Exam 6: Supply Demand and Government Policies: Part B

Whether the minimum wage is a binding price floor always depends upon whether the economy is in a recession.

The distribution of the burden of a tax depends strictly on the elasticity of demand. ​

A tax on buyers shifts the demand curve and the supply curve.

The minimum wage has its greatest impact on the market for teenage labor.

When a binding price floor is imposed on a market for a good,some people who want to sell the good cannot do so.

If a tax is imposed on the buyers of a product,then the tax burden will fall entirely on the buyers.

If the equilibrium wage is $4 per hour and the minimum wage is $5.15 per hour,then a shortage of labor will exist.

The distribution of the burden of a tax depends strictly on the elasticity of supply.

A price floor is a legal minimum on the price at which a good or service can be sold.

Price controls can generate inequities.

Prices are inefficient rationing devices.

Minimum-wage laws dictate the lowest wage that firms may pay workers.

Binding price floors benefit sellers because they allow sellers to sell all the goods they want at a higher price.

A price ceiling set above the equilibrium price is not binding.

A price floor set below the equilibrium price causes quantity supplied to exceed quantity demanded.

A tax of $1 on sellers shifts the supply curve upward by exactly $1.

A price ceiling set above the equilibrium price causes a surplus in the market.

A binding minimum wage causes the quantity of labor demanded to exceed the quantity of labor supplied.

The burden of a luxury tax most likely falls more heavily on sellers because demand is more elastic and supply is more inelastic.

If a price ceiling of $2 per gallon is imposed on gasoline,and the market equilibrium price is $1.50,then the price ceiling is a binding constraint on the market.