Ch. 6 Government Intervention

Question 1

Statutory Burden

Answer 1

Burden of being assigned by the government to send a tax payment

Question 2

Economic Burden

Answer 2

Burden created by the change in after-tax prices faced by buyers and sellers

Question 3

Tax Incidence

Answer 3

The division of the economic burden of a tax between buyers and sellers

Question 4

Tax on Buyers

Answer 4

Shifts curve to the left, declines quantity sold, increases price paid and decreases price recieved

Question 5

Subsidy

Answer 5

A payment made by the government to those who make a specific choice

Question 6

Price Ceiling

Answer 6

A maximum price that sellers can legally charge

Question 7

Price Floor

Answer 7

A minimum price that sellers can legally charge

Question 8

Binding Price Ceiling

Answer 8

A price ceiling that prevents the market from reaching the market equilibrium price; the highest price sellers can charge is below equilibrium price

Question 9

Price Gouging

Answer 9

Raising the price above what is considered fair

Question 10

Usury Laws

Answer 10

Prevent payday loan companies from charging excessively high rates

Question 11

Taxi Fares

Answer 11

Travel prices set by local government

Question 12

Binding Price Floor

Answer 12

A price floor that prevents the market from reaching the equilibrium price; lowest price that sellers can charge is above equilibrium

Question 13

Quantity Regulations

Answer 13

A minimum or maximum quantity that can be sold

Question 14

Mandate

Answer 14

A requirement to buy or sell a minimum amount of a good

Question 15

Quota

Answer 15

A limit on the maximum quantity of a good that can be bought or sold; raise prices