Exam 5: Economic Efficiency,government Price Setting and Taxes

Figure 5.5 Figure 5.5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1 000 per month. -Refer to Figure 5.5.What is the value of the dead-weight loss after the imposition of the ceiling?

In the economic sense,almost everything is scarce.________ of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price.

Consumers are willing to purchase a product up to the point where ___________.

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?

Table 5.4 Hourly Wage (dollars) Quantity of Labour Supplied Quantity of Labour Demanded 7.50 530000 650000 8.50 550000 630000 9.50 570000 610000 10.50 590000 590000 11.50 610000 570000 12.50 630000 550000 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 supplied decreases by 80 000 at each wage level.What are the new free-market equilibrium hourly wage and the new equilibrium quantity of labour?

The sum of consumer surplus and producer surplus is called economic surplus.

Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos. -Refer to Figure 5.1.What is the total amount that Arnold is willing to pay for 2 burritos?

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

What is marginal benefit? Which curve is also referred to as a marginal benefit curve? __________________________________________________________________________________________________________________________________________________________________________________________

Figure 5.10 -Refer to Figure 5.10.The figure above illustrates the markets for two goods,Good X and Good Y.Suppose an identical dollar tax is imposed in each market. a.Compare the consumer burden and producer burden in each market.Illustrate your answer graphically. b.If the goal of the government is to raise revenue with minimum impact to quantity consumed,in which market should the tax be imposed? c.If the goal of the government is to discourage consumption,in which market should the tax be imposed? __________________________________________________________________________________________________________________________________________________________________________________________

Table 5.4 Hourly Wage (dollars) Quantity of Labour Supplied Quantity of Labour Demanded 7.50 530000 650000 8.50 550000 630000 9.50 570000 610000 10.50 590000 590000 11.50 610000 570000 12.50 630000 550000 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 $12.50 is mandated,there will be a _________.

Figure 5.5 Figure 5.5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1 000 per month. -Refer to Figure 5.5.Suppose that instead of a rent ceiling,the government imposed a price floor of $2 000 per month for apartments.What is the quantity of apartments demanded at the new price?

Table 5.4 Hourly Wage (dollars) Quantity of Labour Supplied Quantity of Labour Demanded 7.50 530000 650000 8.50 550000 630000 9.50 570000 610000 10.50 590000 590000 11.50 610000 570000 12.50 630000 550000 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 ________.

Table 5.4 Hourly Wage (dollars) Quantity of Labour Supplied Quantity of Labour Demanded 7.50 530000 650000 8.50 550000 630000 9.50 570000 610000 10.50 590000 590000 11.50 610000 570000 12.50 630000 550000 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 $12.50 an hour is mandated,the quantity of labour supplied is ________.

Of what is rent control an example?

Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos. -Refer to Figure 5.1.If the market price is $1.50,the consumer surplus on the first burrito is _________.

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

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 5.9 -Refer to Figure 5.9.Suppose the market is initially in equilibrium at price P₁, and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

The excess burden of a tax is also a dead-weight loss.