Exam 6: Market Efficiency and Government Intervention

-Figure 6.9 shows the market for tobacco.If the government passes a law banning tobacco imports,what happens to the total surplus of the market? Who wins and who loses as a result of this policy?

All else equal,if supply is relatively elastic and demand is relatively inelastic,a tax on a product will cause

Recall the Application about the cost of using import restrictions to protect jobs in the lumber industry to answer the following question(s). -Recall the Application.Softwood lumber is subject to import quotas and tariffs,and these policies protect roughly 600 jobs in the industry.Which of the following statements is true about the impact of protecting these jobs?

If Jaime is willing to pay $8 for a movie ticket and the theater charges her only $4 for 2 movie tickets,her consumer surplus for each movie ticket is equal to $4.

-Figure 6.4 shows the market for new cars.Show the area of consumer surplus at the market equilibrium.

In an efficient market where buyers and sellers act in their own self-interest,Adam Smith's invisible hand is in action.

What is consumer surplus?

Rent control reduces market efficiency if the maximum rents allowable are below the market equilibrium price.

If the equilibrium price of gasoline is $2.75 per gallon and the government will not allow oil companies to charge more than $2.00 per gallon of gasoline,which of the following will happen?

When a tax is levied on a good or service,

Figure 6.11 -Refer to Figure 6.11.If a tax is imposed on the market in Figure 6.11,________ will bear a smaller share of the tax.

A maximum price below the market equilibrium price will raise the total surplus of the market.

-Figure 6.5 shows the market for bananas.Shade in the area of consumer surplus.Use the information provided to calculate consumer surplus.

-Figure 6.7 shows the supply and demand curves for human kidneys.If the government set the price of a kidney at $5,000,then

Recall the Application about taxes on luxury goods to answer the following question(s). -Recall the Application.If the quantity of yachts sold decreases due to higher prices,the luxury tax will

Table 6.1 -Table 6.1 indicates the demand and supply schedules for oil in the United States.Suppose also that the world price of oil is $75 per barrel and that the United States can buy all the oil it wants at that price.Which of the following statements about the impact of a law banning all oil imports is true?

Suppose a good is produced in a constant-cost industry.The market price is $4 and the equilibrium quantity is 20.After a tax is imposed on the good,the price rises to $5 and the equilibrium quantity falls to 18.The amount of the tax is

A tax imposed on the supplier of Blu Ray players shifts

A seller's willingness to accept is the minimum amount he is willing to accept as payment for a product,and is equal to the marginal cost of production.

Assume that the supply of smartphones remains constant,but the price of smartphones increases.Producer surplus