Exam 4: Markets in Action

Much of the nation's coal is extracted by strip mining. This process leaves a huge barren hole in the ground when complete, and the cost of replanting the trees is approximately $10 per ton of coal. Burning the coal for electricity causes air pollution. No one knows how much damage the air pollution causes, but we know that for another $10 per ton the power plant can be outfitted with a pollution control device. What is one measure of the true social cost of coal fired electricity, in dollars per ton?

If a price ceiling is imposed, then:

Exhibit 4-7 Demand and supply schedules for movie tickets

Price	Quantity Demanded	Quantity Supplied
$10	200	500
8	240	470
6	370	420
4	390	390
2	410	310

In Exhibit 4-7, a 100 unit decrease in quantity demanded at every price level would cause the new equilibrium price to become:

The minimum price for a good set by the government above the equilibrium price is called a:

When the consumption of a good generates an external benefit:

After a hurricane in Florida knocked out the regional water supply for several days, the demand for bottled water increased sharply. In a market economy, how will this increase in demand affect the equilibrium price and quantity of bottled water?

Exhibit 4-5 Supply and demand curves for computers Which of the following changes could cause the computer market to change as shown in Exhibit 4-5?

Exhibit 4-3 Supply and demand curves In Exhibit 4-3, an increase in demand would cause a movement from which equilibrium point to another, other things being equal?

Exhibit 4-3 Supply and demand curves Initially the market shown in Exhibit 4-3 is in equilibrium at P₂, Q₂ (E₂). Changes in market conditions result in a new equilibrium at P₂, Q₄ (E₄). This change is stated as a(n):

External benefits cause the market to:

Cindy discovers that when she goes to the beach, she does not have to bring her radio. She can put her blanket near someone who has a radio and listen all day (without having to carry her radio, get sand in her speakers, or buy new batteries). This is an example of:

Exhibit 4-8 Demand and supply curves In Exhibit 4-8, a movement from A to B in which price has decreased and quantity has increased is best explained by a(n):

When airplanes take off and land at Logan airport, residents of East Boston complain about the noise. The same planes make the same noise during the trip to Boston from Paris, but there are no ____ for most of the trip because ____.

Consider the market for chicken. Assuming that chicken and beef are substitutes, an increase in the price of beef will:

Exhibit 4-1 Supply and demand data

Price	Quantity demanded	Quantity supplied
$1.00	500	50
1.50	450	150
2.00	400	250
2.50	300	300
3.00	150	350

In Exhibit 4-1, suppose that a reduction in the price of an important input used to produce the good causes an increase in quantity supplied of 150 units at every price level. Assuming that demand does not change, the new equilibrium price will be:

Consider the market for grapes. An increase in the wage paid to grape pickers will cause the:

When there are positive externalities associated with the consumption of a good, we can expect the market:

Ceteris paribus , if consumer tastes change so that more people are eating broccoli, then what will happen to the market equilibrium for cabbage, a substitute good for broccoli?

Price ceilings set below the equilibrium create:

If the equilibrium price of aspirin is $2.50 and a price ceiling is imposed at $3.00, the market will have a(n):