Exam 6: Government Actions in Markets

One way to assure that poor people will have a plentiful supply of affordable housing available to them is by imposing rent ceilings.

What is search activity and how does it influence consumer surplus when a rent ceiling creates a housing shortage?

The minimum wage in 2008 was $6.55 cents until July 2008 when it was raised to $7.25. If the minimum wage in June was below the equilibrium wage and the increased wage in July was above the equilibrium wage, then

Suppose the local government places a sales tax on hotel rooms and that the demand for these rooms is elastic while the supply is perfectly inelastic. The tax incidence is such that the tax will be paid by

-Which of the following is a likely outcome of rent ceilings?

-The table gives the demand and supply schedules for cookies. The government now levies a $0.30 tax on cookies. As a result, the price of a packet of cookies increases by ________ and the tax revenue collected is ________ a week.

Suppose the government imposes a price ceiling that is lower than the equilibrium price. Discuss the effect, if any, on the price and quantity if the government later removes the price ceiling.

-The figure above illustrates the current market for apartments in Washington, D.C. a) If the local government imposes a price ceiling of $1,500 per month, is there a shortage? If so, how much, if not, why not? b) If the local government imposes a price ceiling of $900 per month, is there a shortage? If so, how much, if not, why not?

-The figure above shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced, how many gallons are sold per year?

-In the above figure, if the minimum wage is set at $6 per hour, the level of unemployment is ________ hours per week is

-The figure above shows the market for milk in Cowland. If a subsidy paid to producers of $1 per gallon of milk is introduced, what is the price that consumers pay?

In order to have an effect, a price ceiling must be set

Explain why in cities such as New York City that have rent ceiling laws, so many people who work in the city commute from outside the city.

Will an increase in the minimum wage create more unemployment if the supply and demand for labor are highly elastic or highly inelastic?

A price ________ is a regulated ________ that must be set below the equilibrium price to have an effect.

-In the above figure, who pays the larger share of the tax?

-You are in the business of producing and selling hamburgers, french fries, pizza, and ice cream. The mayor plans to impose a tax on one of these products. Based on the elasticities in the above table, on which of these goods would your customers most prefer to be taxed?

-The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $8 per hour is imposed. Unemployment will equal

-In the above figure, a minimum wage of ________ would result in employment of ________.

A price ceiling set below the equilibrium price ________ search activity and ________ the use of black markets.