Exam 9: An Evaluation of Competitive Markets

Figure 9.9 shows the demand and supply of a product in a competitive market. -Refer to Figure 9.9 to answer the question.Suppose that this graph represents an industry with big external benefits and that the government wishes to increase its output by 10 units and lower its price.Which of the following will produce this result?

In long-run equilibrium,perfectly competitive markets:

Differentiate between a subsidy to consumers and a subsidy to producers.

All of the following,except one,are valid reasons why many governments provide quasi-public goods?

Figure 9.9 shows the demand and supply of a product in a competitive market. -Refer to Figure 9.9 to answer the question.Suppose this graph represents a polluting industry and that the government wishes to decrease its output by 10 units.Which of the following will produce this result?

What is implied if P = MC > AC?

What does the term non-excludable mean?

What will happen if all competitive firms increase in size?

-Refer to the above graph to answer this question.What is the value of the external benefits per unit?

09-05 Explain how governments try to encourage production of goods and services;such as education;that carry external benefits. 09-18 Providing Subsidies The following graph refers to a province's day care market which is in equilibrium: -Refer to the above graph to answer this question.In an effort to increase the number of daycare spaces,suppose the authorities give daycare operators a subsidy of $150 for each child registered.What will be the new equilibrium fee?

The provision of private goods is an example of a market failure.

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

Explain how a competitive market might experience a breakdown in competition.

All of the following,except one,are methods by which society can integrate external costs into the market process.Which is the exception?

When does allocative efficiency occur?

Military defense is a:

Table 9.3 shows the cost structure for a perfectly competitive firm of which there are a total of 50 in the industry Table 9.3

What does productive efficiency mean?

-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 total amount of tax revenue?

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