Exam 6: Government Actions in Markets

A minimum wage set above the equilibrium wage will

Two small California cities, Richmond and El Monte, are planning to impose a penny per ounce tax on sugary drinks. They are being opposed by the soda industry that is vehemently against this new legislation. (Source: Reuters, September 6, 2012) -Assuming the market of soda has a regular downward sloping demand curve and upward sloping supply curve, the tax will ________ the price paid by buyers and ________ the price received by sellers.

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

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

Which of the following leads to the suppliers paying all of a tax?

-In the above figure, a price ceiling of $4 would

-In the above figure, CBL is the cost of breaking the law. If it is illegal to sell, but not illegal to buy, then the price per unit will be

Why do rent ceilings lead to shortages and black markets?

-The above figure shows the demand and supply curves for housing. What would be the effects of a rent ceiling equal to $500 per month?

-In the above figure, the amount of the tax per unit imposed on the sellers is

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. What is the deadweight loss?

In some recent past years, prices of basic food commodities such as corn, rice, and wheat have increased sharply. Chinese authorities were concerned that escalating prices would cause inflation and be followed by civil unrest. -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.

-Using the above figure, CBL is the cost of breaking the law. What is the equilibrium price and quantity if beer is legal?

An upper limit to the quantity of a good that may be produced in a specific period is called

The sellers pay the entire sales tax levied on a good when demand is perfectly ________ or supply is perfectly ________.

-The figure above illustrates the market for antifreeze. Suppose the government decides to implement an $8 sales tax on the sellers for every gallon of antifreeze sold. a) In the figure, illustrate the effect the tax has on the market for antifreeze. b) What is the equilibrium price of a gallon of antifreeze before the tax? What is the price paid by buyers after the tax? c) What is the equilibrium quantity of antifreeze before the tax? What is the equilibrium quantity after the tax? d) What is the revenue collected by the government from this tax? e) Do buyers or sellers bear the largest incidence of the tax? f) Illustrate the deadweight loss created by the tax.

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the price of salt is $0.40 per pound. The demand for salt is perfectly inelastic and the elasticity of supply is 1.5. How is the salt tax burden shared between buyers and sellers in Healthyland?

-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, how much tax per unit has the government imposed?

-The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. What is the deadweight loss from this tax?

A price floor is a price