If the supply curve is vertical the burden of a tax on suppliers is borne:

(Repeat answer on line 25.) An important difference between price ceilings and taxes is that price ceilings __________ and taxes __________.

(Repeat answer on line 26.) Refer to the graph above. There will be a shortage of soldiers if the wage is set equal to:

(Repeat answer on Scantron lines 27 and 28.) If the demand curve is not at all responsive to price the burden of a tax on suppliers is borne:

(Repeat answer on Scantron line 29.) "Andron's Law"
1) states that any tax which raises significant revenue is bound to be inefficient.
2) states that no seller will face an inelastic demand curve.
3) states that the income elasticity of demand declines as you move down a straight line demand curve.

(Repeat answer on Scantron line 30.) Refer to the graph above. Initial market equilibrium is at point H. When government imposes a per unit tax, supply shifts from S0 to S1. The effect of this tax is to:

(Repeat answer on Scantron line 31.) If a consumer is willing to pay as much as $5 for a hot dog that actually costs $1.50, then the amount of consumer surplus resulting from the purchase of the hot dog would be:

(Repeat your answer on Scantron lines 32 and 33.) Assume that the income elasticity of demand for a good is greater than one. Then evaluate each of the following statements and choose the best answer from among the lettered choices below.
1) The good is a luxury good.
2) The good is a necessity.
3) The good is a normal good.
4) The good is an inferior good.

(This might be tricky) Refer to the graph above. Assume the market is initially in equilibrium at point j in the graph. If government imposes a per-unit tax equal to the distance between point k and point j in the graph, and buyers collect and send in the money from the tax, "the market price" will:

(Repeat your answer on Scantron lines 34 and 35.) The government is considering imposing a tax on the market for Squidges and asks you whether the buyers or the sellers are going to pay a larger share of the burden of this new tax. Here is the only data you have: if the price of Squidges rises 10%, the quantity supplied rises 10% and quantity demanded falls 20%. Choose the most complete answer.

(Repeat your answer on Scantron line 36.) A firm produces and sells a particular good. The firm discovers the own price elasticity of demand for its good is -.25. Decide which of the following statements are correct and then choose the best answer from A) through E) below:
1) Revenue will rise as price falls.
2) This situation will not last very long, because the firm can make more profit by raising its price, which it will keep doing again and again until demand becomes elastic. (I sometimes call this "Andron's Law".)
3) Revenue will fall as price falls.
4) Revenue will fall as price rises.
5) Revenue will rise as price rises.

(Repeat your answer on Scantron line 37.) Since both supply curves and demand curves tend to be less elastic in the short run than in the long run:
1) The burden of a tax tends to fall more heavily on the buyers in the short run but shift more onto the sellers in the long run.
2) The burden of a tax tends to fall more heavily on the sellers in the short run but shift more onto the buyers in the long run.
3) The tax is definitely more efficient in the long run than the short run.
4) The tax is definitely more efficient in the short run than the long run.
5) A given tax will definitely raise more taxes revenue in the short run than the long run.
6) A given tax will definitely raise more tax revenue in the long run than the short run.

Choose the best answer:

(Repeat your answer on Scantron line 38.) As you slide down a straight line demand curve:

(Repeat your answer on Scantron line 39.) Suppose the data shows that if the price of a product rises 5% then quantity supplied rises 10% and quantity demanded falls 30%; and if income rises 5% quantity demanded rises 15%. Evaluate the following, then choose your answer:
1) The own price elasticity of supply is 1/2.
2) The own price elasticity of supply is 2.
3) The own price elasticity of demand is 6 (technically -6).
4) The own price elasticity of demand is 1/6 (technically -1/6).
5) An economist would say the good definitely is a luxury good.
Choose the best answer.

Consider each of the following statements about the "minimum wage laws" as discussed in lecture.
1) The minimum wage law results in higher income for those teenagers who are able to find work, but lower incomes for many teenagers who become unemployed because of the law.
2) The minimum wage law makes it easier for smart, reliable, well connected teenagers to steal jobs from poorly educated teenagers and minority teenagers.
3) The minimum wage law is an example of a price floor.

Then choose which of the following is most accurate:

Assuming elasticity of supply is the same for all goods, sellers would bear the smallest burden of a 10% tax on which item?

(Repeat answer on Scantron lines 40 and 41.) Consider each of the following statements about taxes.
1) If the buyer sends the tax proceeds to the government, the market price of the good (dollar per unit passing from buyer to seller) will be higher than if the seller sends tax to the government.
2) If you want a tax to be "efficient" (as discussed in lecture), pick a market in which both supply and demand are as inelastic as possible.
3) In lecture we have said that if you wish the sellers to bear the burden of a tax, it is important to be sure that the seller, not the buyer, collects the tax revenue and sends it to the government.    

Then choose which of the following is most accurate:

(Repeat answer on Scantron line 42.) Consider each of the following statements about price ceilings and price floors.
1) Price ceilings create shortages and price floors create surpluses, and both tend to produce "black markets".
2) Price ceilings reduce the quantity of a good which is purchased legally in a market, and price floors do the same thing.
3) The minimum wage law is an example of a price floor, and rent controls is an example of a price ceiling.

Then choose which of the following is most accurate:

(Repeat answer on Scantron lines 43 and 44.) Refer to the graph above. When quantity supplied equals quantity demanded, producer surplus is:

(Repeat answer on Scantron lines 45 and 46.) The formula for calculating price elasticity of demand is:

(Repeat answer on Scantron line 47.) If the price elasticity of demand equals 1.5 and the price elasticity of supply equals .5 then:
1) The sellers bear 25% of the burden.
2) The buyers bear 25% of the burden.
3) The sellers bear 75% of the burden.
4) The buyers bear 75% of the burden.
5) The buyers bear 1/3 of the burdent.

If you want taxes to be as efficient as possible:

(Repeat answer on Scantron lines 48 and 49.) Evaluate these statements and choose the best answer.
1) As a general rule, the more substitutes a good has, the less elastic is its demand curve.
2) As a general rule, the more important a good is in the buyers' budgets, the more elastic is its demand curve.

(Repeat answer on Scantron line 50.) Consider the following statements and then choose the best answer.
1) If the price elasticity of demand equals 2, a reduction in price will increase total revenue from sales.
2) If the price elasticity of demand equals 1/2, a reduction in price will reduce total revenue from sales.
3) If the price elasticity of demand equals 1, a reduction in price will leave total revenue from sales unchanged.
4) Total revenue from sales depends on the elasticity of supply, not the elasticity of demand.