Exam 5: Economic Efficiency , Government Price Setting and Taxes

Suppose an excise tax of $1 is imposed on every case of beer sold, and sellers are responsible for paying this tax. How would the imposition of the tax be illustrated in a graph?

The division of the burden of a tax between buyers and sellers in a market is called tax allocation.

-Refer to Figure 5-5. What is the value of the deadweight loss after the imposition of the ceiling?

A price ceiling is a legally determined maximum price that sellers may charge.

Which of the following is not a result of imposing a rent ceiling?

-Refer to Figure 5-1. If the market price is $3.00, what is the maximum number of burritos that Arnold will buy?

The incidence of a tax depends on whether the government collects the tax from buyers or sellers.

If marginal benefit is greater than marginal cost, output is inefficiently high.

The actual division of the burden of a tax between buyers and sellers in a market is called

-Refer to Table 5-4. Suppose that the quantity of labour supplied increases by 40 000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

-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,

A minimum wage law dictates

If the demand curve for a product is vertical, any tax increase on the product is paid for entirely by the consumer.

The minimum wage is an example of a price ceiling.

-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 ticket is $25,

-Refer to Table 5-4. If a minimum wage of $12.50 an hour is mandated, what is the quantity of labour supplied?

-Refer to Figure 5-3. At the equilibrium price of $15, consumers are willing to buy 80 pounds of tiger shrimp. Is this an economically efficient quantity?

-Refer to Figure 5-4. The figure above represents the market for pecans. Assume that this is a competitive market. If 4000 pounds of pecans are sold,

Economists are reluctant to state that price controls are desirable or undesirable because

In cities with rent controls, the actual rents paid can be higher than the legal maximum. One explanation for this is