Chapter 7 Word Scramble

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Question	Answer
Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia. What will be the likely effect on the market for sparkling wine in Vinyardia?	Quantity demanded will decrease, quantity supplied will increase, and a surplus will result
A price floor is the ________.	lower limit on the price of a good
Which term refers to a legally established minimum price that firms may charge?	a price floor
A price floor set above the equilibrium price leads to a(n) ________.	excess supply of goods in the market
A price ceiling refers to ________.	the upper limit on the price of a good
The price of a gallon of gasoline in Bonland is $3.20. However, just before the election, the government decides to fix the price of gasoline at $2.80 per gallon. This is an example of a ________.	price ceiling
When a price ceiling is in place keeping the price below the market price, what’s larger: quantity demanded or quantity supplied	Quantity demanded
Price controls distribute resources in many unintended ways. In the following cases below, who will probably spend more time waiting in line to get scarce, price-controlled goods? Choose one from each pair	Retired people
In order to be binding, a price ceiling	must lie below the free market equilibrium price
In New York City, about 1 million apartments are subject to rent control by the local government. Rent control	puts a legal limit on the rent that landlords can charge for an apartment
In a city with rent-controlled apartments, all of the following are true except	landlords have an incentive to rent more apartments than they would without rent control.
A price ceiling does NOT lead to a deadweight loss if ________.	the equilibrium market price lies below the price ceiling
How does a free market eliminate a shortage?	By letting the price rise
How do unregulated markets cure a “labor shortage” when there are no immigrants to boost the labor supply?	Let the price of labor increase
In the town of Freedonia, the government declares that all street parking must be free. In an almost identical town of Meterville, parking costs $5 per hour (or $1.25 per 15 minutes). Where will it be easier to find parking: in Freedonia or Meterville?	Meterville
To affect the market outcome, a price ceiling	must be set below the equilibrium price
With an increase in the demand for a good, if prices are not allowed to increase	there will be no incentive for firms to increase the quantity supplied of the good
A price ceiling is a legally determined maximum price that sellers may charge	True
When the government taxes a good or service, it	affects the market equilibrium for that good or service
The actual division of the burden of a tax between buyers and sellers in a market is called	tax incidence
If a tax is imposed on a good,________.	the equilibrium quantity of the good in the market falls
If the sellers of a good are taxed for each unit sold, ________.	a smaller quantity of the good is sold
Suppose that in Canada the government places a $1,500 tax on the buyers of new snowmobiles. After the purchase of a new snowmobile, a buyer must pay the government $1,500. How would the imposition of the tax on buyers be illustrated in a graph?	The tax will shift the demand curve to the left by $1,500
Suppose an excise tax of $1 is imposed on every case of beer sold and sellers are responsible for paying this tax. How would the imposition of the tax be illustrated in a graph?	The supply curve for cases of beer would shift to the left by $1
The tax incidence on buyers is higher if ________.	the elasticity of the market supply curve is higher than the elasticity of the market demand curve
The tax incidence on sellers is higher if ________.	the buyers are more sensitive to price changes than the sellers
For a given supply curve, the deadweight loss from the imposition of a tax is smaller if demand is more elastic	False
The burden of a tax falls entirely on buyers if ________.	the price elasticity of demand is zero (perfectly inelastic)
The actual division of the burden of a tax is called	tax incidence
The person or firm that pays a tax bears the burden of the tax	False
When the demand for a product is less elastic than the supply	consumers pay the majority of the tax on the product
When the demand for a product is less elastic than the supply, consumers pay the majority of the tax on the product	True
In a progressive tax system, ________.	the marginal tax rate exceeds the average tax rate
In a ________ tax system, the marginal tax rate declines with income	regressive
If, as your taxable income decreases, you pay a smaller percentage of your taxable income in taxes, then the tax is	Progressive
A proportional tax is a tax for which people with lower incomes	pay the same percentage of their incomes in tax as do people with higher incomes
A tax bracket is	the income range within which a particular tax rate applies
If you pay a constant percentage of your taxable income in taxes, the tax is	proportional
The corporate income tax is ultimately paid by all of the following except	the corporation's debtors in the form of lower rates of return on the corporation's bonds
If you pay $2,000 in taxes on an income of $20,000, and a tax of $2,700 on an income of $30,000, then over this range of income the tax is	regressive

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