Exam 6: Government Actions in Markets

-To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Referring to the above figure, the area that equals the tax revenue the government raises from this tax on sports equipment is

-The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. How much tax revenue does the government raise from this tax?

What are the major economic effects of rent ceilings?

A rent ceiling creates a shortage. As a result, which of the following occurs?

When a sales tax is imposed on sellers, the supply curve shifts so that the vertical distance between the old and the new supply curve equals the

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. Using the figure, how much tax revenue does the government raise?

Suppose that apartments rent for $1,300 a month in San Francisco, California and $850 a month in Los Angeles, California. If the state of California passes a state-wide rent ceiling for apartments of $1,100 a month, what occurs in the two cities?

-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. If the law is strictly enforced, the maximum for which an apartment will rent on the black market is

Suppose a tax is imposed on sellers. The more inelastic the demand for the taxed item, the

-The above figure shows the apartment market in Big City. A rent ceiling of $1400 per month would

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 above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. The amount of the tax paid by the sellers would be greater than shown in the figure if

-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 quantity of milk sold is

A minimum wage

The stricter the enforcement of a price ceiling, the

-The above figure illustrates the labor market for fast food restaurants in a small city in Peru. What would be the effects of a minimum wage imposed at $5.50 per hour?

-The price ceiling depicted in the above figure results in

The elasticity of demand for chocolate chip cookies is 0.6 and the elasticity of supply for these cookies is 1.9. If a tax is imposed on purchases of chocolate chip cookies, then the

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

Discuss the inefficiencies created by a price floor.