Exam 5: Economic Efficiency, Government Price Setting and Taxes

Table 5.3 -Refer to Table 5.3.The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specialises in producing fancy dress costumes.If the market price of cowboy hats is $50, how many hats will be produced?

Table 5.7 -Refer to Table 5.7.The equations above describe the demand and supply for Bubba's Fried Jellybeans.The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units.What is the value of economic surplus in this market?

Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos. -Refer to Figure 5.1.If the market price is $3.00, what is the maximum number of burritos that Arnold will buy?

Figure 5.3 Figure 5.3 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 5.3.At the equilibrium price of $15, consumers are willing to buy 80 metrics of tiger shrimp.Is this an economically efficient quantity?

Table 5.1 -Refer to Table 5.1.The table above lists the highest prices three consumers, Tom, Dick and Harriet, are willing to pay for a short-sleeved polo shirt.If the price of the shirts falls from $28 to $20,

If the market price is at equilibrium, the deadweight loss is maximised.

Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos. -Refer to Figure 5.1.If the market price is $1.00, what is the maximum number of burritos that Arnold will buy?

What area on a supply and demand graph represents consumer surplus? __________________________________________________________________________________________________________________________________________________________________________________________

Table 5.4 Table 5-4 shows the demand and supply schedules for labour market in the city of Pixley. -Refer to Table 5.4.Suppose that the quantity of labour supplied increases by 40 000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

What do economists mean by an efficient tax? __________________________________________________________________________________________________________________________________________________________________________________________

The division of the burden of a tax between buyers and sellers in a market is called tax allocation.

Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos. -Refer to Figure 5.1.What is the total amount that Arnold is willing to pay for 4 burritos?

What is economic surplus? When is economic surplus at a maximum? __________________________________________________________________________________________________________________________________________________________________________________________

If the price of chewing gum is represented by equation P = 25 - 0.5 Q_D, then the corresponding quantity of chewing gum demanded is represented by the equation

Assume the market price for lemon grass is $4.00 per metric, but most buyers are willing to pay more than the market price.At the market price of $4.00, the quantity of lemon grass demanded is 1500 metrics per month, and quantity demanded does not reach zero until the price reaches $30.00 per metric.Construct a graph showing this data, calculate the total consumer surplus in the market for lemon grass, and show the consumer surplus on the graph. __________________________________________________________________________________________________________________________________________________________________________________________

The total amount of producer surplus in a market is equal to the area below the supply curve.

Figure 5.4 -Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $9,

Table 5.2 -Refer to Table 5.2.The table above lists the highest prices five consumers are willing to pay for a theatre ticket.If the price of one ticket rises from $10 to $19,

Figure 5.5 Figure 5.5 shows the market for apartments in Springfield.Recently, the government imposed a rent ceiling of $1000 per month. -Refer to Figure 5.5.What is the value of the deadweight loss after the imposition of the ceiling?

Figure 5.9 -Refer to Figure 5.9.Suppose the market is initially in equilibrium at price P₁, and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?