Exam 4: Market Efficiency and Market Failure

Table 4-6 Marko's Polos Marginal Cost (dollars) 1st shirt \ 7 2nd shirt 10 3rd shirt 15 4th shirt 20 -Refer to Table 4-6.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the market price of Marko's polo shirts is $18

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

Table 4-7 Hourly Wage (dollars) Quantity of Labor Supplied Quantity of Labor Demanded \ 7.50 530,000 650,000 8.50 550,000 630,000 9.50 570,000 610,000 10.50 590,000 590,000 11.50 610,000 570,000 12.50 630,000 550,000 Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley. -Refer to Table 4-7.If a minimum wage of $11.50 an hour is mandated,what is the quantity of labor demanded?

Worldwide annual carbon dioxide emissions increased from about 198 million metric tons in 1850 to ________ million metric tons in 2015.

Which of the following could be evidence of a market failure?

Economists ________ that price controls are desirable.

In a competitive market equilibrium the ________ equals the ________ of the last unit sold.

Figure 4-10 Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R₀. -Refer to Figure 4-10.With rent control,the quantity supplied is Q₁.Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get.What is the highest rent they can get?

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

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $1.50,what is Arnold's consumer surplus?

The willingness of consumers to buy a product at different prices is shown on a

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?

What is consumer surplus? Why would policy makers be interested in consumer surplus?

When there is a positive externality in a free market,too much of the good is produced and consumed.

Price floors are illegal in the United States.

Table 4-7 Hourly Wage (dollars) Quantity of Labor Supplied Quantity of Labor Demanded \ 7.50 530,000 650,000 8.50 550,000 630,000 9.50 570,000 610,000 10.50 590,000 590,000 11.50 610,000 570,000 12.50 630,000 550,000 Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley. -Refer to Table 4-7.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?

In a competitive market equilibrium

Table 4-8 Hourly Wage (dollars) Quantity of Labor Supplied Quantity of Labor Demanded \ 8.00 350,000 390,000 8.50 360,000 380,000 9.00 370,000 370,000 9.50 380,000 360,000 10.00 390,000 350,000 10.50 400,000 340,000 Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-8.Suppose that the quantity of labor supplied decreases by 40,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Figure 4-21 Companies producing toilet paper bleach the paper to make it white. The bleach is discharged into rivers and lakes and causes substantial environmental damage. Figure 4-21 illustrates the situation in the toilet paper market. -Refer to Figure 4-21.An efficient way to get the firm to produce the socially optimal output level is

What does the phrase "internalizing an external cost" mean?