Exam 6: Government Actions in Markets

-The table gives the demand and supply schedules for fireworks on the Island of Big Bang. In the past, because many deaths have resulted from accidents involving fireworks, the government has banned fireworks and is enforcing the ban. A $6 a firework penalty on sellers of fireworks and no penalty on buyers will reduce the number of fireworks bought to ________ a week and increase the price paid by buyers to ________ a firework.

What are the effects of a rent ceiling set below the equilibrium rent?

A policy of raising the minimum wage is beneficial to all low-skilled workers.

Among the factors that create a deadweight loss and inefficiency are

-The above figure depicts the market for video games. If the government imposed a $3 per game tax on sellers, what would be the new equilibrium price paid by consumers after the tax?

What happens to the quantity of labor supplied, the quantity of labor demanded, and the number of unemployed workers if the minimum wage rate set above the equilibrium wage is increased still higher?

-The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. Automobile owners would pay a larger part of this tax than what is shown in the figure if the

-The figure above shows the market for milk in Cowland. A subsidy paid to producers of $1 per gallon of milk is introduced. If there are no external costs and no external benefits, the marginal benefit of the last gallon of milk consumed is

With rent controls, which of the following is most likely to occur?

-The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $10 per hour is imposed. Unemployment will equal

-The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, the deadweight loss will be

A production quota on tobacco lowers the price of tobacco and the marginal cost of producing it.

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, how much producer surplus is lost from this tax on sports equipment?

-In the figure above, the initial demand curve is D₀. There are no rent ceilings nor rent floors. The equilibrium monthly rent is

-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?

We know that the minimum wage causes unemployment. So, why does the government impose a minimum wage?

Suppose penalties are imposed on both buyers and sellers of marijuana, but the cost of breaking the law to sellers is greater than that to buyers. This measure will ________ the equilibrium price of marijuana and ________ the equilibrium quantity of marijuana sold.

-In the figure above, D₀ is the demand for labor curve. Imposing a minimum wage of $12 per hour will initially

How is the incidence of a sales tax between the buyer and the seller determined?

In general, a fine on smoking cigarettes shifts the ________ curve of cigarettes ________.