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Exam 6: Supply, Demand, and Government Policies

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Question 261

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Which of the following observations would be consistent with the imposition of a binding price floor on a market? After the price floor becomes effective,

A) a smaller quantity of the good is bought and sold.
B) a larger quantity of the good is demanded.
C) a smaller quantity of the good is supplied.
D) the price falls below the equilibrium price.

E) A) and D)
F) A) and C)

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Question 262

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Rent-control laws dictate a minimum rent that landlords may charge tenants.

A) True
B) False

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Question 263

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One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this?

Figure 6-34 -Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, what price will buyers pay per unit after the tax is imposed?

If a price floor is not binding, then

Scenario 6-2 Suppose demand for a product is given by the equation and supply for the product is given by the equation -Refer to Scenario 6-2. Suppose the government sets a price floor at $13 for this product. Is this price floor binding, and what will be the size of the shortage/surplus in this market?

To be binding, a price floor must be set above the equilibrium price.

​Price ceilings are never binding when set above the equilibrium price.

Figure 6-31 ​ -Refer to Figure 6-31. Suppose that a price ceiling is imposed in this market at a price of $30 and market demand for the good subsequently increases. This would

A price ceiling is always a binding price control, whereas a price floor may be either binding or not binding.

Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. What price will buyers pay for the good after the tax is imposed?

Figure 6-25 -Refer to Figure 6-25. The burden of the tax on sellers is

Table 6-4 The following table contains the demand schedule and supply schedule for a market for a particular good. Suppose sellers of the good successfully lobby Congress to impose a price floor $3 above the equilibrium price in this market. -Refer to Table 6-4. How many units of the good are sold after the imposition of the price floor?

Figure 6-33 -Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the buyers in this market?

If a tax is levied on the buyers of a product, then the supply curve will

Figure 6-6 -Refer to Figure 6-6. If the government imposes a price ceiling of $8 on this market, then there will be

If the supply curve is more price elastic than the demand curve, will the buyers or the sellers bear a greater burden of a tax? Draw a diagram to illustrate your answer.

The quantity sold in a market will increase if the government

Figure 6-3 Panel (a) Panel (b) -Refer to Figure 6-3. A nonbinding price floor is shown in

Figure 6-4 -Refer to Figure 6-4. A government-imposed price of $12 in this market is an example of a