tut5

If a price ceiling is a binding constraint on a market, then:

• the equilibrium price must be below the price ceiling.

• the quantity supplied must exceed the quantity demanded.

• sellers cannot sell all they want to sell at the price ceiling.

• buyers cannot buy all they want to buy at the price ceiling.

If a binding price floor is imposed on the video game market, then:

• the demand for video games will decrease.

• the supply of video games will increase.

• a surplus of video games will develop.

• All of the above are correct.

When government imposes a price ceiling or a price floor on a market:

• price no longer serves as a rationing device.

• efficiency in the market is enhanced.

• shortages and surpluses are eliminated.

• buyers and sellers both become better off.

A tax on the sellers of TVs:

• leads sellers to supply a smaller quantity at every price.

• leads buyers to demand a smaller quantity at every price.

• leads sellers to supply a larger quantity at every price.

• Both (a) and (b) are correct.

If the government levies a $500 tax per car on buyers of cars, then the price received by sellers of cars would:

• decrease by more than $500.

• decrease by exactly $500.

• decrease by less than $500.

• increase by an indeterminate amount.

If the government removes a tax on buyers of a good and imposes the same tax on sellers of the good, then the price paid by buyers will:

• not change and the price received by sellers will not change.

• not change and the price received by sellers will decrease.

• decrease and the price received by sellers will not change.

• decrease and the price received by sellers will decrease.

The price paid by buyers in a market will decrease if the government:

• increases a binding price floor in that market.

• increases a binding price ceiling in that market.

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

• More than one of the above is correct.

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

• decreases a binding price floor in that market.

• increases a binding price ceiling in that market.

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

• More than one of the above is correct.

If a tax shifts the supply curve upward (or to the left), we can infer that the tax was levied on:

• a. buyers of the good.

• b. sellers of the good.

• c. both buyers and sellers of the good.

• d. We cannot infer anything because the shift described is not consistent with a tax.

When a tax is levied on buyers, the:

• supply curves shifts upward by the amount of the tax.

• tax creates a wedge between the price buyers effectively pay and the price sellers receive.

• tax has no effect on the well-being of sellers.

• All of the above are correct.