Business
Engineering
Math
Science
Social Science
Which of the following would increase quantity supplied, increase quantity demanded, and decrease the price that consumers pay? a. the imposition of a binding price floor b. the removal of a binding price floor c. the passage of a tax levied on producers d. the repeal of a tax levied on producers
Principles of Economics (MindTap C...
Principles of Economics (MindTap C...
Which of the following would increase quantity supplied, increase quantity demanded, and decrease the price that consumers pay?
a. the imposition of a binding price floor
b. the removal of a binding price floor
c. the passage of a tax levied on producers
d. the repeal of a tax levied on producers
Explanation of Solution
The price floor is the minimum price that can be charged for the product in the market. This is to prevent the prices from going too low and make loss to the producers and service providers. The most common price floor is the minimum wages set by the government. The labors should be paid minimum wages when their service is rendered. Similarly, the price ceiling is the maximum limit price that can be charged for a good or service in the market. This is to prevent the prices from going too high and prevent the exploitation of the consumers. The best given examples of the price ceiling include rent controls, price controls on gasoline in the 1970s and the price ceilings on water during the drought etc.
Option (d):
When the tax is removed, the producers will act by shifting the supply curve to the equilibrium level which will remove the shortage and reduce the price level to the equilibrium level and the economy will be back at the point of equilibrium. Thus, the quantity supplied will increase and the quantity demanded will increase in the economy along with the decreasing price level in the economy at the equilibrium point. So, option 'd' is correct.
Option (a):
When there is a price floor in the economy, then, the producers will get a minimum of the floor price and this will increase the revenue of the producers...
Chapter 6 Solutions
Additional Business Textbook Solutions
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Principles of Microeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Brief Principles of Macroeconomics (MindTap Course List)
Probability and Statistics for Engineering and the Sciences
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Corporate Financial Accounting
Foundations of Business (MindTap Course List)
Accounting Information Systems
Financial & Managerial Accounting
Essentials of Business Communication (MindTap Course List)
Cornerstones of Financial Accounting
Fundamentals of Financial Management (MindTap Course List)
Financial And Managerial Accounting
Essentials of Economics (MindTap Course List)
College Accounting, Chapters 1-27
Management, Loose-Leaf Version
Financial Accounting
Accounting Information Systems
Intermediate Accounting: Reporting And Analysis
Contemporary Marketing
Managerial Accounting: The Cornerstone of Business Decision-Making
MKTG 12:STUDENT ED.-TEXT
Exploring Economics
Statistics for Business & Economics, Revised (MindTap Course List)
College Accounting (Book Only): A Career Approach
Accounting (Text Only)
Fundamentals of Financial Management (MindTap Course List)
Financial & Managerial Accounting
Financial Accounting
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
College Accounting (Book Only): A Career Approach
Principles of Macroeconomics (MindTap Course List)
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Pkg Acc Infor Systems MS VISIO CD
Macroeconomics
Economics For Today
Economics (MindTap Course List)
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Practical Management Science
Corporate Financial Accounting
Purchasing and Supply Chain Management
Cornerstones of Cost Management (Cornerstones Series)
Survey of Accounting (Accounting I)
Economics: Private and Public Choice (MindTap Course List)
Principles of Microeconomics
MACROECONOMICS FOR TODAY
Macroeconomics: Private and Public Choice (MindTap Course List)
Micro Economics For Today
Microeconomics: Private and Public Choice (MindTap Course List)
Understanding Management (MindTap Course List)
