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

Table 4-4 Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-4.If a minimum wage of $10.00 is mandated there will be a

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-1.If the market price is $3.00,what is Kendra's consumer surplus?

If the government implements a price ceiling on insulin,this will

Using a supply and demand graph,illustrate the market for rent-controlled apartments with the following data: Equilibrium rent without rent control: $1,500 Rent with rent control: $700 Quantity of apartments demanded with rent control: 50,000 Quantity of apartments supplied with rent control: 20,000 What is the value of the initial shortage of apartments with rent control? Now assume rent control leads to a reduction in the supply of apartments,and the new quantity supplied is now 15,000.Illustrate this on your graph. What is the value of the shortage of apartments following the decrease in supply?

If the price of toothpaste is represented by equation P = 40 - .5Q_D,then the corresponding quantity of toothpaste demanded is represented by the equation

Figure 4-9 Figure 4-9 shows the market for cigarettes.The government plans to impose a unit tax in this market. -Refer to Figure 4-9.As a result of the tax,is there a loss in producer surplus?

Which of the following statements is not true?

Employers withhold several taxes from employees ' paychecks,one of which is FICA.Congress requires employers to pay half of the FICA tax and workers to pay the other half.Does this mean that the burden of the FICA tax falls evenly on employers and employees? Briefly explain.

Is there a difference between the "true burden" of a tax and who is legally required to pay a tax? Briefly explain.

The area above the market supply curve and below the market price

If a tax is imposed on a product,the buyer will always bear the entire burden of the tax.

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-1.If the market price is $2.50,what is the consumer surplus on the third ice cream cone?

There will be no deadweight loss if the marginal benefit to consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.

What is consumer surplus? Why would policy makers be interested in consumer surplus?

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 $24 dollars

What area on a supply and demand graph represents producer surplus?

The additional cost to a firm of producing one more unit of a good or service is equal to producer surplus.

Figure 4-9 Figure 4-9 shows the market for cigarettes.The government plans to impose a unit tax in this market. -Refer to Figure 4-9.For each unit sold,the price sellers receive after the tax (net of tax)is

Deadweight loss refers to

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-1.If the market price is $3.00,what is the consumer surplus on the first ice cream cone?