EC Exam 2
price ceiling - Answer-a legal maximum on the price that may be charged for a commodity.
price floor - Answer-a legal minimum on the price that may be charged for a commodity.
tax incidence - Answer-the division of the burden of tax between the buyer and the seller.
Tax shifts up or down. - Answer-Everything else shifts left or right.
Why is tax a burden on the market? - Answer-It creates a dead weight loss and takes away total surplus.
tax revenue - Answer-the amount of tax times the quantity.
Whoever chooses to be less responsive in a tax will shoulder more of the tax burden. - Answer-Yes.
Group that is COMPLETELY unresponsive picks up all of the tax and all of the dead weight loss. - Answer-
Yes. So there is no DWL on the graph.
budget constraint - Answer-a line that marks the boundary between those combinations of goods that a
household can afford to buy and those that it cannot afford.
A pivot of the budget constraint is - Answer-caused by change in price.
price ceiling - Answer-a legal maximum on the price that may be charged for a commodity.
price floor - Answer-a legal minimum on the price that may be charged for a commodity.
tax incidence - Answer-the division of the burden of tax between the buyer and the seller.
Tax shifts up or down. - Answer-Everything else shifts left or right.
Why is tax a burden on the market? - Answer-It creates a dead weight loss and takes away total surplus.
tax revenue - Answer-the amount of tax times the quantity.
Whoever chooses to be less responsive in a tax will shoulder more of the tax burden. - Answer-Yes.
Group that is COMPLETELY unresponsive picks up all of the tax and all of the dead weight loss. - Answer-
Yes. So there is no DWL on the graph.
budget constraint - Answer-a line that marks the boundary between those combinations of goods that a
household can afford to buy and those that it cannot afford.
A pivot of the budget constraint is - Answer-caused by change in price.
