Exam 6: Government Actions in Markets

Search activity ________.

If sanctions are imposed on buyers but NOT on sellers of an illegal good, then the equilibrium price ________ and the equilibrium quantity ________.

Rather than prohibiting a good or service, the government might tax it. Imposing such a tax on a good or service ________ the equilibrium price and ________ the equilibrium quantity.

-The figure above illustrates the market for antifreeze. Suppose the government decides to implement an $8 sales tax on the sellers for every gallon of antifreeze sold. a) In the figure, illustrate the effect the tax has on the market for antifreeze. b) What is the equilibrium price of a gallon of antifreeze before the tax? What is the price paid by buyers after the tax? c) What is the equilibrium quantity of antifreeze before the tax? What is the equilibrium quantity after the tax? d) What is the revenue collected by the government from this tax? e) Do buyers or sellers bear the largest incidence of the tax? f) Illustrate the deadweight loss created by the tax.

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

-In the above figure, a sales tax of $1 per unit imposed on sellers shifts the

A rent ceiling below the equilibrium rent will create

How is the incidence of a sales tax between the buyer and the seller determined?

When a government fines and/or imprisons convicted drug dealers, it is attempting to reduce the illegal drug trade by shifting the ________ curve for illegal drugs ________.

-The above figure shows the demand and supply curves for housing. What would be the effects of a rent ceiling equal to $500 per month?

A minimum wage set above the equilibrium wage rate is a price

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

-The table gives the demand and supply schedules for fireworks on the Island of Big Bang. In the past, because many deaths have resulted from accidents involving fireworks, the government has banned fireworks and is enforcing the ban. A $6 a firework penalty on sellers of fireworks and no penalty on buyers will reduce the number of fireworks bought to ________ a week and increase the price paid by buyers to ________ a firework.

When a rent ceiling is imposed in a housing market, the opportunity cost of housing equals the

A price floor is a price

-The figure above shows the market for a life-saving drug. Suppose the government imposes a $150 tax per dose on sellers of the drug. Show and describe the impact on the market. Who pays this tax?

If the Chinese government sets a price ceiling below the equilibrium price, the result will be I. an increase in the quantity demanded. II) a decrease in the quantity supplied. III) a shortage.

-The figure illustrates the market for posters. The tax on a poster is ________ and the government's tax revenue from the sale of posters is ________ a month.

What happens to the quantity of labor supplied, the quantity of labor demanded, and the number of unemployed workers if the minimum wage rate set above the equilibrium wage is increased still higher?

A good has a downward-sloping demand curve and a perfectly elastic supply. Imposing a sales tax of $1 per unit on the sellers of the good