ECON 402 Exam 2 || Questions and 100% Accurate Answers.
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Course
ECON 402
Institution
ECON 402
A tax on sellers correct answers - Shifts supply to the left
- Price rises and quantity falls
- The rise in price is less than the amount of tax
- Increases the price that buyers pay and decreases the price that sellers receive
statutory burden correct answers The statutory burden of a tax de...
ECON 402 Exam 2 || Questions and 100% Accurate
Answers.
A tax on sellers correct answers - Shifts supply to the left
- Price rises and quantity falls
- The rise in price is less than the amount of tax
- Increases the price that buyers pay and decreases the price that sellers receive
statutory burden correct answers The statutory burden of a tax describes the burden of being
assigned by the government the responsibility of sending a tax payment
economic burden correct answers The economic burden describes the burden created by the
change in after-tax prices faced by buyers and sellers as a result of the tax
tax incidence correct answers Tax incidence describes the division of the economic burden of a
tax between buyers and sellers
a tax on buyers correct answers - causes a decrease in demand
- Shifts demand to the left
- Price falls and quantity falls
- The fall in price is less than the amount of tax
- Increases the price buyers pay and decreases the price that sellers receive
three steps for evaluating taxes correct answers Is the supply or demand curve shifting?
Is that shift an increase in taxes, shifting the curve to the left? Or is it a decrease in taxes, shifting
the curve to the right?
How will prices and quantities change in the new equilibrium?
subsidy correct answers a payment made by the government to those who make a specific choice
Example: a Pell Grant is a subsidy that the government gives lower-income people who choose
to go to college. The government uses subsidies to try to encourage the consumption of certain
goods and services, such as education.
price ceiling correct answers when the government sets a maximum price
binding price ceiling correct answers when a price ceiling prevents the market from reaching the
equilibrium price because the highest price that sellers can charge is set below the equilibrium
price
price floors correct answers when the government sets a minimum price
What do price ceilings cause? correct answers lower prices but cause shortages
what do price floors cause? correct answers raise prices but lowers the quantity sold (surpluses)
,quantity regulation correct answers a maximum or minimum quantity that can be sold
mandate correct answers requires you to buy or sell a minimum amount of a good
quotas correct answers set a limit on the maximum quantity of a good that can be sold.
Raise prices
_____increase the quantities demanded and supplied, and they tend to lower the price buyers pay
and _____ the price sellers receive. correct answers subsidies, increase
_____sets a minimum or maximum quantity that can be sold. correct answers quantity regulation
a statutory burden is: correct answers the burden of being assigned by the government to send a
tax payment.
Governments typically set minimum wages in order to raise the wages received by the lowest
wage workers. The minimum wage is a _____. correct answers price floor
_____often limit the quantity of pollutants that firms can release. correct answers environmental
regulations
When the government imposes a tax on you as a seller, your _____of producing each unit _____
by the amount of the tax. correct answers marginal cost; goes up
_____is a price floor that prevents the market from reaching the equilibrium price. correct
answers a binding price floor
Customs regulations limit _____and _____ souvenirs you can bring back from abroad. correct
answers what kind; how many
When sellers and buyers bear the economic burden of a tax, the tax _____the price buyers pay
and _____ the price sellers receive. correct answers increases; decreases
A binding price ceiling can lead to all of the following EXCEPT: correct answers more quantity
supplied
If a new tax on sellers of $500 per automobile is introduced, equilibrium occurs at the point
where the _____curve meets the _____ curve. correct answers new supply; demand
If a new tax on sellers of $0.20 per 20-ounce bottle of soda is introduced, the supply curve
_____until it lies _____ higher. correct answers shifts left; $0.20
A binding price floor sets a price that is the _____price that sellers can charge and is _____ the
equilibrium price. correct answers lowest; above
, Suppose that the demand for candy is less elastic than the supply of candy. If a tax is imposed on
sellers of candy, which of the following is true? correct answers Sellers will bear a smaller share
of the tax burden because supply is more elastic than demand.
Which of the following is a government subsidy? correct answers Zach lives in the Bronx and
goes to Baruch College in Manhattan. New York City gives him a free MetroCard every month
for him to get from his home to his classes
The question "Which is the better outcome, and what policy should the government adopt?"
reflects: correct answers normative analysis
Government failure occurs when: correct answers government policies lead to worse outcomes
_____ analysis requires a value judgment, while _____ analysis is purely objective, and _____
analysis should always be performed first. correct answers normative; positive; positive
Efficient allocation occurs when: correct answers goods are distributed to create the largest
possible economic surplus.
When a market failure due to underproduction exists, economic surplus can be measured as the
area below the marginal benefit curve and above the: correct answers marginal cost curve, out to
the actual quantity.
_____ is about assessing whether a policy will yield a fair distribution of economic benefits.
correct answers equity
Which concept is most relevant to the question, "How many goods should be bought and sold?"
correct answers Efficient quantity
Which of these is TRUE of both deadweight loss resulting from overproduction and deadweight
loss resulting from underproduction? correct answers When graphed, the deadweight loss seems
to point to the efficient quantity.
The problem of _____ arises when markets don't meet the perfectly competitive ideal of many
buyers and sellers selling identical products. correct answers market power
The idea that the more economic surplus that's generated, the better the outcome is known as:
correct answers economic efficiency
Which best explains how markets determine who should make products? Products should be
made by the producers who: correct answers can make them at the lowest marginal cost
Since a change in price affects buyers and sellers in equal measure, the analysis of price is NOT
necessary to determine: correct answers deadweight loss
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