Exam 4: Asupply and Demand: Applications and Extensions

The City of Greenville needs to raise revenue.Alderman Black has proposed a $10 tax on red cars in the city,currently numbering 2,000.Mayor White,who wants more than $20,000 in revenue,proposes taxing these cars at $100 each.Councilwoman Bluestone goes even farther,suggesting a $1,000 per red car tax,arguing that her proposal will raise $2 million.If maximizing tax revenue is the only consideration,which proposal should pass? Why?

Rent control applies to about two-thirds of the private rental housing in New York City.Economic theory suggests that the below-equilibrium prices established by rent controls would

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.Which of the following states the actual burden of the tax?

An income tax is progressive if the

If Neleh's income increases from $60,000 to $80,000 and her tax liability increases from $12,000 to $16,000,which of the following is true?

Figure 4-24 -Refer to Figure 4-24.The per unit burden of the tax on buyers is

Figure 4-18 -Refer to Figure 4-18.In this market,which of the following price controls would be binding?

If the federal government began granting a subsidy of 10 cents per apple to apple growers and as a result the price of apples to consumers falls by 8 cents,

Figure 4-17 -Refer to Figure 4-17.If the government imposes a price ceiling in this market at a price of $5.00,the result would be a

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

Figure 4-17 -Refer to Figure 4-17.Which of the following price controls would cause a shortage of 10 units of the good?

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

How would an increase in the price of paper influence the market for college textbooks?

Ron works full time as a teacher making $50,000 while his wife Ellen stays at home taking care of their two children.Ron's income puts the family in a tax bracket with a 40 percent marginal tax rate.Ellen receives a full-time job offer as an administrative assistant making $30,000 per year,however to take the job would require the family to start paying $8,000 per year in child care expenses.If Ellen were to accept the job offer,after paying taxes and subtracting child care expenses,by how much would the family's net disposable income increase?

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?

When a tax is imposed on a good,

Which of the following characterizations is correct?

After a natural disaster,such as a hurricane,the increased demand for certain items (like lumber,electric generators,and chainsaws)causes their prices to rise.These higher prices

A politician was recently quoted as saying,"Our country can only reach full employment by raising the minimum wage,which would cause the demand for products to increase ...and eventually cause production to expand." His analysis overlooks the fact that

Joanne states,"If raising the minimum wage to $10 an hour is good,like Senator Largess suggests,then raising it to $20 an hour would be twice as good." Is Joanne correct? Why or why not?