Each of the statements in questions 27 through 45 describes a characteristic of suppliers, demanders, or a public policy. Please analyze what will happen in each case. Assume, unless the statement suggests otherwise, that the market is competitive and without any distortions or pathologies other than those that are specific to the statement. Also assume, unless the statement suggests otherwise, that for those statements dealing with a public policy, the policy described affects the market outcome in some way, but not necessarily in a socially optimal way. Assume, unless the statement suggests otherwise, short run. Select your answer to each question from the available options.

The outcome in a market where the use of a good by buyers harms non-buyers.

Suppose that in an effort to keep prices of gasoline low for consumers, a government imposes and vigorously enforces a price ceiling on the retail price of gasoline. The government allocates the gasoline with a lottery (a buyer has to present a winning lottery ticket to buy gasoline), but does not penalize in any way the resale of lottery tickets by lottery winners. Given this scenario, which of the following statements is true?

The following graph applies to questions 21 and 22. Visual Description The shown graph has quantity on the x-axis and price/cost on the y-axis. Three lines are drawn on the graph: Lines A, B, and D. Lines A and B both have positive slopes, while D has a negative slope. Line A passes through (800, $10) and (1000, $12) while line B passes through (800, $4) and (1000, $6). Line D passes through line A at (800, $10) and passes through line B at (1000, $6). At 1000 units of output, the marginal willingness to pay for the last unit is equal to ________.

The members of a state legislature claim that they want to increase the quality of schooling in their state. However, they have limited the competition to public schools from private schools. The only way this makes economic sense is if ________.

The following graph applies to questions 21 and 22. Visual Description The shown graph has quantity on the x-axis and price/cost on the y-axis. Three lines are drawn on the graph: Lines A, B, and D. Lines A and B both have positive slopes, while D has a negative slope. Line A passes through (800, $10) and (1000, $12) while line B passes through (800, $4) and (1000, $6). Line D passes through line A at (800, $10) and passes through line B at (1000, $6). Suppose that A represents the marginal social cost of an activity and that B represents the marginal private cost. In the absence of government intervention, this industry would produce ________.

The outcome in a market where a transactions tax is collected from suppliers.

Suppose that the Federal government can, at some cost to itself (and, hence, to all of us), penalize banks for the risks they take on. Suppose, further, that beyond some point, the value to the government and to all of us of things the government might do with the money used for risk reduction is greater than the cost of a little risk. Finally, assume that the Federal government pursues policies consistent with what you know about optimal choices. Then, from an efficiency perspective, it should be the case that  ________.

Suppose that a US President comes along (call them Brand X) who proposes to tax people 5 percent of their income but then allow them to take the tax money and enter the market for savings. That is, Brand X is proposing to force people to save at least 5 percent of their income. Suppose that everyone in the economy is already privately saving 5 percent of their income. Brand X claims their proposed policy will increase saving by each person from 5 percent to 10 percent. Which of the following statements is true?

A few years ago, the Utah State Legislature taxed margarine production (margarine is not produced by farmers), but not butter production (farmers produce butter). Whatever the legislators’ public rationale for the tax, your best analysis suggests that it will have the effect of ________.