth of the burden, and sellers bear three-fourths of the burden.

three-fourths of the burden, and sellers bear one-fourth of the burden

In the market for apartments, rent control causes the quantity supplied -and quantity demanded to fall. -to fall and quantity demanded to rise. -to rise and quantity demanded to fall. -and quantity demanded to rise.

to fall and quantity demanded to rise.

Under rent control, landlords can cease to be responsive to tenants' concerns about the quality of the housing because -with rent control, the government guarantees landlords a minimum level of profit. -they become resigned to the fact that many of their apartments are going to be vacant at any given time. -with shortages and waiting lists, they have no incentive to maintain and improve their property. -with rent control, it becomes the government's responsibility to maintain rental housing.

with shortages and waiting lists, they have no incentive to maintain and improve their property.