Exam 6: Government Actions in Markets

The government imposes a sales tax on hot dogs. The tax would be paid entirely by the hot dog buyers if the

Suppose the government imposes a $1 tax on frisbees, and the price of a frisbee paid by demanders rises by $1.

-The above figure shows the market for neckties after the government has imposed a tax. How much deadweight loss results from this tax?

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) -One reason why soda companies are so fervently against this tax might be because they assume sellers will pay the entire tax. Sellers will pay the entire tax if

A rent ceiling below the equilibrium rent will create

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

Which of the following is an effect of a price ceiling set below the equilibrium price?

-In the table above, the market is in equilibrium. Then a minimum wage is set at $11 per hour. The number of workers who lose their jobs will be

-The above figure shows the apartment market in Big City. What could the Big City Housing Authority do if it wants to reduce the rents paid by its citizens?

-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, what is the tax per blouse?

In a supply and demand diagram, illustrate an effective price ceiling, that is, a price ceiling that changes the price and quantity. In the same diagram, also illustrate an effective price floor, that is, a price floor that changes the price and quantity.

-The figure above illustrates the current market for workers in Lima, Peru. a) Without any government intervention, what is the equilibrium wage rate and amount of employment? b) If the city government imposes a minimum wage of $3 an hour, what is the amount of employment? Does the minimum wage create any unemployment? Why or why not? c) If the city government imposes a minimum wage of $6 an hour, what is the amount of employment? Does the minimum wage create any unemployment? Why or why not?

One common effect of rent ceilings in big cities is

If the demand is perfectly elastic, buyers pay the entire tax.

-The above figure shows the demand and supply curves for housing in City B. What would be the effects of a rent ceiling equal to $1000 per month?

Sherry wants to rent an apartment. Although rents are below what she is willing to pay, she cannot find an apartment. Then after a month of searching, she finds an apartment but she has to pay an additional $1,000 to have the locks changed. Sherry has just experienced the effects of

As long as the supply curve for a good is upward sloping and the demand curve is downward sloping, a sales tax imposed on sellers shifts the supply curve

-The above figure shows the apartment rental market in Bigtown. If the market is in equilibrium and then the Bigtown Housing Authority imposes a rent ceiling of $500 per apartment, which of the following would occur?

In 1920 a constitutional amendment was passed that outlawed the production, sale, purchase, and consumption of alcoholic beverages. "Prohibition" encouraged bootlegging and black markets for whiskey, wine, and beer. The amendment was eventually repealed in 1933. In 1920, what alternative economic policy was available to the government as a means of reducing alcohol consumption nationwide?

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $400, there is