Exam 4: A : Supply and Demand: Applications and Extensions

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

Compared to legal markets, black markets have

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

Use the figure below to answer the following question(s). Figure 4-4 -Given the demand and supply conditions shown in Figure 4-4, what will happen as the result of imposing a price ceiling of a?

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

Use the figure below to answer the following question(s). Figure 4-7 -Refer to Figure 4-7. The supply curve S₁ and the demand curve D indicate initial conditions in the market for gasoline. A $.60-per-gallon excise tax on gasoline is levied, which shifts the supply curve from S₁ to S₂. Imposing the tax causes the equilibrium price of gasoline to increase from

Both price floors and price ceilings lead to

A tax on the buyers of coffee will

If drugs such as marijuana and cocaine were legalized, it would be likely that

In the supply and demand model, a subsidy granted to sellers is illustrated by

In 2010 the federal government reduced the Social Security tax withholding rate from 12.4 percent (6.2 percent on both the employer and employee) to 8.4 percent (4.2 percent on both the employer and employee) on the wages of all workers. If the supply of labor is relatively inelastic when compared to the elasticity of the demand for labor, the burden of this tax will

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

Which of the following characterizations is correct?

Subsidy programs that provide benefits to well organized interest groups will

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

If there was an increase in the excise tax imposed on beer suppliers, what would be the effect on the equilibrium price and quantity of beer?

In a market economy, which of the following would most likely cause a prolonged grain surplus?

Taxes adversely affect the allocation of resources because

A payment the government makes to either the buyer or seller, usually on a per-unit basis, when a good or service is purchased or sold is called a

A new law requiring plumbers to pass strict certification tests that reduce the number of plumbers would