Exam 7: Government Actions in Markets

The figure above shows the demand (D)and supply (S)curves for insulin before any tax is imposed. The government imposes a $0.20 a dose tax on sellers of insulin. -Based on the figure above, at the market equilibrium with the tax, marginal benefit ________ marginal cost, and the quantity of insulin sold is ________.

The figure above shows the market for MP3 players, where S is the supply curve and D is the demand curve before any tax is imposed. The government imposes a $10 per unit tax on sellers of MP3 players. -Based on the figure above, after the tax is imposed, the price paid by the buyer is ________ per MP3 player.

A tax

-The above figure shows the market for biologists. The government decides to set a minimum wage for biologists of $18 per hour. After this minimum wage is in effect, and taking account of the resources lost in job search, workers' surplus equals ________.

-The above figure shows a labor market with a minimum wage of $8 an hour. The value of the resources workers are willing to use in their job search equals the distance between point ________ and point ________.

If a price ceiling is set above the equilibrium price, then

The deadweight loss from a rent ceiling below the equilibrium rent is smallest when the supply of housing is

The imposition of a tax on a good enables the government to

-The above figure shows the market for winter jackets. In an effort to keep the nation warm, the president places a price ceiling of $100 in the market for winter jackets. When the price ceiling is in place and taking account of the resources lost in search, consumer surplus ________ and producer surplus ________ compared to the equilibrium before the price ceiling was imposed.

A minimum wage law set above the equilibrium wage rate is unfair because the minimum wage

In a housing market with no rent ceilings, the equilibrium rent is that for which the quantity of apartments demanded

Black markets occur when price ceilings are imposed in a market. Which of the following explains why sellers participate in a black market?

Which of the following is true? I. A price support is inefficient. Ii. A price floor set above the equilibrium price creates a surplus. Iii. A price ceiling set above the equilibrium price creates a black market.

-The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the consumer surplus?

Suppose the city of Chicago imposes a rent control program that fixes rents at $400 below the equilibrium rent. With this plan

-At harvest time the supply of wheat is perfectly inelastic. If the government taxes wheat at $1 a bushel, then

Neither the supply of nor demand for a good is perfectly elastic or perfectly inelastic. So, imposing a tax on the good results in a ________ in the price paid by buyers and ________ in the equilibrium quantity.

In the labor market, as wages rise, households

-In the figure above, if the minimum wage rate is $8 per hour, then after taking account of resources lost in job search, the workers' surplus is the area ________ and the firms' surplus is the area ________.

-The above figure shows the market for gourmet ice cream. In effort to reduce obesity, government places a $2 tax per gallon on suppliers in this market, shifting the supply curve from S₀ to S₁. The total tax revenue is equal to