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

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production, and in which

Table 4.2 The Lethbridge Kid's Cowboy Hats Marginal Cost (dollars) Ist hat \ 24 2nd hat 30 3rd hat 38 4th hat 46 -Refer to Table 4.2.The table above lists the marginal cost of cowboy hats by The Lethbridge Kid, a firm that specializes in producing western wear.If the market price of The Lethbridge Kid's cowboy hats is $40

The minimum wage is an example of a price ceiling.

Figure 4.8 Figure 4.8 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 4.8.As a result of the tax, is there a loss in consumer surplus?

Which of the following statements is true?

What is the difference between a price ceiling and a price floor? Compared to the competitive equilibrium price, where must price ceilings and price floors be set to have an effect on the market.

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

Figure 4.3 Figure 4.3 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 4.3.At a price of $18 consumers are willing to buy 40 kilograms of tiger shrimp.Is this an economically efficient quantity?

Marginal benefit is equal to the ________ benefit to a consumer receives from consuming one more unit of a good or service

Sen, Rybczynski, and Van de Wall studied the impact of minimum wages in Canada between 1981 and 2004 and found

Consumers are willing to purchase a product up to the point where

The total amount of consumer surplus in a market is equal to the area below the demand curve.

The area ________ the market supply curve and ________ the market price is equal to the total amount of producer surplus in a market.

Figure 4.4 -Refer to Figure 4.4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following is true?

Figure 4.4 -Refer to Figure 4.4.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $9

Economic surplus

Which of the following statements best describes the concept of consumer surplus?

Suppose the demand curve for a product is vertical and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

The total amount of producer surplus in a market is equal to

Figure 4.4 -Refer to Figure 4.4.The figure above represents the market for pecans.Assume that this is a competitive market.If 8,000 pounds of pecans are sold