Exam 6: Government Actions in Markets

The government of Healthyland imposes a tax on sellers of salt. The tax is $0.10 per pound. With no tax, the market price of salt is $0.40 per pound. The demand for salt is perfectly inelastic, and the elasticity of supply is 1.5. With the tax, the price that sellers of salt in Healthyland receive and keep is

The minimum wage

If a production quota is set below the equilibrium quantity, at the quota quantity, marginal benefit is ________ marginal cost and the level of production is ________.

-In the above figure, the amount of tax revenue is

Can the incidence of a sales tax ever be so that buyers pay all of the tax or so that sellers pay all of the tax?

-In the above figure, a black market emerges with a

-In the figure above, the demand curve shifts rightward from D₀ to D₁ so that D₁ is the relevant demand curve. Suppose the government imposes a rent ceiling of $500 per month. In the short run there will be

A price ceiling is a price

An example of a price floor is a

-In the figure above, the demand curve shifts rightward from D₀ to D₁ so that D₁ is the relevant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will be

-The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. What is the amount of the tax?

-In the above figure, the imposition of a $0.25 sales tax on sellers will

-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. The rent ceiling leads to a

On Green Island, the demand for pencils is perfectly elastic and the supply of pencils is perfectly inelastic. If a sales tax on pencils is introduced

"Farm subsidies in the European Union spill over to the rest of the world." Explain this assertion.

The federal government pays airlines to service small cities in the United States through a subsidy program called Essential Air Service which was established in 1978 when the airline industry was deregulated. Most subsidies can't exceed $200 per passenger. What is NOT an effect of this subsidy?

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

If the government makes a good illegal and then imposes stiffer penalties on illegal drug buyers than on sellers, the price of the good ________ and the quantity ________.

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

-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, what is the equilibrium price and quantity with this new law in effect?