How does a government-regulated price floor set above the equilibrium price affect the quantity of the good demanded and supplied in the market?
What will be an ideal response?
If the government sets a price floor on a good, the price of the good becomes higher than the equilibrium price. As a result, the quantity of the good demanded falls while quantity of the good supplied increases. This causes an excess supply of the good in the market.
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According to supply-side economics, a cut in taxes will affect total tax revenue, because ________
A) the level of productivity should fall precipitously with a tax cut B) a tax cut will be followed by an even larger decrease in government spending C) of the resulting increase in saving D) of the positive impact on the level of income
The price of a new textbook increases from $105 to $130 while the price of used copies of the textbook increases from $45 to $55. Other things equal, we would expect to observe
A. the quantity demanded of the used textbook to increase while the quantity demanded of the new textbook to fall. B. the quantity demanded of the used textbook to decrease and the quantity demanded of the new textbook to increase. C. the demand for the new textbook to increase while the demand for the used textbook to decrease. D. the quantity demanded of both to fall.
Researchers have found a hybrid of corn that is cheaper to grow. This technological breakthrough
A) increases the demand for corn. B) decreases the supply of corn. C) increases the supply of corn. D) Both answers A and C are correct. E) Both answers A and B are correct.
Which of the following statements is correct regarding the imposition of a tax on gasoline? a. The incidence of the tax always falls on the buyer
b. The incidence of the tax depends upon the price elasticities of demand and supply. c. The incidence of the tax always falls on the sellers. d. The oil company will ultimately pay.