Question

#30. True or False - The demand for soap is more elastic than the demand for Dove soap.

#31. Price controls are usually enacted

a.	as a means of raising revenue for public purposes.
b.	when policymakers believe that the market price of a good or service is unfair to buyers or sellers.
c.	when policymakers detect inefficiencies in a market.
d.	All of the above are correct.

#32. A price ceiling will be binding only if it is set

a.	equal to the equilibrium price.
b.	above the equilibrium price.
c.	below the equilibrium price.
d.	either above or below the equilibrium price.

#33. A price floor is

a.	a legal minimum on the price at which a good can be sold.
b.	often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor.
c.	a source of inefficiency in a market.
d.	All of the above are correct.

Figure 1-1

Panel (a)	Panel (b)

#34. Refer to Figure 1-1. In panel (b), there will be

a.	a shortage of wheat.
b.	equilibrium in the market.
c.	a surplus of wheat.
d.	lines of people waiting to buy wheat.

Figure 1-2

#35. Refer to Figure 1-2. When the price ceiling applies in this market, and the supply curve for gasoline shifts from S₁ to S₂,

a.	the market price will increase to P3.
b.	a surplus will occur at the new market price of P2.
c.	the market price will stay at P1.
d.	a shortage will occur at the new market price of P2.

#36. Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

a.	The effective price received by sellers is $0.40 per bottle less than it was before the tax.
b.	Sixty percent of the burden of the tax falls on sellers.
c.	This tax causes the demand curve for perfume to shift downward by $1.00 at each quantity of perfume.
d.	All of the above are correct.

#37. When a tax is placed on the buyers of lemonade, the

a.	sellers bear the entire burden of the tax.
b.	buyers bear the entire burden of the tax.
c.	burden of the tax will be always be equally divided between the buyers and the sellers.
d.	burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

Figure 1-3

The vertical distance between points A and B represents the tax in the market.

#38. Refer to Figure 1-3. The price that buyers pay after the tax is imposed is

a.	$8.
b.	$10.
c.	$16.
d.	$24.

#39. Refer to Figure 1-3. The effective price that sellers receive after the tax is imposed is

a.	$6.
b.	$10.
c.	$16.
d.	$24.

#40. Refer to Figure 1-3. The amount of the tax per unit is

a.	$6.
b.	$8.
c.	$14.
d.	$18.

#41. True/False - The tax burden falls more heavily on the side of the market that is more inelastic.

#42. True/False - Even though federal law mandates that workers and firms each pay half of the total FICA tax, the tax burden may not fall equally on workers and firms.