Exam 5: Economic Efficiency, Government Price Setting and Taxes

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.If a minimum wage of $11.50 an hour is mandated, the quantity of labour supplied is

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 decreases by 80 000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

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 The Waco Kid's cowboy hats is $40,

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 2 burritos?

The demand and supply equations for the apple market are: Demand: P = 12 - 0.01Q Supply: P = 0.02Q where P= price per bushel, and Q = quantity. a.Calculate the equilibrium price and quantity. b.Suppose the government guaranteed producers a price of $10 per bushel.What would be the effect on quantity supplied? Provide a numerical value. c.By how much would the $10 price change the quantity of apples demanded? Provide a numerical value. d.Would there be a shortage or surplus of apples? e.What is the size of this shortage or surplus? Provide a numerical value. __________________________________________________________________________________________________________________________________________________________________________________________

Paul goes to Sportsmart to buy a new tennis racquet.He is willing to pay $200 for a new racquet, but buys one on sale for $125.What is Paul's consumer surplus from the purchase?

Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos. -Refer to Figure 5.1.If the market price is $1.50, the consumer surplus on the first burrito is