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

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.What is the value of consumer surplus at the equilibrium price of $15?

The difference between the ________ and the ________ from the sale of a product is called producer surplus.

Table 4-3 -Refer to Table 4-3.The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear.If the market price of cowboy hats is $50, producer surplus is

Table 4-4 Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley. -Refer to Table 4-4.What is the equilibrium hourly wage (W*)and the equilibrium quantity of labor (Q*)?

Deadweight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.

Table 4-6 -Refer to Table 4-6.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.What are the equilibrium price and quantity (in thousands)for Chef Ernie's sushi?

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?

Table 4-7 -Refer to Table 4-7.The equations above describe the demand and supply for Bubba's Fried Jellybeans.What are the equilibrium price and quantity (in thousands)for Bubba's Fried Jellybeans?

When the government taxes a good or service, it

Assume the market price for lemon grass is $4.00 per pound, but most buyers are willing to pay more than the market price.At the market price of $4.00, the quantity of lemon grass demanded is 1,500 pounds per month, and quantity demanded does not reach zero until the price reaches $30.00 per pound.Construct a graph showing this data, calculate the total consumer surplus in the market for lemon grass, and show the consumer surplus on the graph.Your demand curve should be a straight line.

Table 4-2 -Refer to Table 4-2.The table above lists the highest prices five consumers are willing to pay for a theater ticket.If the price of one ticket is $25,

Table 4-3 -Refer to Table 4-3.The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear.If the market price of The Waco Kid's cowboy hats is $40,

Figure 4-10 -Refer to Figure 4-10.Suppose the market is initially in equilibrium at price P₁ and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

________ is maximized in a competitive market when marginal benefit equals marginal cost.

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

Table 4-4 Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley. -Refer to Table 4-4.If a minimum wage of $11.50 an hour is mandated, what is the quantity of labor supplied?

Figure 4-5 Figure 4-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. -Refer to Figure 4-5.Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000 per month for apartments.What is the quantity of apartments demanded at the new price?

Table 4-4 Table 4-4 shows the demand and supply schedules for the labor market in the city of Pixley. -Refer to Table 4-4.If a minimum wage of $12.50 an hour is mandated, what is the quantity of labor supplied?

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 the equilibrium price of $15 consumers are willing to buy 80 pounds of tiger shrimp.Is this an economically efficient quantity?

A ________ curve shows the marginal cost of producing one more unit of a good or service.