Exam 6: Government Actions in Markets

Assume that your state government has placed a price ceiling of $.20 per kilowatt hour on electricity. The equilibrium price per kilowatt hour for electricity is $.25. The government's action will result in

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

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $800, what is the rent?

Outlawing the sale of a good shifts the supply curve

A rent ceiling results in a shortage. As a result, which of the following do you expect?

A rent ceiling set above the equilibrium rent

A price ceiling can result in which of the following?

-The above figure shows the labor market in an undeveloped nation. A minimum wage has an effect on the market for low-skilled labor if it is set at

"The tax on insulin in the Philippines is anywhere between 10 and 20 percent. If you are rich and living in the Philippines, this is not a problem, but if you are poor, then insulin becomes something that you cannot afford." If the government places the tax on sellers, what is the effect on the supply and demand curves?

With rent controls set below the equilibrium rent, what mechanism might arise that moves the market closer to the efficient equilibrium?

-In the figure above, if a minimum wage of $12 per hour has been imposed and the labor demand curve then shifts from D₀ to D₁ the wage rate ________ and the amount of employment ________.

The supply curve of low-skilled labor is upward sloping because those workers know that government will protect them with minimum wage legislation.

-In the above figure, a rent ceiling of $300 per month would

-In the above figure, CBL is the cost of breaking the law. If the good in the figure is made illegal and penalties are imposed on both buyers and sellers, then its price per unit

A sales tax will be divided so that

-The figure above shows the housing market in the city of Appleville. A rent ceiling of $650 per month is imposed. With the rent ceiling, what is the maximum black market rent in Appleville?

-The above figure shows the market for blouses. The government decides to impose the sales tax on sellers, as shown in the figure. How much producer surplus is lost?

Suppose the price elasticity of demand for Mexican food is 1.23 and the price elasticity of supply is 0.47. If the government imposes a tax on Mexican food, do buyers or sellers pay most of the tax? Why?

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

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