Pre Test Quiz

• Suppose sellers of parfume are required to send $1.00 to the goverment for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. So, The effective price received by sellers $0.40 per bottle less than it was before the tax.
• The presence of a price control in a market for a good service usually is an indication that policymakers believed that the price that preveiled in the market in the absence of price controls was unfair to buyers or sellers.
• a tax burden falls more heavily on the side of the market that is less elastic
• the price received by sellers in a market will increase if the goverment increases a binding price ceiling in the market
• a binding price floor will reduce a firm's total revenue when demand is elastic
• the tax burden will fall most heavily one buyers of the good when the demand curve is relatively steep, and the supply curve is relatively flat