Exam 6: Government Actions in Markets

Suppose the equilibrium wage is $10 per hour. A minimum wage is a ________ and affects employment if it is set at ________.

If supply is perfectly elastic, a sales tax imposed on sellers is paid by

Price ceilings, such as rent ceilings, set below the equilibrium price

-In the figure above, D₀ is the demand for labor curve. Imposing a minimum wage of $6 per hour will initially

-In the figure above, originally the apartment rental market is in short-run and long-run equilibrium with a rent of $600 per month. Then the government imposes a rent ceiling of $500 per month. Now suppose that demand increases. The increase in demand results in the quantity supplied

-The above figure shows the market for neckties. Based on the graph, how much tax per necktie has been imposed by the government?

-The above figure shows the apartment rental market in Bigtown. If there is a shortage of 200,000 apartments in the Bigtown rental market, it might be because the Bigtown Housing Authority has imposed a rent

-In the above figure, CBL is the cost of breaking the law. If it is illegal to buy and sell, then the price per unit will be

In general, a fine on buying a product leads to the

In the recent years, prices of basic food commodities such as corn, rice, and wheat have increased sharply. A recent article in the Wall Street Journal states that Chinese authorities are concerned that escalating prices will cause inflation and be followed by civil unrest. (Source: Wall Street Journal, February 20, 2011) -If the Chinese government sets a price ceiling below the equilibrium price, the result will be to

Making the buying and selling of a good illegal shifts the demand curve ________ and shifts the supply curve ________.

-In the figure above, imposing a tax on the sellers of the product results in a division in which

-The table above gives the demand and supply schedules for bread in Bakerville. Draw the demand and supply curves. Suppose a subsidy on bread of $1 per loaf is given to bread producers. a) How will the subsidy affect the price paid by buyers for a loaf of bread and the quantity of bread sold? Show your work on your graph. b) How will the subsidy affect the amount sellers receive for a loaf of bread? c) After the subsidy is granted, what is the marginal social cost of the last loaf of bread produced? What is its marginal social benefit? If there are no external costs or external benefits, is the bread market efficient once the subsidy is granted?

A price ________ is a regulated ________ that must be set below the equilibrium price to have an effect.

-The figure above shows the market for low-skilled labor in Midland city. The government sets a minimum wage at $6 per hour. The minimum wage ________ the employers' surplus by ________ million per year.

-An example of a price floor is a

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $400, there is

If the minimum wage is set above the equilibrium wage, a supply and demand diagram of the low-skilled labor market will show unemployment as

In the recent years, prices of basic food commodities such as corn, rice, and wheat have increased sharply. A recent article in the Wall Street Journal states that Chinese authorities are concerned that escalating prices will cause inflation and be followed by civil unrest. (Source: Wall Street Journal, February 20, 2011) -If the Chinese government sets a price ceiling below the equilibrium price, the result will be I. an increase in the quantity demanded. II) a decrease in the quantity supplied. III) a shortage.

If a minimum wage is set above the equilibrium wage rate, employment