Scribd
Upload
5 views3 pages

E201 Homework 4

This document is a homework assignment for an Introduction to Microeconomics course at Indiana University, focusing on concepts such as price ceilings, price floors, and the effects of taxes on markets. It includes multiple-choice questions that test students' understanding of these economic principles. The assignment is due on October 8th, 2018.

Uploaded by

jeremyhock9
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
5 views3 pages

E201 Homework 4

This document is a homework assignment for an Introduction to Microeconomics course at Indiana University, focusing on concepts such as price ceilings, price floors, and the effects of taxes on markets. It includes multiple-choice questions that test students' understanding of these economic principles. The assignment is due on October 8th, 2018.

Uploaded by

jeremyhock9
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

E201 Homework 4

Department of Economics, Indiana University


Introduction to Microeconomics, Fall 2018
Instructor: MJ Shin
Due date: Oct. 8th, 11:59 pm
1. A price ceiling is
(a) often imposed on markets in which “cutthroat competition” would prevail
without a
price ceiling.
(b) a legal maximum on the price at which a good can be sold.
(c) often imposed when sellers of a good are successful in their attempts to
convince the
government that the market outcome is unfair without a price ceiling.
(d) All of the above are correct.
2. If the government removes a binding price ceiling from a market, then the price
received by
sellers will
(a) decrease, and the quantity sold in the market will decrease.
(b) decrease, and the quantity sold in the market will increase.
(c) increase, and the quantity sold in the market will decrease.
(d) increase, and the quantity sold in the market will increase.
3. Suppose the government has imposed a price ceiling on laptop computers.
Which of the
following events could transform the price ceiling from one that is not binding into
one that
is binding?
(a) Improvements in production technology reduce the costs of producing laptop
computers.
(b) The number of firms selling laptop computers decreases.
(c) Consumers’ income decreases, and laptop computers are a normal good.
(d) The number of consumers buying laptop computers decreases.
4.
Refer the figure
For a price ceiling to be binding in this market, it would have to be set at
(a) any price below $7.
(b) any price above $3.
(c) any price below $9.
(d) any price above $7.
1
5.
Refer the figure
Suppose a price floor of $8 is imposed on this market. As a result,
(a) buyers’ total expenditure on the good decreases by $20.
(b) the supply curve shifts to the left; quantity sold is now 30 units and the price is
$8.
(c) the quantity of the good demanded decreases by 10 units.
(d) the price of the good continues to serve as the rationing mechanism.
6.
Refer the table
This table refers to five possible buyers’ willingness to pay for a case of
Vanilla Coke.
Table 1: Consumers’ willingness to pay
Buyer
Willingness to Pay
David
$8.50
Laura
$7.00
Megan
$5.50
Mallory
$4.00
Audrey
$3.50
If the price of Vanilla Coke is $6.90, who will purchase the good?
(a) all five individuals
(b) Megan, Mallory and Audrey
(c) David, Laura and Megan
(d) David and Laura
7. A $5 tax levied on the buyers of pants will cause the
(a) supply curve for pants to shift down by $5.
2
(b) supply curve for pants to shift up by $5.
(c) demand curve for pants to shift down by $5.
(d) demand curve for pants to shift up by $5.
8. Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of
airline tickets
are required to pay the tax to the government. If the tax is reduced from $50 per
ticket to
$20 per ticket, then the
(a) demand curve will shift upward by $30, and the price paid by buyers will
decrease by
less than $30.
(b) demand curve will shift upward by $30, and the price paid by buyers will
decrease by
$30.
(c) supply curve will shift downward by $30, and the effective price received by
sellers will
increase by less than $30.
(d) supply curve will shift downward by $30, and the effective price received by
sellers will
increase by $30.
Figure 1: The vertical distance between points A and B represents the tax in the
market.
9.
Refer to Figure
. The price that buyers pay after the tax is imposed is
(a) $8.
(b) $10.
(c) $16.
3
(d) $24.
10.
Refer to Figure
The effective price that sellers receive after the tax is imposed is
(a) $6.
(b) $10.
(c) $16.
(d) $24.
11.
Refer to Figure
The amount of the tax per unit is
(a) $6.
(b) $8.
(c) $14.
(d) $18.
12.
Refer to Figure
The per-unit burden of the tax on buyers is
(a) $6.
(b) $8.
(c) $14.
(d) $24.
13.
Refer to Figure
The per-unit burden of the tax on sellers is
(a) $6.
(b) $8.
(c) $10.
(d) $14.
4

You might also like