Chapter 6 Worksheet - Lecture Questions (Practice Problems) PDF

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Lecture Questions (Practice Problems)...

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Name: Chapter 6 Worksheet 1. If a price ceiling is not binding, then a. the equilibrium price is above the price ceiling. b. the equilibrium price is below the price ceiling. c. it has no legal enforcement mechanism. d. None of the above is correct because all price ceilings must be binding. 2. Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective, a. a smaller quantity of the good is bought and sold. b. a smaller quantity of the good is demanded. c. a larger quantity of the good is supplied. d. the price rises above the previous equilibrium. 3. A binding price ceiling causes a surplus. (i) (ii)

causes a shortage.

(iii)

is set at a price above the equilibrium price.

(iv)

is set at a price below the equilibrium price.

a. (ii) only b. (iv) only c. (i) and (iii) only d. (ii) and (iv) only 4. If a price floor is not binding, then a. the equilibrium price is above the price floor. b. the equilibrium price is below the price floor. c. there will be a surplus in the market. d. there will be a shortage in the market. 5. If the government removes a binding price floor from a market, then the price received by sellers will a. decrease, and the quantity sold in the market will decrease. b. decrease, and the quantity sold in the market will increase. c. increase, and the quantity sold in the market will decrease. d. increase, and the quantity sold in the market will increase. 6. When a tax is placed on the sellers of a product, buyers pay a. more, and sellers receive more than they did before the tax. b. more, and sellers receive less than they did before the tax. c. less, and sellers receive more than they did before the tax. d. less, and sellers receive less than they did before the tax.

7. If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would a. increase by more than $1,000. b. increase by exactly $1,000. c. increase by less than $1,000. d. decrease by an indeterminate amount. 8. Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy. Further, suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle. Which of the following statements is correct? a. This tax causes the demand curve for vodka to shift downward by $5.00 at each quantity of vodka. b. The price paid by buyers is $2.00 per bottle more than it was before the tax. c. Sixty percent of the burden of the tax falls on sellers. d. All of the above are correct. Figure 6-21

9. Refer to Figure 6-21. What is the amount of the tax per unit? a. $1 b. $2 c. $3 d. $4

10. Refer to Figure 6-21. Who faces the greater incidence of this tax? a. Buyers, because demand is more elastic than supply. b. Buyers, because demand is less elastic than supply. c. Sellers, because demand is more elastic than supply. d. Sellers, because demand is less elastic than supply....