Exam 5: Efficiency and Equity

Hummel is a line of figurines based on the artistic style of German nun Maria Innocentia Hummel and have become a collector's item. The Hummel figurines are almost uniformly "cute." Lukas, Felix, Anya, and Hannah sell Hummel figurines through the internet. Their willingness to sell price for one figurine is: Lukas $240, Felix $180, Anya $150, Hannah $130. Suppose the price of a Hummel figurine is $150, who will sell their figurine?

Utilitarianism is the idea that only

Explain the difference between the "fair rules" and the "fair results" guidelines for competitive market fairness.

Producer surplus is the ________ summed over the quantity sold.

Explain the principle "Make the poorest as well off as possible." Who proposed it?

-In the above figure suppose there is only one milk producer who chooses to restrict milk production to two million gallons per day. What is the size of the deadweight loss?

Suppose the government considers placing a tax on business profits o that businesses decrease their production and generate a deadweight loss. Revenues from the tax would be used to boost the incomes of the poor. The decision to levy the tax implies that in this case, the government

Deadweight loss is the decrease in ________ from producing an inefficient amount of a product.

If the marginal social benefit of pizza exceeds the marginal social cost of pizza, the economy is producing the efficient quantity of pizza.

The big tradeoff is a tradeoff between

-What area in the above figure is the consumer surplus at the efficient quantity?

-The above table gives the market demand and market supply schedules for soda. There are no external benefits or external costs. What is the efficient quantity of soda?

Often politicians assert that a price, such as the price of gasoline or the rent for an apartment, is too high and that it is unfair for these prices to be so high. If these products are traded in competitive markets, what fairness rule are politicians using? Why?

The market demand curve for coffee is the same as the

When the Smiths were shopping for their present home, the asking price from the previous owner was $250,000.00. The Smiths had decided they would pay no more than $245,000.00 for the house. After negotiations, the Smiths actually purchased the house for $239,000.00. Therefore, the previous owner earned a producer surplus of

At the efficient level of production

In the competitive market for balloon rides, marginal social cost equals marginal social benefit when 3,000 balloon rides a day are taken and the price of a ride is $130. Which of the following statements is TRUE?

-The above figure shows the marginal social benefit and marginal social cost curves of chocolate in the nation of Kaffenia. When the marginal social benefit is equal to the marginal social cost of chocolate in Kaffenia

-The above figure shows Dana's marginal benefit curve for ice cream. If the market price is $2 per gallon, then Dana's consumer surplus from the 4th gallon of ice cream is

Marginal social cost