To help improve the health of city residents, the Ithaca City Council is considering imposing an effective price ceiling on health clubs that operate within the city limits. Explain the effects of this price control on the demand, supply, equilibrium price, and equilibrium quantity exchanged in the health club market (in Ithaca). Will this policy have its intended consequences? Explain why.

 

In an attempt to reduce the consumption of alcohol by students, the state government is considering imposing a per unit tax on Soju. Explain the effects of this proposal on the demand, supply, equilibrium price, and equilibrium quantity exchanged of Soju. Clearly label the amount of revenue the government will receive from the tax.