Exam 5: Economic Efficiency, Government Price Setting and Taxes

Shortage means the same thing as scarcity.

Suppliers will be willing to supply a product only if

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.Suppose that instead of a rent ceiling, the government imposed a price floor of $2000 per month for apartments.What is the value of the portion of consumer surplus transferred to producers as a result of the price floor?

Figure 5.4 -Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.Which of the following statements is true if 8000 metrics of pecans are sold?

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.What is the equilibrium hourly wage (W*)and the equilibrium quantity of labour (Q*)?

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 $35, The Waco Kid will produce

The difference between the ________ and the ________ from the sale of a product is called producer surplus.

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 price of cowboy hats increases from $38 to $46,

Figure 5.7 Figure 5.7 shows the market for beer.The government plans to impose a unit tax in this market. -Refer to Figure 5.7.How much of the tax is paid by producers?

What is 'tax incidence'? What determines tax incidence in a competitive market? __________________________________________________________________________________________________________________________________________________________________________________________

If the market price is at equilibrium, the producer surplus is minimised.

Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos. -Refer to Figure 5.1.What is Arnold's marginal benefit from consuming the third burrito?

Arthur buys a new mobile phone for $150.He receives consumer surplus of $150 from the purchase.How much does Arthur value his cell phone?

The graph below represents the market for lychee nuts.The equilibrium price is $7.00 per bushel, but the market price is $5.00 per bushel.Identify the areas representing consumer surplus, producer surplus, and deadweight loss at the equilibrium price of $7.00 and at the market price of $5.00. __________________________________________________________________________________________________________________________________________________________________________________________

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production, and the sum of consumer surplus and producer surplus is maximised.

A minimum wage law dictates

One result of a tax is an increase in economic efficiency.

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

Marginal benefit is the total benefit to a consumer from consuming one more unit of a good or service.

Economic surplus