Chap015 - Chapter 15 - Market Interventions Chapter 15:...

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Unformatted text preview: Chapter 15 - Market Interventions Chapter 15: Market Interventions Main Concepts and Learning Objectives This chapter focuses on three types of market interventions: taxes and subsidies, policies designed to impact the market price, and import tariffs and quotas. Skills developed in the preceding chapters are used to analyze the impacts of these interventions on equilibrium price and quantity, efficiency and aggregate surplus. Students who master the material presented in this chapter will be able to: Compute the impact of a specific tax on price and quantity Analyze economic tax incidence, and the burden of a tax Analyze the impact of elasticity on tax incidence and tax burden Compute the surplus or shortage that will be generated by policies designed to impact the market price Analyze the impacts of import tariffs and quotas. 15-1 Chapter 15 - Market Interventions Multiple Choice Quiz (10 questions) covering main points : 1. The federal gasoline tax is a specific tax because a. it is a fixed dollar amount (e.g. 18.4 cents) per gallon of gas. b. the federal government specifically prohibits taxing gas. c. the federal government specifically prohibits states from taxing gas. d. none of the above 2. Consumers pay a larger share of a specific tax when demand for the good is: a. less elastic. b. more elastic. c. perfectly inelastic. d. none of the above 3. True or false: Federal law states that employers and employees must pay equal shares of the tax that funds Social Security and Medicare, but in reality for full time employees, almost all of the tax is paid by the employees. a. True b. False 4. True or False: A milk price floor would definitely help all dairy farmers. a. True b. False 5. The requirement that each must taxi driver must purchase a medallion a. increases the price of taxi services by almost 20%. b. creates a deadweight loss of approximately $30,000 per year. c. creates a deadweight loss of approximately $19 million per year. d. Both a and c 6. Some government policies create net losses. They are enacted because: a. the policies create benefits for a small group that lobbies for the policies. b. the policies generate costs that are spread over such a large group, that individual members of that large group are not motivated to lobby against the policies. c. Both a and b d. None of the above 7. An effective price ceiling (that actually impacts the market) would be set a. below the equilibrium price. b. above the equilibrium price. 15-2 Chapter 15 - Market Interventions 8. An effective price floor (that actually impacts the market) would be set a. below the equilibrium price. b. above the equilibrium price....
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Chap015 - Chapter 15 - Market Interventions Chapter 15:...

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