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

Figure 4-6 Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2. -Refer to Figure 4-6. What area represents consumer surplus at P2?

Figure 4-8 Figure 4-8 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. -Refer to Figure 4-8. 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 4-2 -Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a theater ticket. If the price of one of the tickets is $10,

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

Equilibrium in a competitive market results in the greatest amount of economic surplus from the production of a good or service.

Table 4-8 Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-8. If a minimum wage of $10.50 is mandated there will be a

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-3. If the market price is $2.50, what is the maximum number of ice cream cones that Kendra will buy?

For most goods and services, the burden of a tax is on the sellers.

Deadweight loss refers to

Table 4-7 Table 4-7 shows the demand and supply schedules for labor market in the city of Pixley. -Which of the following is not a consequence of minimum wage laws?

Table 4-5 -Refer to Table 4-5. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one ticket falls from $50 to $20,

There is a shortage of every good that is scarce.

Figure 4-2 -Two economists from Northwestern University estimated the benefit households received from subscribing to broadband Internet service. The economists found that

Figure 4-18 Figure 4-18 shows the market for cigarettes. The government plans to impose a unit tax in this market. -Refer to Figure 4-18. What is the size of the unit tax?

Figure 4-9 Figure 4-9 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. -Refer to Figure 4-9. What is the area that represents producer surplus after the imposition of the price floor?

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1. If the market price is $2.00, what is the consumer surplus on the second burrito?

Suppose the demand curve for a product is horizontal and the supply curve is upward sloping. If a unit tax is imposed in the market for this product,

Table 4-5 -Refer to Table 4-5. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one ticket is $50,

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -The difference between the lowest price a firm would have been willing to accept and the price it actually receives from the sale of a product is called

The total amount of producer surplus in a market is equal to the area above the market supply curve and below the market price.