Exam 4: Supply and Demand: Applications and Extensions

Suppose a property tax of $300 per month is legally (statutorily) imposed on the owners of rental housing. Which of the following is likely to occur?

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.

Which of the following statements regarding black markets is true?

If the supply of health care services is highly inelastic, programs that subsidize the cost of purchasing medical services will

The deadweight loss resulting from levying a tax on an economic activity is

Figure 4-25 Refer to Figure 4-25. The equilibrium price before the tax is imposed is

If Heather's tax liability increases from $10,000 to $13,500 when her income increases from $30,000 to $40,000, her marginal tax rate is

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

Suppose the market equilibrium price of wheat is $5 per bushel, and the government sets a price floor of $7 per bushel to aid growers. What is the most likely result of this action?

When a tax is levied on the sale of an item,

The imposition of price ceilings on a market often results in

Figure 4-24 Refer to Figure 4-24. The amount of the tax on each unit of the good is

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

Figure 4-14 Figure 4-14 depicts the milk market. The horizontal line, P, represents a price ceiling imposed by the government. Which of the following is true?

Figure 4-22 Refer to Figure 4-22. Suppose the same S and D curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the buyers of the good, rather than the sellers, are required to pay the tax to the government. Now,

If a local government enacts rent control legislation that sets the price of rental housing below equilibrium, which of the following will most likely happen in the local rental housing market?

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

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

In a market economy, which of the following will most likely cause a prolonged milk shortage?

A tax for which the average tax rate remains constant at all levels of income is defined as a