Microeconomics

p PM\" 2'4 9. . Give an example of a price ceiling and an example of a price oor. Which causes a shortage of a gooda price ceiling or a price oor? Which causes a surplus? What mechanisms allocate resources when the price of a good is not allowed to bring supply and demand into equilibrium? Explain why economists usually oppose controls on prices. What is the difference between a tax paid by buyers and a tax paid by sellers? How does a tax on a good affect the price paid by buyers, the price received by sellers, and the quantity sold? What determines how the burden of a tax is divided between buyers and sellers? Why? Consider the following policies, each of which is aimed at reducing violent crime by reducing the use of guns. Illustrate each of these proposed policies in a supply and-demand diagram of the gun market. a. a tax on gun buyers b. a tax on gun sellers c. a price oor on guns d. a tax on ammunition Explain how buyers' willingness to pay, consumer surplus, and the demand curve are related. [0. Explain how sellers' costs, producer surplus, and the supply curve are related. 11. In a supply-and-demand diagram, show producer and consumer surplus in the market equilibrium. 12. What is efciency? Is it the only goal of economic policymakers? 13. What does the invisible hand do? 14. Name two types of market failure. Explain why each may cause market outcomes to be inefcient