Exam 6: Market Efficiency and Government Intervention

Recall the Application about the mismatch of rent-controlled apartments and their tenants to answer the following question(s). -Recall the Application.Under rent control,the government sets a maximum price for housing,decreasing the quantity supplied and the total value of the market.Rent control and other maximum prices cause ________ and possibly ________.

At the market equilibrium,resources are allocated efficiently because

If the government sets a minimum price above the equilibrium price for soybeans,which of the following statements will be correct?

When a tax is levied on a good or service,

At the free market equilibrium,the efficient level of output is produced because

There are winners and losers from licensing programs such as a taxi medallion policy.The losers are producers,who receive lower prices for taxi rides.

The amount of a tax shifted forward depends on the price elasticities of supply and demand.

Producer surplus is equal to

Suppose the government sets a minimum price below the market equilibrium price.This will have no economic impact on the market.

Figure 6.2 -Refer to Figure 6.2.If the price of a DVD rental is $2.00,consumer surplus will be $________ each week.

Comment on the following statement: "The more inelastic the demand,the greater is the deadweight loss caused by any given tax rate."

Assume that Crystal's demand for handbags remains constant,but the price of handbags increases.Crystal's consumer surplus

When a tax is levied on a good or service,

Assume that linen pants are a normal good and consumer income rises.If the supply of linen pants remains constant,producer surplus

Figure 6.3 -Refer to Figure 6.3.If the price of one hour of tutoring is $30,then producer surplus is

Figure 6.10 -Refer to Figure 6.10.If a tax is imposed on the market in Figure 6.10,________ will bear a larger share of the tax.

If the market price of salmon is $8.99 per pound but the government will not allow salmon farmers to charge more than $4.99 per pound of salmon,which of the following will happen?

-Figure 6.8 shows the market for taxicab services in a small town.If the government creates a new law limiting taxicab services to 20 per day,

Figure 6.2 -Refer to Figure 6.2.If the price of a DVD rental is $4.00,consumer surplus will be $________ each week.

Taxes may cause deadweight losses because