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6 GOVERNMENT ACTIONS IN MARKETS
© 2012 Pearson Addison-Wesley Q1: Which of the following outcomes is typical of a price ceiling that is set below the market equilibrium price? A Less of the good is produced with the price ceiling than would be produced without it. B The price ceiling has no effect on the market equilibrium. C Consumers can buy more than the market equilibrium quantity because the price ceiling is below the market price. D More of the good is produced with the price ceiling than would be produced without it.
© 2012 Pearson Addison-Wesley Q2: With rent controls, what mechanism might arise to bring about the market equilibrium? A A fall in search costs B The creation of a black market C Increased advertising by landlords D More favorable leases offered to tenants
© 2012 Pearson Addison-Wesley Q3: If a minimum wage is set above the market equilibrium wage rate, employment ________. A will increase B will not change C will decrease D might increase, decrease, or not change, depending on how the minimum wage influences the supply of labor
© 2012 Pearson Addison-Wesley Q4: Suppose that the minimum wage in 1950s was 75 cents an hour until 1956 when it was raised to $1 an hour. If the minimum wage in the early 1950s was below the equilibrium wage rate and late 1950s wage was above the equilibrium wage rate. In the early 1950s, ______. A the labor market was more efficient B unemployment was greater C the deadweight loss was greater D the potential loss from job search was greater
© 2012 Pearson Addison-Wesley Q5: If a tax is imposed on buyers in a market in which the supply of the good is perfectly inelastic, then _________. A buyers pay the entire tax B sellers pay the entire tax C both buyers and sellers pay a portion of the tax D neither the buyers nor the sellers pay the tax
© 2012 Pearson Addison-Wesley Q6: The tax on insulin in the Philippines is about 20 percent. If you are rich and live in the Philippines, the tax is not a problem, but if you are poor, insulin becomes something that you cannot afford. Why do diabetes who take insulin care so much about the tax? A Because the demand for insulin is almost perfectly inelastic, buyers pay virtually the entire tax B Because sellers increase their profit when there is a tax C Because more insulin can be provided to those in need D Because the tax incidence is equal between the buyers and sellers
© 2012 Pearson Addison-Wesley Q7: If a production quota is set below the market equilibrium quantity, the marginal benefit from the quantity produced is ________ the marginal cost of producing it and production is ________. A greater than; inefficient B greater than; efficient C less than; inefficient D equal to; efficient
© 2012 Pearson Addison-Wesley Q8: Rather than prohibit an illegal good or service, the government might tax it. By imposing a tax on such a good or service the equilibrium market price _______ and the equilibrium quantity bought and sold ______. A rises; increases B rises; decreases C falls; increases D falls; decreases
When you have completed your study of this chapter, you will be able to C H A P T E R C H E C K L I S T Describe the effects of sales taxes and excise.
© 2010 Pearson Addison-Wesley. Markets and Prices A market is any arrangement that enables buyers and sellers to get information and do business with.
© 2010 Pearson Addison-Wesley CHAPTER 1. © 2010 Pearson Addison-Wesley.
C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to Explain how a rent ceiling creates a housing.
Supply, Demand and Government Policies Chapter 6 Copyright © 2001 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any.
Price Ceilings and Price Floors!
6 MARKETS IN ACTION CHAPTER.
Objectives © Pearson Education, 2005 Markets in Action Chapter 6.
Ch. 6: Markets in Action. Price ceiling and inefficiencies. Minimum wages and inefficiency. Sales tax Volatility of farm prices and revenues How production.
GOVERNMENT ACTIONS IN MARKETS
© 2013 Pearson. Can the President repeal the laws of supply and demand?
Copyright © 2004 South-Western 6 Supply, Demand, and Government Policies.
1 CHAPTER To view a full-screen figure during a class, click the red “expand” button. To return to the previous slide, click the red “shrink” button. To.
EYE ONS How powerful is the presidents pen? Can the President sign an order that caps executive pay? Or sign an order that ensures every worker gets a.
6 CHAPTER Markets in Action.
Notes appear on slides 5, 7, 8, 9, 25, and 26.
Chapter 5 Markets in Action.
Ch. 6: Markets in Action. Price ceiling and inefficiencies.
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