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If the equilibrium price of bread is R20 and the government imposes a R15.00 price ceiling on the price of bread,


A) more bread will be produced to meet the increased demand.
B) there will be a shortage of bread.
C) the demand for bread will decrease because suppliers will reduce their supply.
D) a surplus of bread will emerge.

E) B) and D)
F) A) and B)

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A tax creates a tax wedge between a buyer and a seller. This causes the price paid by the buyer to rise, the price received by the seller to fall, and the quantity sold to fall.

A) True
B) False

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Government-created price floors are typically imposed to


A) help consumers.
B) help producers.
C) raise tax revenue.
D) shift the supply curve to the right.

E) All of the above
F) B) and C)

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Which of the following statements about the burden of a tax is correct?


A) The tax burden generated from a tax placed on a good that consumers perceive to be a necessity will fall most heavily on the sellers of the good.
B) The burden of a tax falls on the side of the market (buyers or sellers) from which it is collected.
C) The distribution of the burden of a tax is determined by the relative elasticities of supply and demand and is not determined by legislation.
D) The tax burden falls most heavily on the side of the market (buyers or sellers) that is most willing to leave the market when price movements are unfavourable to them.

E) None of the above
F) All of the above

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Taxes levied directly on consumers


A) always hurt consumers rather than producers.
B) always hurt producers rather than consumers.
C) generate more revenue than taxes levied on producers.
D) have the same effect as taxes directly levied on producers.

E) None of the above
F) B) and C)

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A subsidy is the opposite of a tax. The government pays buyers a R0.50 subsidy for each bus ticket purchased. a) What happens to the effective price paid by consumers buying bus tickets, the effective price received by bus companies and the quantity traded? Create a graph to justify your answer. b) Who gains and who loses from this policy?

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blured image a) The effect of a R0.50 per bus ticket...

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Rent controls typically end up


A) increasing rents received by landlords.
B) raising property values.
C) encouraging landlords to overspend on maintenance.
D) discouraging new housing construction.

E) A) and D)
F) B) and C)

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 Price Per  Pair  Quantity  Demanded  Quantity  Supplied  R20 183 R40 144 R60 105 R80 66 R100 28\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Price Per } \\\text { Pair }\end{array} & \begin{array} { c } \text { Quantity } \\\text { Demanded }\end{array} & \begin{array} { c } \text { Quantity } \\\text { Supplied }\end{array} \\\hline \text { R20 } & 18 & 3 \\\hline \text { R40 } & 14 & 4 \\\hline \text { R60 } & 10 & 5 \\\hline \text { R80 } & 6 & 6 \\\hline \text { R100 } & 2 & 8 \\\hline\end{array} -Refer to the table above. In the supply and demand schedules for socks shown here, if a price floor of R60 is imposed by the government, there will be a


A) surplus of socks equal to 8 pairs.
B) shortage of socks equal to 5 pairs.
C) surplus of socks equal to 6 pairs.
D) market clearing quantity of 6 pairs of socks exchanged.

E) A) and D)
F) All of the above

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 Price Per  Pair  Quantity  Demanded  Quantity  Supplied  R20 183 R40 144 R60 105 R80 66 R100 28\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Price Per } \\\text { Pair }\end{array} & \begin{array} { c } \text { Quantity } \\\text { Demanded }\end{array} & \begin{array} { c } \text { Quantity } \\\text { Supplied }\end{array} \\\hline \text { R20 } & 18 & 3 \\\hline \text { R40 } & 14 & 4 \\\hline \text { R60 } & 10 & 5 \\\hline \text { R80 } & 6 & 6 \\\hline \text { R100 } & 2 & 8 \\\hline\end{array} -Refer to the table above. In the supply and demand schedules for socks shown here, if a price ceiling of R60 is imposed by the government, there will be a


A) shortage of socks equal to 6 pairs.
B) shortage of socks equal to 5 pairs.
C) a surplus of socks equal to 5 pairs.
D) a surplus of socks equal to 8 pairs.

E) All of the above
F) A) and D)

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A price floor set above the equilibrium price is a binding constraint.

A) True
B) False

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A tax placed on a good that is a necessity for consumers will likely generate a tax burden that


A) falls more heavily on sellers.
B) falls entirely on sellers.
C) falls more heavily on buyers.
D) is evenly distributed between buyers and sellers.

E) A) and C)
F) A) and B)

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 Price Per  Pair  Quantity  Demanded  Quantity  Supplied  R20 183 R40 144 R60 105 R80 66 R100 28\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Price Per } \\\text { Pair }\end{array} & \begin{array} { c } \text { Quantity } \\\text { Demanded }\end{array} & \begin{array} { c } \text { Quantity } \\\text { Supplied }\end{array} \\\hline \text { R20 } & 18 & 3 \\\hline \text { R40 } & 14 & 4 \\\hline \text { R60 } & 10 & 5 \\\hline \text { R80 } & 6 & 6 \\\hline \text { R100 } & 2 & 8 \\\hline\end{array} - Refer to the table above. In the supply and demand schedules for socks shown here, if a price floor of R100 is imposed by the government, there will be a


A) surplus of socks equal to 8 pairs.
B) shortage of socks equal to 16 pairs.
C) surplus of socks equal to 6 pairs.
D) market clearing quantity of 6 pairs of socks exchanged.

E) C) and D)
F) A) and B)

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Which of the following statements is true if the government places a price ceiling on petrol at R15.00 per litre and the equilibrium price is R10.00 per litre?


A) A significant increase in the demand for petrol could cause the price ceiling to become a binding constraint.
B) A significant increase in the supply of petrol could cause the price ceiling to become a binding constraint.
C) There will be a shortage of petrol.
D) There will be a surplus of petrol.

E) C) and D)
F) A) and D)

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Using the graph shown (below), analyze the effect a $700 price floor would have on this market.Would this be a binding price floor ? Using the graph shown (below), analyze the effect a $700 price floor would have on this market.Would this be a binding price floor ?

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We know that equilibrium means where dem...

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The tax per unit on a good is the


A) difference between the list price and the actual price paid by the buyer.
B) licensing fees and other business taxes paid by sellers, averaged over the total quantity of goods sold.
C) difference between the total price paid by the buyer and the price received by the seller.
D) difference between wholesale and retail prices.

E) All of the above
F) C) and D)

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What is the difference between a price ceiling and a price floor?

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A price ceiling or a price cap is a lega...

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A 10 per cent increase in the minimum wage is more likely to raise unemployment among teenage workers than among mid-career professional workers.

A) True
B) False

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Which of the following takes place when a tax is placed on a good?


A) A decrease in the price buyers pay, an increase in the price sellers receive, and a decrease in the quantity sold.
B) An increase in the price buyers pay, a decrease in the price sellers receive, and an increase in the quantity sold.
C) A decrease in the price buyers pay, an increase in the price sellers receive, and an increase in the quantity sold.
D) An increase in the price buyers pay, a decrease in the price sellers receive, and a decrease in the quantity sold.

E) C) and D)
F) A) and C)

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