Exam 4: Supply and Demand: Applications and Extensions

Use the figure below illustrating the impact of an excise tax to answer the following question(s). Figure 4-6 -Refer to Figure 4-6. The amount of the excise tax I is

If a household has $40,000 in taxable income and its tax liability is $20,000, the household's average tax rate is

Figure 4-22 -Refer to Figure 4-22. The equilibrium price in the market before the tax is imposed is

Which of the following would tend to increase the price of lumber?

If a $500 tax is placed legally (statutorily) on the sellers of new violins and as a result the price of violins to consumers rises by $400, then the actual burden of the tax

Figure 4-23 -Refer to Figure 4-23. In which market will the tax burden be most equally divided between the buyer and the seller?

Figure 4-21 -Refer to Figure 4-21. The price received by sellers after the tax is imposed is

When a government subsidy is granted to the sellers of a product, buyers can end up capturing some of the benefit because

A price ceiling set below an equilibrium price tends to cause persistent imbalances in the market because

Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because

If Sophia's tax liability increases from $10,000 to $15,000 when her income increases from $30,000 to $40,000, her marginal tax rate is

Deadweight losses are associated with

Use the figure below to answer the following question(s). Figure 4-4 -Given the demand and supply conditions shown in Figure 4-4, if the government imposes a price ceiling of a, which of the following would be true?

If the Federal government enacts a new excise tax of $1.50 per case of soda, which of the following is most likely to occur?

When policymakers impose price controls, they

Because of price controls in the former Soviet Union, people often waited in long lines for food and other necessities. Modern economic theory would indicate that, relative to price rationing, waiting in line is

A price floor that sets the price of a good above market equilibrium will cause

A price floor set above an equilibrium price tends to cause persistent imbalances in the market because

Economists have argued that rent control is "the best way to destroy a city, other than bombing." Why would economists say this?

Use the figure below to answer the following question(s). Figure 4-13 -Refer to Figure 4-13. The supply curve S and the demand curve D₁ indicate initial conditions in the market for flu shots. A new government program is implemented that grants buyers a $25 subsidy when they buy a flu shot, shifting the demand curve from D₁ to D₂. Which of the following is true for this subsidy given the information provided in the figure?