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

Buyers will bear the entire burden of a unit tax if the demand curve for a product is

Which of the following is not a consequence of minimum wage laws?

Frieda is at her local florist to buy a dozen roses. She is willing to pay $75 for the roses, and buys them for $75. Frieda's consumer surplus from the purchase is

Table 4-2 -Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one ticket is $25,

The government proposes a tax on halogen light bulbs. Sellers will bear the entire burden of the tax if the

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?

Using a supply and demand graph, illustrate the market for rent-controlled apartments with the following data: Equilibrium rent without rent control: $1,500 Rent with rent control: $700 Quantity of apartments demanded with rent control: 50,000 Quantity of apartments supplied with rent control: 20,000 What is the value of the initial shortage of apartments with rent control? Now assume rent control leads to a reduction in the supply of apartments, and the new quantity supplied is now 15,000. Illustrate this on your graph. What is the value of the shortage of apartments following the decrease in supply?

Table 4-12 -Refer to Table 4-12. The equations above describe the demand and supply for Bubba's Fried Jellybeans. What are the equilibrium price and quantity (in thousands) for Bubba's Fried Jellybeans?

What is producer surplus? What does producer surplus measure?

The cities of Francistown and Nalady are five miles apart. Francistown enacts a rent control law that puts a ceiling on rents well below their equilibrium market value. Predict the short-run impact of this law on the competitive equilibrium rent in Nalady, which does not have a rent control law. a. Illustrate your answer with one demand and supply graph for the apartment market in Francistown and another demand and supply graph for the apartment market in Nalady. b. Make sure that your graphs clearly show (1) the initial equilibrium before the rent control in both markets and (2) what happens after the imposition of rent control. c. Clearly show any shifts in the demand or supply curves, and the movement along the curves for each market. d. Label your graphs fully and provide written explanation for your graphs.

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 consumer surplus after the imposition of the price floor?

Figure 4-15 Figure 4-15 shows the market for beer. The government plans to impose a per-unit tax in this market. -Refer to Figure 4-15. As a result of the tax, is there a loss in consumer surplus?

Figure 4-4 Figure 4-4 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. -Refer to Figure 4-4. What is the value of the deadweight loss at the equilibrium price of $15?

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 first burrito?

What area on a supply and demand graph represents producer surplus?

A consumer is willing to purchase a product up to the point where

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 $10.50 an hour is mandated, what is the quantity of labor demanded?

Rent control is an example of

Figure 4-7 -Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. If 20,000 units of iced tea are sold

Economists ________ that price controls are desirable.