Exam 4: Supply and Demand: Applications and Extensions

Use the figure below to answer the following question(s). Figure 4-9 Refer to Figure 4-9. The market for gasoline was initially in equilibrium at point b. If a $.40 excise tax was imposed,

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

A $25 government subsidy paid directly to buyers of jeans will result in

Taxes adversely affect the allocation of resources because

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

When a price ceiling is imposed below the equilibrium price of a commodity,

When a price floor is above the equilibrium price,

When government imposes price controls in a market,

Suppose the United Auto Workers union obtains a substantial wage increase for auto workers. How will this affect the market for automobiles?

An excise tax levied on a product will impose a smaller relative burden on consumers (and a larger relative burden on sellers) when

If a household has $40,000 in taxable income and its tax liability is $4,000, the household's average tax rate is

Suppose the demand curve for a good is highly elastic and the supply curve is highly inelastic. If the government taxes this good,

Figure 4-25 Refer to Figure 4-25. After the tax is levied, consumer surplus is represented by area

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?

Emma works full time during the day as an economist and faces a 90 percent marginal tax rate. If Emma were to get an offer to work a second job in the evenings doing consulting work for a local business for $10,000 per year, how much of this additional income would she be able to keep as net pay after taxes?

Price controls will tend to cause misallocation of resources because

Suppose the U.S. government banned the sale and production of cigarettes. Which of the following would be most likely to occur?

The more elastic the supply of a product, the more likely that the actual benefit of a subsidy granted of the product will

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?

Use the figure below to answer the following question(s). Figure 4-7 Refer to Figure 4-7. Which of the following is true for the tax illustrated?