Econ Final Exam.

Econ Final Exam. when a binding price ceiling is imposed on a market to benefit buyers - CORRECT ANSWER some buyers will not be able to buy any amount of the good a price ceiling is - CORRECT ANSWER the legal max on the price at which a good can be sold if a non binding price ceiling is imposed on a market the the - CORRECT ANSWER the quantity sold will be the same in a free competitive market, what is the rationing mechanism - CORRECT ANSWER price when a binding price ceiling is imposed on a market - CORRECT ANSWER price is no longer a server as a rationing device suppose the equilibrium price of a physical by a doctor is $200 and the gov imposes a price ceiling of $150 per physical. as a result of the price ceiling - CORRECT ANSWER -quantity of physical demands increases -there is a shortage of physicals -the quantity of physical supplied decreases if a price FLOOR is not binging, then - CORRECT ANSWER equilibrium price is above the price floor the legal minimum on the price at which a good can be sold is the - CORRECT ANSWER price floor which is not correct a. taxes levied on sellers/buyers are not equivalent b.a tax places a wedge between the price that buyers pay and the price sellers receive the new equilibrium tax buyers and sellers share the burden of tax wedge between the buyers price and the sellers price are the same regardless of wether the tax is levied on the buyer or the seller - CORRECT ANSWER A a tax on the sellers in the coffee mug market - CORRECT ANSWER decreases the size of the coffee mug market suppose fountain drinks are required to send .50 to the government every time they purchase a fountain drink. Then suppose the tax causes the an effective price received by sellers of the fountain drinks to fall by .20 which is true - CORRECT ANSWER -tax causes the demand curve for fountain drinks to shift downward by .50 at each quantity -the price paid by buyers is .30 per drink more than before tax - 40% of the burden fall on the sellers when a tax is placed on the buyers of a tennis racquet, the size of the tennis racquet market - CORRECT ANSWER decreases but the price paid by buyer of the tennis racquets increases what causes the price paid by buyers to be different from the price received by sellers - CORRECT ANSWER a tax on a good a tax burden falls more heavily on the side of the market that is - CORRECT ANSWER more inelastic 3 friends are bidding in an auction for a movie, each has in mind a max amount they would bid. this max is called - CORRECT ANSWER willingness to pay willingness to pay - CORRECT ANSWER measures the value that a buyer places on a good cost is a measure of - CORRECT ANSWER sellers willingness to pay a seller is willing to sell a product on if the seller receives a price that is at least as great as the - CORRECT ANSWER sellers cost of production