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

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.

If the market price is at equilibrium, the deadweight loss is zero.

Government intervention in agriculture began in the United States in the 1890s.

Figure 4-5 -Refer to Figure 4-5. The figure above represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $3, what changes in the market would result in an economically efficient output?

What is a black market?

Table 4-13 -Refer to Table 4-13. The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion. The equilibrium price and quantity for Aunt Maud's lotion are $20 and 30 thousand units. What is the value of consumer surplus?

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. What is the value of the deadweight loss after the imposition of the ceiling?

Figure 4-2 -Refer to Figure 4-2. What area represents producer surplus at a price of P2?

Deadweight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.

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 $3.50, what is Kendra's consumer surplus?

Figure 4-17 -Suppose that in Canada, the government places a $1,500 tax on the buyers of new snowmobiles. After the purchase of a new snowmobile, a buyer must pay the government $1,500. How would the imposition of the tax on buyers be illustrated in a graph?

In New York City, about 1 million apartments are subject to rent control by the local government. Rent control

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. Paul's consumer surplus from the purchase is

Table 4-7 Table 4-7 shows the demand and supply schedules for labor market in the city of Pixley. -Economists refer a to a market where buying and selling take place at prices that violate government price regulations as

Economic efficiency in a competitive market is achieved when

Figure 4-16 -Refer to Figure 4-16. Suppose the market is initially in equilibrium at price P1 and now the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax? For demand curve D1

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 of the tickets is $20,

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 $10.00 is mandated, there will be a

________ dictates the lowest wage that firms may pay for labor.

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -Marginal benefit is the total benefit to a consumer from consuming one more unit of a good or service.