Exam #2- Chapter 6

Question 1

Price Ceiling

Answer 1

• A legal max on the price of a good or service (causes shortages).
• Below the eq’m

Question 2

Price Floor

Answer 2

• A legal min on the price of a good or service (causes a surplus).
• Above the eq’m

Question 3

What happens when supply is more elastic than demand?

Answer 3

Buyers bear most of the burden of the tax

Question 4

What happens when demand is more elastic than supply?

Answer 4

Sellers bear most of the burden of the tax.