chap 6

A legal maximum on the price at which a good can be sold is called a price

• floor.

• subsidy.

• support.

• ceiling.

A legal minimum on the price at which a good can be sold is called a price

• subsidy.

• floor.

• support.

• ceiling.

A price ceiling is

• often imposed on markets in which “cutthroat competition” would prevail without a price ceiling.

• a legal maximum on the price at which a good can be sold.

• often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling.

• All of the above are correct.

A price floor is

• a legal minimum on the price at which a good can be sold.

• often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor.

• a source of inefficiency in a market.

• All of the above are correct.

A $2.00 tax levied on the sellers of birdhouses will shift the supply curve

• upward by exactly $2.00.

• upward by less than $2.00.

• downward by exactly $2.00.

• downward by less than $2.00.

A $0.10 tax levied on the sellers of chocolate bars will cause the

• supply curve for chocolate bars to shift down by $0.10.

• supply curve for chocolate bars to shift up by $0.10.

• demand curve for chocolate bars to shift down by $0.10.

• demand curve for chocolate bars to shift up by $0.10.

A tax on the buyers of sofas

• increases the size of the sofa market.

• decreases the size of the sofa market.

• has no effect on the size of the sofa market.

• may increase, decrease, or have no effect on the size of the sofa market.

When a tax is placed on the buyers of a product, buyers pay

• more and sellers receive more than they did before the tax.

• more and sellers receive less than they did before the tax.

• less and sellers receive more than they did before the tax.

• less and sellers receive less than they did before the tax.

The price received by sellers in a market will decrease if the government

• imposes a binding price floor in that market.

• decreases a binding price ceiling in that market.

• decreases a tax on the good sold in that market.

• increases a binding price floor in that market.

The quantity sold in a market will decrease if the government decreases a

• binding price floor in that market.

• binding price ceiling in that market.

• tax on the good sold in that market.

• All of the above are correct.