Quiz 4

Question 1

A legal minimum price at which a good can be sold is a price:

Answer 1

floor

Question 2

The initial impact of a tax on the sellers of a product is on:

Answer 2

the supply of the product

Question 3

Rent controls lead to:

Answer 3

a small shortage of housing in the short run and a large shortage of housing in the long run

Question 4

A binding price floor on wheat will:

Answer 4

result in a surplus of wheat

Question 5

Australia exports cattle to Indonesia. If Australia puts an export subsidy on cattle and the Australian supply of cattle is elastic while the demand for cattle in Indonesia is inelastic then:

Answer 5

Indonesian buyers of cattle will enjoy most of the subsidy’s benefit

Question 6

Amount of tax buyers will pay

Answer 6

Measured of S2- S1 from equilibrium quantities

Question 7

Price ceilings are binding when:

Answer 7

when below equilibrium price

Question 8

A hot summer’s day can lead to dramatic increases in the demand for electricity. Suppose the government decides a binding price ceiling is necessary so pensioners can continue to afford their power bills. The effect of this policy will be such that:

Answer 8

electricity producers will supply less than demanded, leading to a shortage

Question 9

A tax on the sellers of popcorn will:

Answer 9

increase the equilibrium price of popcorn and reduce the equilibrium quantity

Question 10

A tax on the sellers of coffee:

Answer 10

leads sellers to supply a smaller quantity at every price

Question 11

When a supply curve shifts to Q3 what will the new market quantity be

Answer 11

Less than Q3