Exam 4: Market Efficiency and Market Failure

Table 4-7 Hourly Wage (dollars) Quantity of Labor Supplied Quantity of Labor Demanded \ 7.50 530,000 650,000 8.50 550,000 630,000 9.50 570,000 610,000 10.50 590,000 590,000 11.50 610,000 570,000 12.50 630,000 550,000 Table 4-7 shows the demand and supply schedules for labor market in the city of Pixley. -Refer to Table 4-7.Suppose that the quantity of labor supplied decreases by 80,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Figure 4-25 Figure 4-25 illustrates the market for gasoline before and after the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 4-25.The gasoline tax raises the price paid by consumers by ________ per gallon.

A positive externality results when

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-3.If the market price is $3.50,what is Kendra's consumer surplus?

Table 4-1 Consumer Willingness to Pay Tom \ 40 Dick 30 Harriet 25 -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

Figure 4-20 Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to Figure 4-20.Why is there a deadweight loss?

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 does D₁ represent?

Some environmentalists have criticized tradable emissions allowances on the grounds that they give permit holders a license to pollute.Furthermore,environmentalists argue that those who sell their permits receive a monetary benefit from their contribution to polluting the environment.Use economic reasoning to evaluate this criticism.

Figure 4-15 Figure 4-15 shows a market with an externality.The current market equilibrium output of Q₁ is not the economically efficient output.The economically efficient output is Q₂. -Refer to Figure 4-15.If,because of an externality,the economically efficient output is Q₂ and not the current equilibrium output of Q₁,what does S₂ represent?

Table 4-7 Hourly Wage (dollars) Quantity of Labor Supplied Quantity of Labor Demanded \ 7.50 530,000 650,000 8.50 550,000 630,000 9.50 570,000 610,000 10.50 590,000 590,000 11.50 610,000 570,000 12.50 630,000 550,000 Table 4-7 shows the demand and supply schedules for labor market in the city of Pixley. -Refer to Table 4-7.Suppose that the quantity of labor demanded decreases by 80,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Figure 4-4 Figure 4-4 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 4-4.What is the value of consumer surplus at a price of $18?

In order to be binding,a price ceiling

Table 4-4 Consumer Willingness to Pay Curly \ 50 Moe 30 Larry 15 -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 $24 dollars

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 Pf. -Refer to Figure 4-9.What area represents the deadweight loss after the imposition of the price floor?

The first economist to systematically analyze market failure was

Monique buys a new television for $795.She receives consumer surplus of $355 from the purchase.How much does Monique value her television?

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $3.00,what is the maximum number of burritos that Arnold will buy?

Figure 4-8 Figure 4-8 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. -Refer to Figure 4-8.What is the value of consumer surplus after the imposition of the ceiling?

Figure 4-20 Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to the Article Summary.Higher home values which result from close proximity to public transportation are an example of a ________ due to the public transportation.

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 Pf. -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?