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

Table 4-3 -Refer to Table 4-3.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the price of polo shirts increases from $15 to $20

The minimum wage is an example of

Table 4-2 -Refer to Table 4-2.The table above lists the highest prices five consumers are willing to pay for a concert ticket.If the price of one of the tickets is $20

Assume the market price for tangerines is $18.00 per bushel.At the market price,tangerine growers are willing to supply a quantity of 12,000 bushels per week.The quantity supplied drops to zero when the price falls to $5.00 per bushel.Construct a graph showing this data,calculate the total producer surplus in the market for tangerines,and show the total producer surplus on the graph.Your supply curve should be a straight line.

An efficient tax is

FICA is a payroll tax imposed on employers and workers that is used to fund Social Security and Medicare.Which of the following statements regarding the tax is true?

Figure 4-9 Figure 4-9 shows the market for cigarettes.The government plans to impose a per-unit tax in this market. -Refer to Figure 4-9.The price buyers pay after the tax is

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.If 10,000 units of iced tea are sold

Economists ________ that price controls are desirable.

There is a shortage of every good that is scarce.

________ dictates the lowest wage that firms may pay for labor.

Equilibrium in a competitive market results in the greatest amount of economic surplus from the production of a good or service.

Explain how both renters and landlords could be either winners or losers with the imposition of rent control.

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

There will be no deadweight loss if the marginal benefit to consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.

Figure 4-3 Figure 4-3 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 P_2. -Refer to Figure 4-3.What area represents the deadweight loss at P₂?

Table 4-1 -Refer to Table 4-1.The table above lists the highest prices three consumers,Curly,Moe,and Larry,are willing to pay for a bottle of champagne.If the price of the champagne falls from $24 to $14

Figure 4-6 Figure 4-6 shows the demand and supply curves for the coffee market.The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at $7.00. -Refer to Figure 4-6.What is the value of the deadweight loss after the imposition of the price floor?

Which of the following statements is not true?

Table 4-4 Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-4.Suppose that the quantity of labor demanded decreases by 40,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?