Exam 4: Economic Efficiency, government Price Setting, and Taxes

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.If the price of iced tea is $1,what changes in the market would result in an economically efficient output?

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.If the price of iced tea is $3

Article Summary In an attempt to discourage smoking, New York City Mayor Michael Bloomberg proposed a bill which would set a $10.50 minimum price for a pack of cigarettes. The bill would also prohibit retailers from offering any discounts such as 2-for-1 offers or accepting discount coupons. New York City already has the highest cigarette tax in the country, at $5.85 per pack, and the state of New York is one of many which already require cigarettes be marked up by a specified percentage. This bill is a companion to one which would require stores to keep tobacco products hidden from sight. Although the bills are expected to be challenged in court, a precedent has been set in Rhode Island, where a court upheld a ruling allowing the city of Providence to forbid retailers from accepting coupons and offering discounts on cigarettes. Source: Vivian Yee, "Bloomberg Seeks End to Cheap Cigarettes," New York Times, March 26, 2013. -Refer to the Article Summary.The minimum price of $10.50 per pack of cigarettes being proposed by mayor Bloomberg would have which of the following effects on the market for cigarettes?

Price floors are illegal in the United States.

The additional benefit to a consumer from consuming one more unit of a good or service is the marginal benefit.

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-1.What is the total amount that Kendra is willing to pay for 3 ice cream cones?

Using a supply and demand graph,illustrate the effect of an increase in the federal cigarette tax of $1.00 per pack,where the entire tax burden falls on the consumer.Assume the equilibrium price before the tax is $5.00 per pack and the equilibrium quantity is 30 million packs. After the implementation of the tax,what are the equilibrium price and equilibrium quantity?

The difference between the ________ for a good and the ________ is called consumer surplus.

Figure 4-12 -Refer to Figure 4-12.The figure above represents demand and supply in the market for cigarettes.Use the diagram to answer the following questions. a.How much is the government tax on each pack of cigarettes? b.What portion of the unit tax is paid by consumers? c.What portion of the unit tax is paid by producers? d.What is the quantity sold after the imposition of the tax? e.What is the after-tax revenue per pack received by producers? f.What is the total tax revenue collected by the government? g.What is the value of the excess burden of the tax? h.Is this cigarette tax efficient?

Which of the following is a consequence of minimum wage laws?

Table 4-1 -Refer to Table 4-1.The table above lists the highest prices three consumers,Curly,Moe,and Larry,are willing to pay for a bottle of champagne.If the price of one of the bottles is $27 dollars,total consumer surplus will be