1.Positive analysis

• involves the formulation and testing of hypotheses.

• involves value judgments concerning the desirability of alternative outcomes.

• weighs the fairness of a policy.

• examines if the outcome is desirable.

2.Because a price ceiling causes

• a shortage, some form of rationing must occur.

• a surplus, some form of rationing must occur.

• a shortage, the outcome will be efficient.

• a surplus, the outcome will be inefficient.

3.For a price ceiling to have an impact on a market, it

• must be set above the equilibrium price.

• must be set below the equilibrium price.

• must be set anywhere besides the equilibrium price.

• can lead more goods to be produced in a market.

4.A binding price ceiling

• will cause quantity supplied to exceed quantity demanded.

• will increase total well-being.

• will set a legal minimum price in a market.

• will cause quantity demanded to exceed quantity supplied.

7.A price floor is

• a legal maximum price.

• a legal minimum price.

• the price which the legally-permissible price cannot go above.

• a price which cannot legally be charged.

8.A binding price floor

• will cause quantity demanded to exceed quantity supplied.

• will cause quantity supplied to exceed quantity demanded.

• will increase total well-being.

• will set a legal maximum price in a market

17.A seller’s willingness to sell

• is the maximum price that a seller is willing to accept in exchange for a good or service.

• is the minimum price that a seller is willing to accept in exchange for a good or service.

• is his or her reserved minimum bid-price.

• must always equal the buyer’s willingness to buy.

18.The difference in the price the buyer pays and the price the sellers keep in the presence of a tax is called

• the tax differential.

• the tax wedge.

• the tax incidence.

• the tax burden

25.If the demand curve is more elastic than the supply curve, then

• the buyers will bear a greater burden of the tax than sellers.

• the sellers will bear a greater burden of the tax than buyers.

• the tax burden will be shared equally.

• the government will bear the greater share of the tax burden.