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

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

In order to be binding, a price ceiling

In the economic sense, almost everything is scarce.________ of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price.

Economists refer a to a market where buying and selling take place at prices that violate government price regulations as

The government proposes a tax on imported champagne.Buyers will bear the entire burden of the tax if the

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 demanded?

Table 4-6 -Refer to Table 4-6.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of consumer surplus?

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

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9, what changes in the market would result in an economically efficient output?

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

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

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 the deadweight loss at the equilibrium price of $15?

What is economic surplus? When is economic surplus at a maximum?

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

A tax that imposes a small excess burden relative to the tax revenue that it raises is

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 $35, The Waco Kid will produce

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

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

The graph below represents the market for walnuts.Identify the values of the marginal benefit and the marginal cost at the output levels of 2,000 pounds, 4,000 pounds, and 6,000 pounds.At each of these output levels, state whether output is inefficiently high, inefficiently low, or economically efficient.

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