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Markets, International Trade, and the Government

You are given the following scenarios for consideration:

Scenario 1: Assume that the government imposed a price ceiling on gasoline in order to prevent prices from getting too high. What are the economic implications of this action in the gasoline markets?

Scenario 2: Assume that the government imposed a price floor on wages (minimum wage) in order to make sure that workers can earn a living wage. Is this a price floor? What are the economic implications of this action in the labor markets?

Scenario 3: What are the gains and losses of international trade? What happens when tariffs are imposed, in terms of the importing and exporting countries?

Scenario 4: If the government doubled the tax on gasoline, would the tax revenues increase or decrease? Why? Use graphs as needed and explain your answers thoroughly.

Solution Summary

The solution discusses scenarios on price ceiling on gasoline and prices, price floor on wages, gains and losses of international trade, tariffs imposition, and doubled the tax on gasoline.

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