Exam 5: Economic Efficiency,government Price Setting and Taxes

Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos. -Refer to Figure 5.1.What is Arnold's marginal benefit from consuming the second burrito?

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 demanded increases by 40 000 at each wage level.What are the new free-market equilibrium hourly wage and the new equilibrium quantity of labour?

If the market price is at equilibrium,the producer surplus is minimised.

Which of the following is not a consequence of minimum wage laws?

A tax is efficient if it imposes a large excess burden relative to the tax revenue it raises.

The graph below represents the market for lychee nuts.The equilibrium price is $7.00 per bushel,but the market price is $5.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and dead-weight loss at the equilibrium price of $7.00 and at the market price of $5.00. __________________________________________________________________________________________________________________________________________________________________________________________

Paul goes to Sportsmart to buy a new tennis racquet.He is willing to pay $200 for a new racquet,but buys one on sale for $125.What is Paul's consumer surplus from the purchase?

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 value of consumer surplus after the imposition of the price floor?

Table 5.2 Consumer Willingness to Pay Anya \ 24 Easil \ 20 Celeste \ 15 Dralon \ 12 Esther \ 7 -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 rises from $10 to $19,__________.