Principles of microeconomics: Chapter 6
Sellers of a good bear the larger share of the tax burden when a tax is placed on a product for which the ( i ) supply is more elastic than the demand . ( ii ) demand in more elastic than the supply . ( iii ) tax is placed on the sellers of the product . ( iv ) tax is placed on the buyers of the product .
( ii ) only
The quantity sold in a market will increase if the government
More than one of the above is correct .
A minimum wage that is set below a market's equilibrium wage will result in an excess
None of the above is correct .
Which of the following is not correct ?
Taxes levied on sellers and taxes levied on buyers are not equivalent .
In the United States , before OPEC increased the price of crude oil in 1973 , there was
a nonbinding price ceiling on gasoline .
Suppose that the demand for picture frames is highly inelastic , and the supply of picture frames is highly elastic . A tax of $ 1 per frame levied on picture frames will increase the price paid by buyers of picture frames by
between $ 0.50 and $ 1 .
To say that a price floor is binding is to say that the price floor
causes quantity supplied to exceed quantity demanded .
If the government levies a $ 500 tax per car on sellers of cars , then the price received by sellers of cars would
decrease by less than $ 500 .
The mayor of Workerville proposes a local payroll tax to fund a new water park for the city . The mayor proposes to collect half the tax from workers and half the tax from firms . The mayor will be able to successfully divide the burden of the tax equally if the
demand for labor and supply of labor are equally elastic .
Suppose the government imposes a 50 - cent tax on the sellers of packets of chewing gum . The tax would *
discourage market activity .
A tax imposed on the buyers of a good will lower the
effective price received by sellers and lower the equilibrium quantity .
The imposition of a binding price ceiling on a market causes quantity demanded to be
greater than quantity supplied .
If the government removes a binding price ceiling from a market , then the price received by sellers will
increase , and the quantity sold in the market will increase .
As a rationing mechanism , discrimination according to seller bias is
inefficient and potentially unfair .
The imposition of a binding price floor on a market , causes quantity demanded to be
less than quantity supplied .
Suppose the equilibrium price of a tube of toothpaste imposes a price floor of $ 3 per tube . As a result of the price floor , the is $ 2 , and the government
quantity demanded of toothpaste decreases , and the quantity of toothpaste that firms want to supply increases .
Over time , housing shortages caused by rent control .
run . increase , because the demand for and supply of housing are more elastic in the long
Which of the following would be the most likely result of a binding price ceiling imposed on the market for rental cars ?
slow replacement of old rental cars with newer ones
Suppose that a tax is placed on books . If the sellers pay the majority of the tax , then we know that the
supply is more inelastic than the demand .
An alternative to rent - control laws that would not reduce the quantity of housing supplied is
the payment by government of a fraction of a poor family's rent .
If a binding price floor is imposed on the video game market , then
the quantity of video games supplied will increase . the quantity of video games demanded will decrease . a surplus of video games will develop .
The Earned Income Tax Credit is an example of a
wage subsidy .
