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Exam 6: When Governments Intervene in Markets

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Question 31

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(Figure: Tax on Seller) In the graph shown, the original equilibrium price is $50. A $6 tax is placed on the seller in this market. The economic burden of this tax on the seller is $ _____.

A) 6
B) 1
C) 2
D) 5

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Question 32

Multiple Choice

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(Figure: Market for Printed Houses) Consider the market for environmentally friendly three-dimensional printed houses that is shown in the figure. The government wants to encourage buyers to buy such houses and places a price ceiling on the market at $200,000 per house. After the implementation of the price ceiling, the market quantity sold falls by _____ houses.

A) 200,000
B) 400,000
C) 300,000
D) 100,000

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Question 33

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(Figure: Market) In the market shown, the original equilibrium price is 60 cents. A tax is then implemented on the buyer. The amount of the tax is _____ cents.

(Figure: Market for Logs) Suppose that the government is trying to decide between taxes and quotas in order to limit the use of forest wood. Refer to the graph that shows the market for logs of forest wood. The government has set a goal of reducing the consumption of forest wood to 8,000 logs per month. (a) What is the amount of the tax (per 1000 logs) that would achieve the goal? (b) If the government sets a quota at 8,000 logs per month, how much will consumers end up paying?

(Figure: The Market for Microeconomics Textbooks) Use Figure: The Market for Microeconomics Textbooks. Suppose the government believes that microeconomics textbooks are too expensive and wants to make them more affordable, ensuring that they are available to students. The relevant type of price control would be a price _____, and one possible binding price control would be _____.

A tax that the government collects from the consumers of a good:

Which of the following is an example of a quota?

(Table: The Market for Kombucha) Use Table: The Market for Kombucha. The table shows the quantity demanded (Qd) and quantity supplied (Qs) of kombucha at various prices. If the government imposes a price ceiling of $3 per bottle of kombucha, the quantity of soda demanded will be _____ bottles.

If the government imposes a $15 tax on cheap wine, and the price of cheap wine increases by $12:

(Table: The Market for Kombucha) Use Table: The Market for Kombucha. The table shows the quantity demanded (Qd) and quantity supplied (Qs) of kombucha at various prices. If the government imposes a price ceiling of $3 per bottle of kombucha, the quantity of kombucha supplied will be _____ bottles.

This question has two parts: (a) What is a quota? (b) Are housing zoning laws closest to taxes or quotas? Explain.

(Table: Market for Fried Cheesecake) Use Table: Market for Fried Cheesecake. The government decides to tax fried cheesecake at a rate of $0.30 per cheesecake and collect the tax from buyers. After paying the tax, producers will receive _____ per cheesecake, and they will sell _____ cheesecakes after the tax.

(Figure: Market) In the market shown, the original equilibrium price is 60 cents. A tax is then implemented on the buyer. After the introduction of the tax, the equilibrium quantity in this market _____ by _____ units.

(Figure: Market for Timber) Refer to the figure which shows the market for timber. Which of the following statements is correct?

(Figure: Market) A quota of 25 units is placed on the market that is shown in the figure. The equilibrium quantity sold in the market before the implementation of the quota was _____ units.

Which of the following is an example of a quota?

(Figure: Minimum Wage) Suppose a minimum wage of Canadian $17 is implemented in Ontario Province. Suppose the graph represents a small sector of the labor market in Ontario. Using the graph, answer the following questions: (a) What is the number of workers hired (in millions) after the implementation of the minimum wage of $17? (b) After the implementation of the wage, the number of workers hired fell by _______ million workers

Assume that Californian and Italian wines are substitutes in consumption. If the American government imposes a quota on the amount of Italian wine allowed into the United States, with the quota set at a quantity below the equilibrium quantity, the price of Italian wine in the United States will _____, while the price of California-produced wine will _____.

A subsidy for a seller of a product shifts the:

A price ceiling is: