Exam 4: Supply and Demand: Applications and Extensions

Figure 4-18 -Refer to Figure 4-18. If the government imposes a price ceiling of $2.00 in this market, the result is a

The more inelastic the demand for a product, the more likely that the actual benefit of a subsidy granted on the product will

Use the figure below to answer the following question(s). Figure 4-12 -Refer to Figure 4-12. The supply curve S and the demand curve D₁ indicate initial conditions in the market for college textbooks. A new government program is implemented that grants students a $30 per textbook subsidy on every textbook they purchase, shifting the demand curve from D₁ to D₂. Which of the following is true for this subsidy given the information provided in the exhibit?

The actual burden of a tax

Deadweight losses are associated with

A tax for which the average tax rate rises with income is defined as a

The excess burden or deadweight loss of a tax refers to the

When the top marginal tax rates were lowered substantially during the 1980s, the inflation-adjusted income tax revenue collected from the top 1 percent of all income earners

Which of the following is a major disadvantage of setting the price of a good below equilibrium and using waiting in line rather than price to ration the good?

Figure 4-22 -Refer to Figure 4-22. The amount of the tax per unit is

Figure 4-16 -Refer to Figure 4-16. Some policymakers have argued that the government should establish a "living wage." A living wage would provide workers a reasonable standard of living in their city or region. If a living wage of $10 per hour is established in the market pictured here, we would expect

The term "deadweight loss" or "excess burden" is used to describe the

A legal system that provides secure private property rights and unbiased enforcement of contracts

The burden of a tax will fall primarily on buyers when the

Figure 4-20 -Refer to Figure 4-20. The amount of the tax per unit is

If a $50 subsidy is legally (statutorily) granted to the sellers of weed eaters and as a result the price of weed eaters to consumers falls by $30, the actual benefit of the subsidy

Suppose the market equilibrium price of corn is $5 per bushel, and the government sets a price ceiling of $4 per bushel. What is the most likely result of this action?

Government programs such as Medicare substantially subsidize health care purchases by some consumers in the U.S. economy. Who benefits from these subsidies? How do they affect the price of health care? If you are not a recipient of this program, are you made better or worse off by the subsidy? Explain.

Use the figure below to answer the following question(s). Figure 4-4 -Given the demand and supply conditions shown in Figure 4-4, what will happen as the result of imposing a price ceiling of a?

Use the figure below to answer the following question(s). Figure 4-8 -Refer to Figure 4-8. The supply curve S₁ and the demand curve D indicate initial conditions in the market for soft coal. A $40-per-ton tax on soft coal is levied, shifting the supply curve from S₁ to S₂. Imposing the tax increases the equilibrium price of soft coal from