The revenue generated from a tax equals the:
a) amount of the good sold times the original price of the good.
b) amount of the tax times the quantity sold after the tax is imposed.
c) total social welfare lost as a result of the tax.
d) deadweight loss from the tax.
e) total consumer and producer surplus before the tax.
Why do shortages develop under a binding price ceiling?
a) It encourages sellers to produce more of the product.
b) It encourages buyers to purchase less of the product.
c) It makes the price so low that the quantity demanded exceeds the quantity supplied in the legal market.
d) It makes the price so low that the quantity demanded exceeds the quantity supplied on the black market.
e) It encourages sellers to increase the quality of the product they sell, which, in turn, increases the quantity demanded.
Why does a surplus exist under a binding price floor?
a) It encourages sellers to produce less of the product.
b) It encourages buyers to purchase more of the product.
c) It makes the price so high that the quantity supplied exceeds the quantity demanded in the legal market.
d) It makes the price so low that the quantity demanded exceeds the quantity supplied on the legal market.
e) It discourages sellers from increasing the quality of the product they sell, which, in turn, increases the quantity demanded.