# ECON 211 EXAM 2

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question
A binding price floor:
Set at a price above the eq'm, and causes a surplus.
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If the government removes a binding price floor from a market, then the price paid by buyers will:
Decrease, and the quantity sold in the market will increase.
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A tax on the sellers of coffee will increase the price of coffee paid by buyers,
decrease the effective price of coffee received by sellers, and decrease the eq'm quantity of coffee.
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Suppose sellers of liquor are required to send \$1.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by \$0.80 per bottle.
-This tax causes the supply curve for liquor to shift upward by \$1.00 at each quantity of liquor. -The effective price received by sellers is \$0.20 per bottle less than it was before the tax - & Eighty percent of the burden of the tax falls on the buyers.
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If the government passes a law requiring buyers of college textbooks to send \$5 to the government for every textbook they buy, then:
The demand curve for textbooks shifts downward by \$5.
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The term tax incidence refers to:
The distribution of the tax burden between buyers and sellers.
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How is the burden of a tax divided?
Regardless of whether the tax is levied on the buyers or the sellers, the buyers and sellers bear some proportion of the tax burden.
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Tax incidence:
Depends on the elasticities of supply and demand.
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Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the: