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

In Venezuela, the government has implemented price controls on cornmeal, and the resulting shortage created a black market for the product. When compared to the competitive equilibrium, this situation has resulted in a transfer of ________ to black market sellers.

Figure 4-5 -Refer to Figure 4-5. The figure above represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $9

If the quantity of jelly beans supplied is represented by the equation Q_S = -20 + 4P then the corresponding price of jelly beans is represented by the equation

Table 4-12 -Refer to Table 4-12. The equations above describe the demand and supply for Bubba's Fried Jellybeans. The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units. What is the value of economic surplus in this market?

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 of the tickets is $20,

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, how many hats will be produced?

The excess burden of a tax is also known as a deadweight loss.

The government proposes a tax on imported champagne. Buyers will bear the entire burden of the tax if the

Figure 4-18 Figure 4-18 shows the market for cigarettes. The government plans to impose a per-unit tax in this market. -Refer to Figure 4-18. The price buyers pay after the tax is

Figure 4-2 -Refer to Figure 4-2. What area represents producer surplus at a price of P₁?

Figure 4-11 Figure 4-11 shows the demand and supply curves for the coffee market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at $7.00. -Refer to Figure 4-11. What is the value of producer surplus after the imposition of the price floor?

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 producer surplus after the imposition of the price floor?

If the quantity of tacos demanded is represented by the equation Q_D = 20 - 0.5P then the corresponding price of tacos is represented by the equation

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. What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor (Q*)?

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. For each unit sold, the price sellers receive after the tax (net of tax) is

The graph below represents the market for lychee nuts. The equilibrium price is $7.00 per bushel, but the market price is $5.00 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 $5.00.

Figure 4-18 Figure 4-18 shows the market for cigarettes. The government plans to impose a per-unit tax in this market. -Refer to Figure 4-18. What is the size of the per-unit tax?

Figure 4-11 Figure 4-11 shows the demand and supply curves for the coffee market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at $7.00. -Refer to Figure 4-11. What is the value of consumer surplus after the imposition of the price floor?

Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

The additional cost to a firm of producing one more unit of a good or service is equal to producer surplus.