Exam 9: An Evaluation of Competitive Markets

The following graph depicts the various cost curves for a representative competitive firm producing quantity Q1: -Refer to the above graph to answer this question.If the price of the product is P1,what does the graph suggest?

All of the following except one are reasons why Adam Smith advocated the doctrine of laissez-faire.Which is the exception?

What are the four strengths of a perfectly competitive market?

The table below shows the demand for pollution permits to emit hydrocarbons in a particular industrial park which are sold by the government.Each permit allows the owner to release 1 tonne of pollutants into the atmosphere. a)If no fee for a pollution permit were charged,and assuming a straight-line demand curve,what quantity of pollutants would be discharged into the atmosphere? b)Suppose government were to set a fee of $6 per permit.What quantity of pollutants would now be dumped and what would be the revenue of government. c)Suppose that new technology allows for a significant reduction in hydrocarbons at a relatively low cost so that the demand for permits drops by 500 tonnes.Assuming that government holds the permit fee at $6,what quantity of pollutants would now be dumped,and what would be the total revenue received by government? d)After the change of demand in c),what would happen if instead of maintaining the fee at $6,government wants to maintain the same level of pollutants as in b).What fee would have to be charged and what would be the new revenue?

In a perfectly competitive industry at equilibrium price and quantity that the

Under what conditions will a competitive firm continue to grow in size?

What does the term non-rival mean?

What does a belief in the doctrine of laissez-faire mean?

All of the following,except one,are features of a private good.Which is the exception?

What does the doctrine of laissez-faire mean?

What are external benefits?

-Refer to the above graph to answer this question.If this product were taxed by an amount equal to the external costs,what would be the equilibrium values of price and quantity?

The following are cost data for four different size plants available to a competitive producer: -Refer to the above information to answer this question.If the market price of this product is $80,which is the best size of plant?

Table 9.1 shows the cost structure for a perfectly competitive firm of which there are a total of 100 in the industry Table 9.1

Table 9.1,which shows the toll charges on a particular highway. -Refer to Table 9.1 to answer this question.If the user price was presently $1,what increase in the toll charge would be necessary to reduce traffic by 2,000 vehicles per hour?

Which of the following terms refers to the situation where one person's consumption doesn't reduce the amount available for others?

Producer surplus is the

-Refer to the above graph to answer this question What is the value of the per unit external cost in this market?

What is a public good?

Given the following graph,what would the price and quantity traded be if a)the competitive market is unregulated? b)external cost are recognized but external benefits are not? c)external benefits are recognized but external costs are not? d)both external benefits and external cost are recognized?