Exam 4: Economic Efficiency, Government Price Setting, and Taxes

The graph below represents the market for alfalfa. The equilibrium price is $7.00 per bushel, but the market price is $9.00 per bushel. Identify the areas representing consumer surplus, producer surplus, and deadweight loss at the equilibrium price of $7.00 and at the market price of $9.00.

Which of the following statements best describes the concept of consumer surplus?

An efficient tax is

Shortage means the same thing as scarcity.

Table 4-3 -Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of cowboy hats is $50, producer surplus is

There will be no deadweight loss if the marginal benefit to consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.

If the quantity of sunglasses supplied is represented by the supply equation Q^S = -60 + 4P, then to solve for the price of sunglasses, the equation would be rewritten as

Suppliers will be willing to supply a product in all of the following situations except when

In cities with rent controls, the actual rents paid can be ________ than the legal maximum. One explanation for this is because there is a ________ of apartments, tenants are ________.

Table 4-8 Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-8. If a minimum wage of $9.50 is mandated there will be a

Figure 4-6 Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P₁ and a quantity of Q₁. Now suppose producers decide to cut output to Q₂ in order to raise the price to P_2. -Refer to Figure 4-6. What area represents producer surplus at P₂?

Assume the market price for tangerines is $18.00 per bushel. At the market price, tangerine growers are willing to supply a quantity of 12,000 bushels per week. The quantity supplied drops to zero when the price falls to $5.00 per bushel. Construct a graph showing this data, calculate the total producer surplus in the market for tangerines, and show the total producer surplus on the graph. Your supply curve should be a straight line.

The following equations represent the demand and supply for silver pendants. Q^D = 50 - 2P Q^S = -10 + 2P What is the equilibrium price (P) and quantity (Q - in thousands) of pendants?

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-3. If the market price is $3.50, what is the consumer surplus on the first ice cream cone?

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-3. What is the total amount that Kendra is willing to pay for 3 ice cream cones?

Suppose an excise tax of $0.75 is imposed on every pack of cigarettes sold and sellers are responsible for paying this tax. How would the imposition of the tax be illustrated in a graph?

If the quantity of fishing poles demanded is represented by the demand equation Q^D = 60 - P, then to solve for the price of fishing poles, the equation would be rewritten as

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1. If the market price is $2.00, what is the consumer surplus on the second burrito?

Figure 4-10 Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R₀. -Refer to Figure 4-10. Suppose that instead of a price ceiling, the government imposed a price floor of R₁. What is the area representing the portion of consumer surplus transferred to producers as a result of the price floor?

Table 4-7 Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley. -Refer to Table 4-7. If a minimum wage of $12.50 an hour is mandated, what is the quantity of labor supplied?