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

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 1 ice cream cone?

Figure 4-5 -Refer to Figure 4-5. The figure above represents the market for pecans. Assume that this is a competitive market. If 4,000 pounds of pecans are sold

Table 4-4 -Refer to Table 4-4. The table above lists the highest prices three consumers, Curly, Moe, and Larry, are willing to pay for a bottle of champagne. If the price of one of the bottles is $27 dollars, total consumer surplus will be

If buyers were required to pay the federal excise tax on gasoline directly to the government, the demand curve for gasoline would shift up.

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 the price of iced tea is $3, what changes in the market would result in an economically efficient output?

You are given the following market data for Venus automobiles in Saturnia. Demand is represented by: P = 200 - 0.25Q Supply is represented by: P = 130 + 0.10Q where P = Price and Q = Quantity. a. Calculate the equilibrium price and quantity. b. Calculate the consumer surplus in this market. c. Calculate the producer surplus in this market.

Marginal benefit is the total benefit to a consumer from consuming one more unit of a good or service.

Table 4-14 -Refer to Table 4-14. The equations above describe the demand and supply for Pauline's Pickled Pomegranates. What are the equilibrium price and quantity (in thousands) for Pauline's Pickled Pomegranates?

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 one of the shirts is $28 dollars,

Economic efficiency is achieved when there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and

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 price of cowboy hats increases from $38 to $46,

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 10,000 units of iced tea are sold

Figure 4-20 -Refer to Figure 4-20. The figure above represents demand and supply in the market for gasoline. Use the diagram to answer the following questions. a. How much is the government tax on each gallon of gasoline? b. What portion of the per-unit tax is paid by consumers? c. What portion of the per-unit tax is paid by producers? d. What is the quantity sold after the imposition of the tax? e. What is the after-tax revenue per gallon received by producers? f. What is the total tax revenue collected by the government? g. What is the value of the excess burden of the tax?

Figure 4-9 Figure 4-9 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at P_f. -Refer to Figure 4-9. What area represents the portion of consumer surplus that has been transferred to producer surplus 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. Suppose that the quantity of labor demanded increases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

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. At the price P₂, consumers are willing to buy the Q₂ pounds of granola. Is this an economically efficient quantity?

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. As a result of the tax, is there a loss in producer surplus?

What is marginal benefit? Which curve is also referred to as a marginal benefit curve?

The actual division of the burden of a tax between buyers and sellers in a market is called

Equilibrium in a competitive market results in the greatest amount of economic surplus from the production of a good or service.