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

Figure 4-7 -Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. At an output of 30,000 units

Table 4-5 -Refer to Table 4-5. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one ticket rises from $20 to $38,

Table 4-14 -Refer to Table 4-14. The equations above describe the demand and supply for Pauline's Pickled Pomegranates. The equilibrium price and quantity for Pauline's Pickled Pomegranates are $30 and 15 thousand units. What is the value of consumer surplus?

Figure 4-8 Figure 4-8 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. -Refer to Figure 4-8. What is the value of consumer surplus after the imposition of the ceiling?

David Card and Alan Krueger conducted a study of fast-food restaurants in New Jersey and Pennsylvania. The study found that

Figure 4-7 -Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. Which of the following is true?

Using a supply and demand graph, illustrate the effect of the addition of a $10.00 per-unit unit tax on digital cameras, where the entire tax burden falls on the seller. Assume the equilibrium price before the tax is $125 and the equilibrium quantity is 50,000. What happens to the price and quantity after the tax is implemented?

Economic efficiency is a market outcome in which the marginal benefit to consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.

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

Which of the following is not a result of binding government price controls?

Table 4-1 -Refer to Table 4-1. The table above lists the highest prices three consumers, Tom, Dick, and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of the shirts falls from $28 to $20,

If, in a competitive market, marginal benefit is greater than marginal cost

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 $2.50, what is the maximum number of ice cream cones that Kendra will buy?

Rent control is an example of a price ceiling.

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. Suppose that the quantity of labor supplied decreases by 80,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

What is a black market?

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. What is the area that represents the producer surplus after the imposition of the ceiling?

Article Summary Voters in California approved a $2 per pack tax increase on cigarettes, which went into effect on April 1, 2017. Cigarette taxes are now $2.87 per pack in California, the ninth highest cigarette tax in the country. Approximately one-in-nine adults in California are smokers, and the tax increase is estimated to generate almost $1.4 billion in revenue during the first year, with the revenue designated for the state-run health care plan as well as various state-wide anti-smoking campaigns. Source: Andrew Blake, "Cigarette tax hike takes effect in California, costs surge by $2 per pack," Washington Times, April 1, 2017. -Refer to the Article Summary. The additional tax of $2 per pack of cigarettes will have which of the following effects on the market for cigarettes in California?

Figure 4-2 -Refer to Figure 4-2. What area represents the decrease in producer surplus when the market price falls from P₂ to P₁?

Because minimum wage is a price floor,