Exam 4: Market Efficiency and Market Failure

Table 4-8 Hourly Wage (dollars) Quantity of Labor Supplied Quantity of Labor Demanded \ 8.00 350,000 390,000 8.50 360,000 380,000 9.00 370,000 370,000 9.50 380,000 360,000 10.00 390,000 350,000 10.50 400,000 340,000 Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-8.If a minimum wage of $9.50 an hour is mandated,what is the quantity of labor supplied?

When a competitive equilibrium is achieved in a market

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $2.00,what is Arnold's consumer surplus?

Figure 4-16 Figure 4-16 shows a market with a negative externality. -Refer to Figure 4-16.The private profit maximizing quantity for the firm is

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

Policies that mandate the installation of specific pollution control devices are called

What is a Pigovian tax? What happens to deadweight loss when a Pigovian tax is implemented?

Figure 4-20 Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to Figure 4-20.What is the market equilibrium output level?

Figure 4-7 -Refer to Figure 4-7.The figure above represents the market for iced tea.Assume that this is a competitive market.At a price of $3

The difference between the lowest price a firm would have been willing to accept and the price it actually receives from the sale of a product is called

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.Arnold's marginal benefit from consuming the second burrito is

Frieda is at her local florist to buy a dozen roses.She is willing to pay $75 for the roses,and buys them for $75.Frieda's consumer surplus from the purchase is

Producer surplus is the difference between the highest price a firm is willing to accept for a product and the price it actually receives for the product.

The minimum wage is an example of

Figure 4-21 Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage.Figure 4-21 illustrates the situation in the toilet paper market. -Refer to Figure 4-21.Suppose the government wants to use a Pigovian tax to bring about the efficient level of production.What should the value of the tax be?

Article Summary In an attempt to discourage smoking, New York City Mayor Michael Bloomberg proposed a bill which would set a $10.50 minimum price for a pack of cigarettes.The bill would also prohibit retailers from offering any discounts such as 2-for-1 offers or accepting discount coupons.New York City already has the highest cigarette tax in the country, at $5.85 per pack, and the state of New York is one of many which already require cigarettes be marked up by a specified percentage.This bill is a companion to one which would require stores to keep tobacco products hidden from sight.Although the bills are expected to be challenged in court, a precedent has been set in Rhode Island, where a court upheld a ruling allowing the city of Providence to forbid retailers from accepting coupons and offering discounts on cigarettes. Source: Vivian Yee, "Bloomberg Seeks End to Cheap Cigarettes," New York Times, March 26, 2013. -Refer to the Article Summary.The minimum price of $10.50 per pack of cigarettes being proposed by Mayor Bloomberg is an example of

Juanita goes to the Hardware Emporium to buy a new circular saw.She is willing to pay $120 for a new saw,but buys one on sale for $85.Juanita's consumer surplus from the purchase is

The graph below represents the market for alfalfa.The equilibrium price is $7.00 per bushel,but the market price is $9.00 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 $9.00.

If the market price is at equilibrium,the deadweight loss is maximized.

Table 4-6 Marko's Polos Marginal Cost (dollars) 1 st shirt \ 7 2nd shirt 10 3rd shirt 15 4th shirt 20 -Refer to Table 4-6.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the market price of Marko's polo shirts is $30,producer surplus is