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Exam 6: Supply, Demand and Government Policies

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Question 31

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Graph 6-3 -According to Graph 6-3, which panel(s) best represent(s) a binding rent control in the long run?

A) panel a
B) panel b
C) neither panel
D) both panels

E) None of the above
F) A) and D)

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Question 32

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Most of the burden of a luxury tax falls on the middle-class workers who supply luxury goods, rather than on the rich who buy them.

A) True
B) False

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Question 33

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Which of the following is an example of a price-ceiling?

What is the goal of rent control and what do economists think of rent control as a mechanism for achieving the goal?

If a tax is imposed on a market, buyers will pay more for their purchases and sellers will receive less for their sales.

Rent controls lead to:

Using a demand-supply diagram, show how OPEC's raising of oil prices in the 1970s combined with a government-imposed price ceiling on gasoline created a shortage of gasoline.

A tax on the sellers of coffee will cause the price the buyer pays:

Common rationing mechanisms under price ceilings include waiting in long lines and biases of the sellers.

If a tax is imposed on the buyer of a product, the tax incidence will fall entirely on the buyer.

Graph 6-5 -According to Graph 6-5, a binding price floor would exist at a price of:

Graph 6-7 -According to Graph 6-7, the amount of the tax that buyers would pay would be:

Graph 6-5 -According to Graph 6-5, if the government imposes a binding price floor of $6.00 in this market, the result will be a:

Graph 6-7 -According to Graph 6-7, the equilibrium price in the market before the tax is imposed is:

A binding price floor causes:

If the government sets the minimum price a good can be traded at, this is defined as a price floor.

Graph 6-4 -According to Graph 6-4, when the supply curve for gasoline shifts from S₁ to S₂:

Long gas lines after OPEC raised the price of crude oil in world markets were caused by the higher prices of oil and gas.

Graph 6-11 -Using Graph 6-11, answer the following questions. a. What was the equilibrium price in this market before the tax? b. What is the amount of the tax? c. How much of the tax will the buyers pay? f. How much of the tax will the sellers pay? e. How much will the buyer pay for the product after the tax is imposed? f. How much will the seller receive after the tax is imposed? g. As a result of the tax, what has happened to the level of market activity?

Graph 6-10 -In Graph 6-10, the per-unit burden of the tax on the sellers is: