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

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $1.00, what is the consumer surplus on the third burrito?

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.Suppose that the quantity of labor demanded increases by 40,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

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

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

Lucinda buys a new GPS system for $250.She receives consumer surplus of $75 from the purchase.What value does Lucinda place on her GPS system?

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 producer surplus at the equilibrium price of $15?

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?

Marginal benefit is the total benefit to a consumer from consuming one more unit of a good or service.

A minimum wage law dictates

If the demand curve for a product is vertical, any tax increase on the product is paid for entirely by the consumer.

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.Suppose that the quantity of labor supplied increases by 40,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Table 4.7 -Refer to Table 4-7.The equations above describe the demand and supply for Bubba's Fried Jellybeans.The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units.What is the value of producer surplus?

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

The excess burden of a tax is also a deadweight loss.

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 value of the deadweight loss after the imposition of the price floor?

In cities with rent controls, the actual rents paid can be higher than the legal maximum.One explanation for this is

Figure 4-12 -Refer to Figure 4-12.The figure above represents demand and supply in the market for gasoline.Use the diagram to answer the following questions. a.How much is the government tax on each gallon of gasoline? b.What portion of the unit tax is paid by consumers? c.What portion of the unit tax is paid by producers? d.What is the quantity sold after the imposition of the tax? e.What is the after-tax revenue per gallon received by producers? f.What is the total tax revenue collected by the government? g.What is the value of the excess burden of the tax? h.Is this gasoline tax efficient?

The following equations represent the demand and supply for silver pendants. Qᴰ = 50 - 2P Qˢ = -10 + 2P What is the equilibrium price (P)and quantity (Q - in thousands)of pendants?

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.What is the total amount that Arnold is willing to pay for 2 burritos?

Suppose an excise tax of $1 is imposed on every case of beer sold and sellers are responsible for paying this tax.How would the imposition of the tax be illustrated in a graph?