Exam 4: Market Efficiency and Market Failure

Figure 4-5 -Refer to Figure 4-5.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $9

Congress passed the Freedom to Farm Act in 1996.What was the purpose of this act?

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-3.What is the total amount that Kendra is willing to pay for 3 ice cream cones?

An external benefit is created when you pursue a college education.

Figure 4-4 Figure 4-4 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 4-4.At the equilibrium price of $15 consumers are willing to buy 80 pounds of tiger shrimp.Is this an economically efficient quantity?

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-3.Kendra's marginal benefit from consuming the second ice cream cone is

Figure 4-6 Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P₁ and a quantity of Q₁. Now suppose producers decide to cut output to Q₂ in order to raise the price to P₂. -Refer to Figure 4-6.What area represents the deadweight loss at the equilibrium price of P₁?

Figure 4-17 -Refer to Figure 4-17.The efficient output level is

Explain how mandatory seat belt laws may reduce the negative externalities of risky behavior.

In Venezuela,the government has implemented price controls on cornmeal,and the resulting shortage created a black market for the product.When compared to the competitive equilibrium,this situation has resulted in a transfer of ________ to black market sellers.

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-3.If the market price is $2.50,what is the consumer surplus on the first ice cream cone?

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 $30,Marko's will produce

Figure 4-25 Figure 4-25 illustrates the market for gasoline before the government imposes a tax to bring about the efficient level of gasoline production. -Refer to Figure 4-25.If the government wanted to bring about the efficient level of gasoline production by imposing a tax,the actual price of gasoline paid by consumers after the tax is implemented is ________ per gallon.

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.Let's suppose the government imposes a tax of $50 per unit of toilet paper to bring about the efficient level of production.What happens to the market price of toilet paper?

________ is maximized in a competitive market when marginal benefit equals marginal cost.

Table 4-2 Consumer Willingness to Pay Anya \ 24 Basil 20 Celeste 15 Dralon 12 Esther 7 -Refer to Table 4-2.The table above lists the highest prices five consumers are willing to pay for a theater ticket.If the price of one ticket falls from $25 to $10

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.Suppose that instead of a price ceiling,the government imposed a price floor of R₁.What is the quantity of apartments demanded at the new price?

Figure 4-20 Figure 4-20 shows the market for measles vaccinations, a product whose use generates positive externalities. -Refer to Figure 4-20.What does D₁ represent?

A free market fails when

Which of the following would result in a positive externality?