Chapter 6 - Mankiw/Taylor, Economics Worksheet

If the equilibrium price of petrol is €1.00 per litre and the government places a price ceiling on petrol of €1.50 per litre, the result will be a shortage of petrol.

• True

• False

A price ceiling set below the equilibrium price causes a surplus.

• True

• False

A price floor set above the equilibrium price is a binding constraint.

• True

• False

The shortage of housing caused by a binding rent control is likely to be more severe in the long run when compared to the short run.

• True

• False

The minimum wage helps all teenagers because they receive higher wages than they would otherwise.

• True

• False

A 10 per cent increase in the minimum wage is more likely to raise unemployment among teenage workers than among mid-career professional workers.

• True

• False

A price ceiling that is not a binding constraint today could cause a shortage in the future if demand were to increase and raise the equilibrium price above the fixed price ceiling.

• True

• False

A price floor in a market always creates a surplus in that market.

• True

• False

A €10 tax on football boots will always raise the price that the buyers pay for football boots by €10.

• True

• False

Indicate whether the sentence or statement is true or false. The ultimate burden of a tax falls most heavily on the side of the market that is less elastic.

• True

• False