ECON 1 Lecture Notes - Lecture 6: Price Ceiling, Price Floor, Tax Incidence

1.) An excise tax on a good typically reduces the net price received by the seller. (TRUE/FALSE)

2.) The burden of an excise tax on gasoline falls entirely on consumers of gasoline. (TRUE/FALSE)

3.) Rent controls are one of the few examples of a price floor in market economies. (TRUE/FALSE)

4.) Imposing a price ceiling below the equilibrium price of a good often leads to_____.

A) A greater supply of the good

B) A black market for the good

C) A rightward shift of the supply curve for the good.

D) A leftward shift of the demand curve for the good.

E) All of these

5.) Which of the following is true of price floors and ceilings?

A) Lead to the same price and quantity as in competitive market.

B) Lead to technical efficiency

C) Cause the demand curve to shift left

D) Usually result from government intervention

E) Cause the supply curve to shift right.

6.) Price ceilings often lead to black markets. (TRUE/FALSE)

7.) When minimum wage is above the equilibrium wage what occurs?

A) There will be a shortage of labor

B) There will be no effect on the number of people employed

C) There will be an increase in unemployment rate

D) There will be a decrease in unemployment rate

8.) An excise tax on a good typically reduces the price paid by the consumer (TRUE/FALSE)

9.) If a price ceiling is below the equilibrium price is imposed on a market, it will cause the quantity demanded to rise and the quantity supplied to fall. (TRUE/FALSE)

10.) Price floors often lead to black markets. (TRUE/FALSE)

11.) If an excise tax is imposed on restaurant meals what occurs?

A) Fewer meals will be produced and sold

B) More meals will be produced and sold

C) Market price of the meals will fall

D) Government tax revenue will fall.

1. In the formula for Bayes theorem if the w-probability is greater than the zero than the a-probably is less than the b-probability

true or false

2. posted offer markets with at least two sellers will generate prices that remain a little above prices from double auction markets

3. running the price clock in a dutch auction once will produce higher observed prices compared to running the clock twice

4. if losers pay winners in a sealed bid auction then they will eventually be willing to bid up to 50 percent more than the winning prize

5. with only one seller in a posted offer market prices willl tend to move upward toward the monopoly price

6. adjusting the concentration of sweet versus sour enabled rats to have a large negative income effect for sour water

7. a sales tax on large luxury boats will impact the buyers more than the sellers of these boats causing the buyers to pay more than half the cost of the sales tax

8. if each seller knew all of the sellers unit costs and the buyers knew all of the buyers unit values a buyer or seller would be able to calculate the competitive equilibrium price before an experiment began

9. suppose your income taxes rise only on incomes over 250,000 annualkly then your after tax income will be unafftected if your annual income is 100,000

those first nine are true and false

these are short answer

1. explain the logical steps to explain how negative price effects can reult from the negative income effects

2.what happens to observed prices inposted offer and double auction markets as the number of sellers drops to 2. what happens when these two markets sellers drops to 1

3. in a looser pay winner auction. why do bidders change their minds toward wanting to bid well above the value of the price even though they refused to do so at the beginning. how does this experiment explain why george bush and citizens changed their minds about preemptive attack on iraq. how do these experiments explain why england wanted to tax trade in the american colonies which led to rebellion and the formation of the us.

if you could help with any of these thatd be great

Look at the two tables below, which show, respectively, the willingness to pay and willingness to accept of buyers and sellers of bags of oranges. For the following questions, assume that the equilibrium price and quantity will depend on the indicated changes in supply and demand. Assume that the only market participants are those listed by name in the two tables.

a. Given the equilibrium price of $10, what is the equilibrium quantity given the data above?

Equilibrium quantity = ...... bag(s)

b. What if, instead of bags of oranges, the data in the two tables dealt with a public good like fireworks displays?

If all the buyers' free ride, what will be the quantity supplied by private sellers?

c. Assume that we are back to talking about bags of oranges (a private good), but that the government has decided that tossed orange peels impose a negative externality on the public that must be rectified by imposing a $3-per-bag tax on sellers.

What is the new equilibrium price? $

What is the new equilibrium quantity?
....bag(s)

If the new equilibrium quantity is the optimal quantity, by how many bags were oranges being overproduced before?

.....bag(s)