Exam 6: Supply Demand and Government Policies: Part A

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Figure 6-31 -Refer to Figure 6-31.If the government set a price ceiling at $8,would there be a shortage or surplus,and how large would be the shortage/surplus?

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Question 1

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A price ceiling set at $8 would result in a shortage of 8 units.

Figure 6-34 -Refer to Figure 6-34.If the government imposes a tax of $6 per unit in this market,how much is the burden of the tax on the buyers in this market?

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Question 2

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With a $6 tax per unit,the price buyers pay will rise from $8 to $12 per unit.Therefore,the burden of the tax on buyers is $4 per unit.

Using a supply and demand diagram,show a labor market with a binding minimum wage.Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

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Those who are helped by the minimum wage are the workers who are still employed and now receive the higher wage. In the diagram, those would be measured by the quantity of labor demanded at the minimum wage, q0. The minimum wage creates unemployment equal to the difference between the quantity of labor supplied and the quantity demanded at the minimum wage, q2-q0. The perceptive student might note that the unemployed group can be divided into those who lose their jobs as a result of the minimum wage (the competitive equilibrium quantity of labor minus the quantity demanded at the minimum wage, q1-q0), and those who enter the market as a result of the higher wage but cannot find employment (quantity of labor supplied at the minimum wage minus the competitive equilibrium quantity, q2-q1). The buyers of the labor (employers) are also worse off because they have to pay a higher wage for labor and, hence, hire a smaller quantity

Figure 6-31 -Refer to Figure 6-31.If the government set a price ceiling at $15,would there be a shortage or surplus,and how large would be the shortage/surplus?

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Question 4

Figure 6-33 -Refer to Figure 6-33.Suppose a $3 per-unit tax is imposed on the sellers of this good.What is the effective price that sellers will receive for the good after the tax is imposed?

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Question 5

Figure 6-34 -Refer to Figure 6-34.If the government imposes a tax of $6 per unit in this market,how many units will be bought and sold in the market after the tax is imposed?

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Question 6

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1.What are the equilibrium price and quantity in the market for good X?

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Question 7

Figure 6-33 -Refer to Figure 6-33.Suppose a $4 per-unit tax is imposed on the sellers of this good.How many units of this good will be sold after the tax is imposed?

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Question 8

Figure 6-32 -Refer to Figure 6-32.If the government set a price ceiling at $40,would there be a shortage or surplus,and how large would be the shortage/surplus?

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Question 9

Figure 6-34 -Refer to Figure 6-34.If the government imposes a tax of $6 per unit in this market,how much is the burden of the tax on the sellers in this market?

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Question 10

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1.If the government set a price floor at $13,would there be a shortage or surplus,and how large would be the shortage/surplus?

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Question 11

Define a price floor.

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Question 12

Figure 6-32 -Refer to Figure 6-32.If the government set a price ceiling at $50,would there be a shortage or surplus,and how large would be the shortage/surplus?

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Question 13

The following table shows the demand and supply schedules in a particular market. If the government sets a price floor $2 above the equilibrium price,how many units will be sold in this market?

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Question 14

Scenario 6-2 Suppose demand for a product is given by the equation and supply for the product is given by the equation -Refer to Scenario 6-2.Suppose the government sets a price floor at $13 for this product.Initially,is this price floor binding? Suppose that for some reason demand were to decrease to Would the $13 price floor be binding after the shift in the demand curve? If so,what is the size of the resulting shortage/surplus?

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Question 15

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1.If the government set a price floor at $7,would there be a shortage or surplus,and how large would be the shortage/surplus?

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Question 16

When a price floor is binding,is the price floor set above or below the market equilibrium price?

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Question 17

When a price ceiling is binding,is the price ceiling set above or below the market equilibrium price?

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Question 18

In a particular market,market demand is given by the equation and market supply is given by the equation Suppose a per-unit tax is imposed that reduces the number of units bought and sold in the market to 25 units.What is the size of the tax,and who bears the greater burden of the tax,buyers or sellers?

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Question 19

Figure 6-32 -Refer to Figure 6-32.If the government set a price ceiling at $80,would there be a shortage or surplus,and how large would be the shortage/surplus?

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Question 20

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Exam 6: Supply Demand and Government Policies: Part A

Figure 6-31 -Refer to Figure 6-31.If the government set a price ceiling at $8,would there be a shortage or surplus,and how large would be the shortage/surplus?

Figure 6-34 -Refer to Figure 6-34.If the government imposes a tax of $6 per unit in this market,how much is the burden of the tax on the buyers in this market?

Using a supply and demand diagram,show a labor market with a binding minimum wage.Use the diagram to show those who are helped by the minimum wage and those who are hurt by the minimum wage.

Figure 6-31 -Refer to Figure 6-31.If the government set a price ceiling at $15,would there be a shortage or surplus,and how large would be the shortage/surplus?

Figure 6-33 -Refer to Figure 6-33.Suppose a $3 per-unit tax is imposed on the sellers of this good.What is the effective price that sellers will receive for the good after the tax is imposed?

Figure 6-34 -Refer to Figure 6-34.If the government imposes a tax of $6 per unit in this market,how many units will be bought and sold in the market after the tax is imposed?

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1.What are the equilibrium price and quantity in the market for good X?

Figure 6-33 -Refer to Figure 6-33.Suppose a $4 per-unit tax is imposed on the sellers of this good.How many units of this good will be sold after the tax is imposed?

Figure 6-32 -Refer to Figure 6-32.If the government set a price ceiling at $40,would there be a shortage or surplus,and how large would be the shortage/surplus?

Figure 6-34 -Refer to Figure 6-34.If the government imposes a tax of $6 per unit in this market,how much is the burden of the tax on the sellers in this market?

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1.If the government set a price floor at $13,would there be a shortage or surplus,and how large would be the shortage/surplus?

Define a price floor.

Figure 6-32 -Refer to Figure 6-32.If the government set a price ceiling at $50,would there be a shortage or surplus,and how large would be the shortage/surplus?

The following table shows the demand and supply schedules in a particular market. If the government sets a price floor $2 above the equilibrium price,how many units will be sold in this market?

Scenario 6-1 Suppose that demand in the market for good X is given by the equation and that supply in the market for good X is given by the equation -Refer to Scenario 6-1.If the government set a price floor at $7,would there be a shortage or surplus,and how large would be the shortage/surplus?

When a price floor is binding,is the price floor set above or below the market equilibrium price?

When a price ceiling is binding,is the price ceiling set above or below the market equilibrium price?

Figure 6-32 -Refer to Figure 6-32.If the government set a price ceiling at $80,would there be a shortage or surplus,and how large would be the shortage/surplus?

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A

Application International Trade: Part B

Measuring a Nations Income