Chapter+6.+Supply,+Demand,+And+Government+Policies

media type="custom" key="3004364"

Price Ceiling, Price Floor, Tax, Elasticity& Tax.
 * IT IS CHAPTER 6! gosh typos!

Question 1. Which of the following is true of a price floor?

a. The price floor shifts the demand curve to the left b. An effective floor creates a shortage of the good. c. To be an effective floor, they must be set above the equilibrium price.

answer: c.

Question 2. An effective price ceiling in the market for good X likely results in:

a. a shortage of good X b. a surplus of good X

answer: a.

Summary:

In this chapter, we learn about price floor, price ceiling, tax and its relations with elasticity. At some point in the economy, it needs the government's help. The Government helps both the people and the firms. By putting the price ceiling such as minimum wage, it raises the people's minimum wages - thus, people benefit. By putting on a price floor such as minimum price labeling, firms could sell their products "AT LEAST" whatever dollars, more than their previous prices. The government put taxes on goods to make the public better - such as public schools, hospitals and so on. Their tax is both put on consumers and producers. The tax increases the amount of money consumers have to pay and decreases the amount of money producers receive; yet this is fairly put on both of the consumers and producers.