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Exam 6: Supply, Demand, and Government Policies

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Question 131

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A tax of $1 on sellers always increases the equilibrium price by $1.

A) True
B) False

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Question 132

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If the equilibrium price of an airline ticket is $400 and the government imposes a price floor of $500 on airline tickets, then fewer airline tickets will be sold than at the market equilibrium.

A) True
B) False

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Question 133

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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 $13, would there be a shortage or surplus, and how large would be the shortage/surplus?

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

If a price floor is not binding, then

Minimum-wage laws benefit society by creating a surplus of labor.

Figure 6-19 ​ -Refer to Figure 6-19. If the government set a price floor at $55, would there be a shortage or surplus, and how large would be the shortage/surplus?

Figure 6-1 Graph (a) Graph (b) ​ ​ -Refer to Figure 6-1. The price ceiling shown in graph (a)

A price ceiling set below the equilibrium price is binding.

The economy contains many labor markets for different types of workers.

The minimum wage is more often binding for teenagers than for other members of the labor force.

If the government levies a $1600 tax per boat on sellers of boats, then the price paid by buyers of boats would

One disadvantage of government subsidies over price controls is that subsidies

When the government imposes a binding price ceiling on a competitive market, a surplus of the good arises, and sellers must ration the scarce goods among the large number of potential buyers.

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

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 ceiling at $8, would there be a shortage or surplus, and how large would be the shortage/surplus?

When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00.

Figure 6-11 ​ -Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed?

Price floors are typically imposed to benefit buyers.

A large majority of economists favor eliminating the minimum wage.