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a surplus of the good to develop
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When the government imposes a binding price floor, it causes
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increase, decrease, shortage
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In a market with a binding price ceiling, an increase in the ceiling will ________ the quantity supplied, ________ the quantity demanded, and reduce the ________.
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a $1 per unit tax levied on producers of the good
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A $1 per unit tax levied on consumers of a good is equivalent to
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the imposition of a binding price floor
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Which of the following would increase quantity supplied, decrease quantity demanded, and increase the price that consumers pay?
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the repeal of a tax levied on producers
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Which of the following would increase quantity supplied, increase quantity demanded, and decrease the price that consumers pay?
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supply is elastic, and demand is inelastic
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When a good is taxed, the burden of the tax falls mainly on consumers if
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If the price ceiling of $40 per ticket is below the equilibrium price, then quantity demanded exceeds quantity supplied, so there will be a shortage of tickets. The policy decreases the number of people who attend classical music concerts, because the quantity supplied is lower because of the lower price.
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Lovers of classical music persuade Congress to impose a price ceiling of $40 per concert ticket. As a result of this policy, do more or fewer people attend classical music concerts? Explain.
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The equilibrium price of Frisbees is $8 and the equilibrium quantity is six million Frisbees.
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A recent study found that the demand-and-supply schedules for Frisbees are as follows:
A. What are the equilibrium price and quantity of Frisbees?
A. What are the equilibrium price and quantity of Frisbees?
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With a price floor of $10, the new market price is $10 because the price floor is binding. At that price, only two million Frisbees are sold, because that is the quantity demanded.
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A recent study found that the demand-and-supply schedules for Frisbees are as follows:
B. Frisbee manufacturers persuade the government that Frisbee production improves scientists' understanding of aerodynamics and thus is important for national security. A concerned Congress votes to impose a price floor $2 above the equilibrium price. What is the new market price? How many Frisbees are sold?
B. Frisbee manufacturers persuade the government that Frisbee production improves scientists' understanding of aerodynamics and thus is important for national security. A concerned Congress votes to impose a price floor $2 above the equilibrium price. What is the new market price? How many Frisbees are sold?
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If there's a price ceiling of $9, it has no effect, because the market equilibrium price is $8, which is below the ceiling. So the market price is $8 and the quantity sold is six million Frisbees.
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A recent study found that the demand-and-supply schedules for Frisbees are as follows:
C. Irate college students march on Washington and demand a reduction in the price of Frisbees. An even more concerned Congress votes to repeal the price floor and impose a price ceiling $1 below the former price floor. What is the new market price? How many Frisbees are sold?
C. Irate college students march on Washington and demand a reduction in the price of Frisbees. An even more concerned Congress votes to repeal the price floor and impose a price ceiling $1 below the former price floor. What is the new market price? How many Frisbees are sold?
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The price will rise by less than $500. The burden of any tax is shared by both producers and consumers¾the price paid by consumers rises and the price received by producers falls, with the difference between the two equal to the amount of the tax. The only exceptions would be if the supply curve were perfectly elastic or the demand curve were perfectly inelastic, in which case consumers would bear the full burden of the tax and the price paid by consumers would rise by exactly $500.
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If the government places a $500 tax on luxury cars, will the price paid by consumers rise by more than $500, less than $500, or exactly $500? Explain.
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