Exam 6: Government Actions in Markets

-Suppose the government has declared beer to be an illegal substance and has imposed equal penalties on any person caught buying a beer and on any person caught selling a beer. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by

The supply of oil is more elastic than the demand for oil. If oil is taxed $10 per barrel, how will the tax be divided between the buyers and sellers?

If a tax is imposed in a market in which demand is perfectly inelastic,

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. The deadweight loss created by this tax would be greater than shown in the figure above if

-In a diagram, illustrate the case of a price ceiling that affects the market's price and quantity.

-The above figure shows the demand and supply curves for housing in City B. What would be the effects of a rent ceiling equal to $1000 per month?

-Suppose the demand for wine is elastic and that initially 5 million bottles of wine are produced and consumed in the United States. If the government imposes a tax of $2 per bottle of wine, the government will collect

"The tax on insulin in the Philippines is anywhere between 10 and 20 percent. If you are rich and living in the Philippines, this is not a problem, but if you are poor, then insulin becomes something that you cannot afford." If the government places the tax on sellers, what is the most likely tax incidence?

Compare and contrast a price ceiling and a price floor.

-Suppose the government has declared beer to be an illegal substance and has imposed penalties on any person caught buying a beer. Selling a beer, however, remains legal. Using the above figure, in which CBL is the cost of breaking the law, beer consumption is decreased by

If penalties for trading illegal drugs are instituted on both buyers and sellers, the

-In the above figure, a price floor of $4

The opportunity cost of buying a good includes I. the price of the good. II) the value of time spent searching for the good.

-In the above figure, if the minimum wage is equal to ________, there would be ________ hours of labor employed.

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $8 per hour, how many hours of students' labor are unemployed?

-In the figure above, if the minimum wage is $4 per hour, then

-The table above shows the demand for and supply of labor in a small less developed country. a) Draw the demand and supply curves. What are the equilibrium wage and the level of employment? b) Currently, the minimum wage is set at $4.50 per hour. How many hours are worked? How many hours of labor are unemployed? c) If the minimum wage is raised to $6 per hour, what are employment and unemployment?

What are the major economic effects of rent ceilings?

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $4 per hour, how many hours do students work?

-The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $3 per hour is imposed. Unemployment will equal