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

Figure 4-6 Figure 4-6 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 4-6.What area represents consumer surplus after the imposition of the price floor?

In a competitive market the demand curve shows the ________ received by consumers and the supply curve shows the ________.

Table 4-5 -Refer to Table 4-5.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 economic surplus in this market?

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

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?

In a city with rent-controlled apartments,all of the following are true except

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.What is the value of producer surplus after the imposition of the ceiling?

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

Figure 4-6 Figure 4-6 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 4-6.What area represents the deadweight loss after the imposition of the price floor?

Table 4-4 Table 4-4 above contains information about the corn market. Answer the following questions based on this table. -Refer to Table 4-4.An agricultural price floor is a price that the government guarantees farmers will receive for a particular crop.Suppose the federal government sets a price floor for corn at $12 per bushel. a.What is the amount of shortage or surplus in the corn market as result of the price floor? b.If the government agrees to purchase any surplus output at $12,how much will it cost the government? c.If the government buys all of the farmers' output at the floor price,how many bushels of corn will it have to purchase and how much will it cost the government? d.Suppose the government buys up all of the farmers' output at the floor price and then sells the output to consumers at whatever price it can get.Under this scheme,what is the price at which the government will be able to sell off all of the output it had purchased from farmers? What is the revenue received from the government's sale? e.In this problem we have considered two government schemes: (1)a price floor is established and the government purchases any excess output and (2)the government buys all the farmers' output at the floor price and resells at whatever price it can get.Which scheme will taxpayers prefer? f.Consider again the two schemes.Which scheme will the farmers prefer? g.Consider again the two schemes.Which scheme will corn buyers prefer?

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximized,then

When a competitive equilibrium is achieved in a market

Two economists from Northwestern University estimated the benefit households received from subscribing to broadband Internet service.The economists found that

Rent control is an example of

The demand and supply equations for the apple market are: Demand: P = 12 - 0.01Q Supply: P = 0.02Q where P= price per bushel,and Q=quantity. a.Calculate the equilibrium price and quantity. b.Suppose the government guaranteed producers a price of $10 per bushel.What would be the effect on quantity supplied? Provide a numerical value. c.By how much would the $10 price change the quantity of apples demanded? Provide a numerical value. d.Would there be a shortage or surplus of apples? e.What is the size of this shortage or surplus? Provide a numerical value.

Will equilibrium in a market always result in an outcome that is economically efficient? Explain.

Economic surplus

Using a supply and demand graph,illustrate the effect of the addition of a $10.00 unit tax on digital cameras,where the entire tax burden falls on the seller.Assume the equilibrium price before the tax is $125 and the equilibrium quantity is 50,000.What happens to the price and quantity after the tax is implemented?

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

What is producer surplus? What does producer surplus measure?