when policymakers believe that the market price of a good or service is unfair to buyers or sellers.
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A price ceiling is
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a legal maximum on the price at which a good can be sold.
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If the government removes a binding price ceiling from a market, then the price paid by buyers will
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increase, and the quantity sold in the market will increase.
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A price ceiling is binding when it is set
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below the equilibrium price, causing a shortage.
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After a binding price floor becomes effective, a
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smaller quantity of the good is bought and sold.
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When a binding price floor is imposed on a market,
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price no longer serves as a rationing device.
the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor.
only some sellers benefit.
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When a binding price floor is imposed on a market to benefit sellers,
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some sellers will not be able to sell any amount of the good.
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An outcome that can result from either a price ceiling or a price floor is
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a nonbinding price control.
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If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would
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increase by less than $1,000.
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T/F. All buyers benefit from a binding price ceiling.
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False
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T/F.The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers.
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True
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T/F.The term tax incidence refers to how the burden of a tax is distributed among the various people who make up the economy.
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true
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