Exam 7: Government Actions in Markets

Suppose that the elasticity of demand for insulin is 0.1,the elasticity of demand for oranges is 1.2,and the elasticity of supply for insulin and oranges is 0.4.If the government imposes a 10 percent tax on both insulin and oranges,the decrease in the quantity of oranges is ________ the decrease in the quantity of insulin.

Which of the following is an example of the unfairness of rent control?

In the labor market,as wages rise,households

The buyers pay all of a tax when the demand is

To have an effective price support program,the government must I.isolate the domestic market from the world market. Ii.pay the farmers a subsidy. Iii.introduce a price floor.

In the market for cotton,suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons.If the government then imposes a price support of $5 per ton,

-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 total subsidy paid to tomato farmers?

-The graph shows the labor market for apple pickers in Ohio.If the government sets a minimum wage of $5 an hour,________ apple pickers are unemployed.

The minimum wage is set above the equilibrium wage rate.Does the minimum wage create inefficiency?

A sales tax imposed on sellers of a good

-The above figure shows a housing market with a rent ceiling equal to $1,000.In this figure,what area is equal to the deadweight loss?

Assuming that the rent ceiling is strictly enforced so that there is no black market,which of the following statements about a housing market with a rent ceiling set below the equilibrium rent is correct?

If a tax is placed on suppliers of a good,then the incidence of the tax

A price ceiling

When a price ceiling below the equilibrium price is imposed on a good,production of the good

Suppose the marginal benefit the owner of a cherry orchard derives from hiring Lauren to pick cherries is $8 per hour.If the wage rate that Lauren earns is $7 per hour,then the orchard owner's surplus from Lauren's labor is ________ per hour.

Suppose the equilibrium price of a gallon of milk is $4.If the government imposes a price floor of $5 per gallon of milk,the

The demand for gasoline is inelastic and the supply of gasoline is elastic.Therefore,

A minimum wage set above the equilibrium wage rate

A minimum wage set above the equilibrium wage will ________ the quantity of labor demanded and ________ the quantity of labor supplied.