Exam 5: Economic Efficiency, Government Price Setting and Taxes

Consumer surplus in a market for a product would be equal to ________ if the market price was zero.

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

To affect the market outcome, a price ceiling

Figure 5.6 -Refer to Figure 5.6 which shows the market for vitamins.Suppose the government imposes a price ceiling of P_v.How will the price ceiling affect the quantity supplied, quantity demanded and quantity exchanged? __________________________________________________________________________________________________________________________________________________________________________________________

Of what is rent control an example?

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.The value of the deadweight loss at the equilibrium price of $15 is

The graph below represents the market for walnuts.Identify the values of the marginal benefit and the marginal cost at the output levels of 2000 metrics, 4000 metrics and 6000 metrics.At each of these output levels, state whether output is inefficiently high, inefficiently low, or economically efficient. __________________________________________________________________________________________________________________________________________________________________________________________

Economists refer a market where buying and selling goods and services that are illegal as

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.For each unit sold, the price sellers receive after the tax (net of tax)is

Figure 5.4 -Refer to Figure 5.4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3, what changes in the market would result in an economically efficient output?

What is maximised in a competitive market when marginal benefit equals marginal cost?

Which term refers to a legally established minimum price that firms may charge?

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 of the tickets is $18,

If the quantity of sunglasses supplied is represented by the equation Q_S = -60 + 4P, then the corresponding price of sunglasses is represented by the equation

Black markets only exist in developing nations.

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, the consumer surplus on the fourth burrito is

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

Suppose the demand curve for a product is vertical and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

Figure 5.2 -Refer to Figure 5.2.What area represents the increase in producer surplus when the market price rises from P₁ to P₂?