Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
Question
Chapter 6, Problem 1PA
To determine

The impact of price ceiling on music concert ticket.

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Suppose the demand for live comedy performance tickets is downward sloping and the supply of live comedy performance tickets is upward sloping. Lovers of comedy persuade Congress to impose a price ceiling of $40 per ticket for live comedy performances. True or False: If the equilibrium price of live comedy performance tickets were $40, a price ceiling of $40 will cause more people to attend comedy performances than if there is no price control.
Which policy increases the consumption of a good?  a price floor/a price ceiling / a subsidy/ a tax
Which of the following statement is true: a. There can never be price ceiling and price floor that are simultaneously binding in the same market. b. Since the subsidy increases both consumer surplus and producer surplus, subsidy does not create any deadweight loss. c. None of the other answers is correct. d. The economic incidence of the tax depends on who must legally pay the tax. e. In general, the burden of the tax falls on the more elastic side of the market.
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  • Suppose that the government has been supporting the price of corn. Its free market price is $2.50 per bushel, but the government has been setting a support price of $3.50 per bushel. Which of the following are ways that the government might try to reduce the size of the corn surplus? (Select one or more answers from the choices shown.)                                                              a. Decrease the support price. b. Institute an acreage allotment program. c. Decrease demand by taxing purchases of corn. d. Raise the support price.
    Which of the following is a challenge of government setting a price floor? Which of the following is a challenge of government setting a price floor? Firms choosing to leave the market A risk of excess supply of the good A risk of excess demand for the good Prices falling below marginal cost
    After the OPEC oil embargo in the 1970s, price controls were placed on gas markets that did not allow price to rise to the market clearing level. Gas shortages resulted as did black markets. Use the analysis of price controls to discuss whether price controls likely hurt or helped consumers and the economy.  Consider the following: Who is helped and harmed by price ceilings? Had gas prices been allowed to increase sharply, would we have made changes in our economy faster? At what cost? How does the elasticity of demand and supply impact the degree to which price and quantity would change in the gasoline market?
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