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