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Exam 6: Supply, Demand, and Government Policies

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Question 91

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Buyers and sellers rarely share the burden of a tax equally.

A) True
B) False

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Question 92

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Studies by economists have found that a 10 percent increase in the minimum wage decreases teenage employment 10 percent.

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B) False

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Question 93

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​Whether the minimum wage is a binding price floor always depends upon whether the economy is in a recession.

If the government removes a binding price floor from a market, then the price paid by buyers will

When OPEC raised the price of crude oil in the 1970s, it caused the United States'

A price ceiling set below the equilibrium price causes quantity demanded to exceed quantity supplied.

Figure 6-20 ​ -Refer to Figure 6-20. Suppose a $3 per-unit tax is imposed on the sellers of this good. How much is the burden of this tax on the sellers in this market?

A binding minimum wage creates a surplus of labor.

A price ceiling set above the equilibrium price causes a surplus in the market.

Figure 6-17 ​ -Refer to Figure 6-17. If the government places a $2 tax in the market, the seller bears $1 of the tax burden.

The goal of rent control is to help the poor by making housing more affordable.

Figure 6-20 ​ -Refer to Figure 6-20. Suppose a $3 per-unit tax is imposed on the sellers of this good. What is the effective price that sellers will receive for the good after the tax is imposed?

Table 6-2 $\begin{array} { | l | l | l | } \hline \text { Price (\$) } & \begin{array} { l } \text { Quantity } \\\text { Demanded }\end{array} & \begin{array} { l } \text { Quantity } \\\text { Supplied }\end{array} \\\hline 0 & 21 & 0 \\\hline 1 & 18 & 4 \\\hline 2 & 15 & 8 \\\hline 3 & 12 & 12 \\\hline 4 & 9 & 16 \\\hline 5 & 6 & 20 \\\hline 6 & 3 & 24 \\\hline 7 & 0 & 28 \\\hline\end{array}$ -Refer to Table 6-2. In this market, over what range of prices would a price floor set by the government be binding?

A price ceiling set below the equilibrium price is nonbinding.

Figure 6-21 ​ -Refer to Figure 6-21. 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?

Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.

Figure 6-20 ​ -Refer to Figure 6-20. 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?

Figure 6-13 -Refer to Figure 6-13. How is the burden of the tax shared between buyers and sellers? Buyers bear

Scenario 6-1 Suppose that demand in the market for good X is given by the equation $Q ^ { D } = 30 - P$ and that supply in the market for good X is given by the equation $Q ^ { S } = 2 P$ -Refer to Scenario 6-1. If the government set a price floor at $7, would there be a shortage or surplus, and how large would be the shortage/surplus?

In an unregulated labor market, the wage adjusts to balance labor supply and labor demand.