Exam 4: Supply and Demand: Applications and Extensions

Which tax rate measures the percent of your income paid in taxes?

When a price floor is imposed above the equilibrium price of a commodity,

Figure 4-20 Refer to Figure 4-20. The price that buyers pay after the tax is imposed is

Figure 4-25 Refer to Figure 4-25. The price that buyers pay after the tax is imposed is

When the price of a good is legally set below the equilibrium level, a shortage often results. This shortage

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

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

The deadweight loss (or excess burden) resulting from levying a tax on an economic activity is the

Which of the following will most likely result from rent controls that reduce monthly rental rates below market equilibrium?

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 D ₁ 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 D ₁ to D ₂. Which of the following is true for this subsidy given the information provided in the exhibit?

When a subsidy program allocates subsidies to a subset of the population, the result is greater demand and higher prices in the market where purchases are subsidized, raising costs for

When a shortage of a good is present due to a price ceiling,

Use the figure below to answer the following question(s). Figure 4-12 Refer to Figure 4-12. The exhibit illustrates the impact of granting a subsidy on a particular good. Which of the following is true for this subsidy given the information provided in the exhibit?

The tax rate that maximizes the revenue generated by a tax

In the mid-1940s, the marginal income tax rate in the top income tax bracket was 94 percent. In the 1960s, the top rate was lowered to 70 percent, and in the 1980s, the top rate was again lowered to 28 percent. The data show that as a result of these tax rate reductions, tax revenue (particularly from the rich) increased. This is consistent with the idea illustrated with the

If Heather'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

When the purchase of a good is subsidized, economic analysis indicates that

Other things constant, a decrease in the demand for computers will

When several hurricanes hit Florida in 2004, a number of local governments imposed price controls that prevented sellers from raising their prices for badly needed products like plywood and generators. In the areas where the controls were imposed, they resulted in

When government gives a subsidy to buyers of good X, the benefits of the subsidy flow to