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

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 one of the bottles is $24 dollars

If the government implements a binding price ceiling on insulin,this will

The following equations represent the demand and supply for bird feeders. Q_D = 35 - P Q_S = -5 + 3P What is the equilibrium price (P)and quantity (Q - in thousands)of bird feeders?

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.If a minimum wage of $10.50 an hour is mandated,what is the quantity of labor demanded?

Because minimum wage is a price floor

To affect the market outcome,a price floor

The demand and supply equations for the peach market are: Demand: P = 24 - 0.5Q Supply: P = -6 + 2.5Q where P = price per bushel,and Q = quantity (in thousands). a.Calculate the equilibrium price and quantity. b.Suppose the government guaranteed producers a price of $24 per bushel.What would be the effect on quantity supplied? Provide a numerical value. c.By how much would the $24 price change the quantity of peaches demanded? Provide a numerical value. d.Would there be a shortage or surplus of peaches? e.What is the size of this shortage or surplus? Provide a numerical value.

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-1.Kendra's marginal benefit from consuming the first ice cream cone is

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-1.If the market price is $3.50,what is the consumer surplus on the first ice cream cone?

Figure 4-5 Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R₀. -Refer to Figure 4-5.Suppose that instead of a price ceiling,the government imposed a price floor of R₁.What area represents the deadweight loss after the imposition of the price floor?

A consumer is willing to purchase a product up to the point where

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 the equilibrium price of P₁?

The maximum price that a buyer is willing to pay for a good measures his

The government proposes a tax on halogen light bulbs.Sellers will bear the entire burden of the tax if the

The graph below represents the market for alfalfa.The market price is $7.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and economic surplus.

Buyers will bear the entire burden of a unit tax if the demand curve for a product is

Figure 4-10 -Refer to Figure 4-10.Suppose the market is initially in equilibrium at price P₁ and now the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax? For demand curve D₁

Price ceilings result in shortages.

Figure 4-7 -Refer to Figure 4-7 which shows the market for watermelons.Suppose the government imposes a price floor of P_w.How will the price floor affect the quantity supplied,quantity demanded,and quantity exchanged?

Economists working for Uber,along with economists from the University of Oxford and the University of Chicago,estimated the consumer surplus attributed to Uber.For the 4 largest U.S.markets,these economists estimated that the total consumer surplus from Uber in 2015 was