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1694 Supply, Demand, and Government Policies
12. Refer to Figure 6-31. If the government set a price floor at $17, would there be a shortage or
surplus, and how large would be the shortage/surplus?
Figure 6-32
13. Refer to Figure 6-32. If the government set a price ceiling at $40, would there be a shortage or
surplus, and how large would be the shortage/surplus?
Supply, Demand, and Government Policies 1695
14. Refer to Figure 6-32. If the government set a price ceiling at $80, would there be a shortage or
surplus, and how large would be the shortage/surplus?
15. Refer to Figure 6-32. If the government set a price ceiling at $50, would there be a shortage or
surplus, and how large would be the shortage/surplus?
16. Refer to Figure 6-32. If the government set a price floor at $70, would there be a shortage or
surplus, and how large would be the shortage/surplus?
1696 Supply, Demand, and Government Policies
17. Refer to Figure 6-32. If the government set a price floor at $55, would there be a shortage or
surplus, and how large would be the shortage/surplus?
Scenario 6-1
Suppose that demand in the market for good X is given by the equation
and that supply in the market for good X is given by the equation
18. Refer to Scenario 6-1. What are the equilibrium price and quantity in the market for good X?
Supply, Demand, and Government Policies 1697
19. Refer to Scenario 6-1. If the government set a price ceiling at $8, would there be a shortage or
surplus, and how large would be the shortage/surplus?
20. Refer to Scenario 6-1. If the government set a price ceiling at $12, would there be a shortage or
surplus, and how large would be the shortage/surplus?
21. Refer to Scenario 6-1. If the government set a price floor at $13, would there be a shortage or
surplus, and how large would be the shortage/surplus?
1698 Supply, Demand, and Government Policies
22. Refer to Scenario 6-1. If the government set a price floor at $7, would there be a shortage or
surplus, and how large would be the shortage/surplus?
Scenario 6-2
Suppose demand for a product is given by the equation
and supply for the product is given by the equation
23. Refer to Scenario 6-2. What are the equilibrium price and equilibrium quantity in the market for
this product?
Supply, Demand, and Government Policies 1699
24. Refer to Scenario 6-2. Suppose the government sets a price ceiling at $12 for this product. Is
this price ceiling binding, and what will be the size of the shortage/surplus in this market?
25. Refer to Scenario 6-2. Suppose the government sets a price ceiling at $17 for this product. Is
this price ceiling binding, and what will be the size of the shortage/surplus in this market?
1700 Supply, Demand, and Government Policies
26. Refer to Scenario 6-2. Suppose the government sets a price floor at $13 for this product. Is this
price floor binding, and what will be the size of the shortage/surplus in this market?
27. Refer to Scenario 6-2. Suppose the government sets a price floor at $13 for this product.
Initially, is this price floor binding? Suppose that for some reason demand were to decrease to
Would the $13 price floor be binding after the shift in the demand curve? If so, what is the size of
the resulting shortage/surplus?
Supply, Demand, and Government Policies 1701
28. The following table shows the demand and supply schedules in a particular market.
Price
Quantity
Demanded
Quantity Supplied
$1
8
3
$3
6
6
$5
4
9
$7
2
12
$9
0
15
If the government sets a price floor $2 above the equilibrium price, how many units will be sold in
this market?
1702 Supply, Demand, and Government Policies
Table 6-6
Price ($)
Quantity
Demanded
Quantity Supplied
0
21
0
1
18
4
2
15
8
3
12
12
4
9
16
5
6
20
6
3
24
7
0
28
29. Refer to Table 6-6. If the government set a price ceiling at $2, would there be a shortage or
surplus, and how large would be the shortage/surplus?
30. Refer to Table 6-6. If the government set a price ceiling at $4, would there be a shortage or
surplus, and how large would be the shortage/surplus?
Supply, Demand, and Government Policies 1703
31. Refer to Table 6-6. If the government set a price floor at $4, would there be a shortage or
surplus, and how large would be the shortage/surplus?
32. Refer to Table 6-6. If the government set a price floor at $2, would there be a shortage or
surplus, and how large would be the shortage/surplus?
33. Refer to Table 6-6. In this market, over what range of prices would a price ceiling set by the
government be binding?
1704 Supply, Demand, and Government Policies
34. Refer to Table 6-6. In this market, over what range of prices would a price floor set by the
government be binding?
Figure 6-33
35. Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. What
price will buyers pay for the good after the tax is imposed?
Supply, Demand, and Government Policies 1705
36. Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How
much is the burden of this tax on the buyers in this market?
37. Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. What is
the effective price that sellers will receive for the good after the tax is imposed?
38. Refer to Figure 6-33. Suppose a $3 per-unit tax is imposed on the sellers of this good. How
much is the burden of this tax on the sellers in this market?
1706 Supply, Demand, and Government Policies
39. Refer to Figure 6-33. Suppose a $4 per-unit tax is imposed on the sellers of this good. How
many units of this good will be sold after the tax is imposed?
Figure 6-34
40. Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how many
units will be bought and sold in the market after the tax is imposed?
Supply, Demand, and Government Policies 1707
41. Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much
will sellers receive per unit after the tax is imposed?
42. Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, what price
will buyers pay per unit after the tax is imposed?
43. Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much
is the burden of the tax on the buyers in this market?
1708 Supply, Demand, and Government Policies
44. Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, how much
is the burden of the tax on the sellers in this market?
45. Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, who will
bear the greater burden of the tax - the buyers, the sellers, or will the burden be shared equally?
Supply, Demand, and Government Policies 1709
46. In a particular market, market demand is given by the equation
and market supply is given by the equation
Suppose a per-unit tax is imposed that reduces the number of units bought and sold in the market
to 25 units. What is the size of the tax, and who bears the greater burden of the tax, buyers or
sellers?
47. If the demand curve is more price elastic than the supply curve in a particular market, will the
buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?
1710 Supply, Demand, and Government Policies
48. If the supply curve is more price elastic than the demand curve in a particular market, will the
buyers or the sellers bear a larger burden of a per-unit tax imposed on the market?
49. If the demand curve is more price elastic than the supply curve, will the buyers or the sellers
bear a greater burden of a tax? Draw a diagram to illustrate your answer.
Supply, Demand, and Government Policies 1711
50. If the supply curve is more price elastic than the demand curve, will the buyers or the sellers
bear a greater burden of a tax? Draw a diagram to illustrate your answer.
