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

The following equations represent the demand and supply for silver pendants. Q_D = 50 - 2P Q_S = -10 + 2P What is the equilibrium price (P)and quantity (Q - in thousands)of pendants?

Table 4-5 -Refer to Table 4-5.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of consumer surplus?

Figure 4-3 Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. -Refer to Figure 4-3.At a price of $18 consumers are willing to buy 40 pounds of tiger shrimp.Is this an economically efficient quantity?

Economists are reluctant to state that price controls are desirable or undesirable because

Government intervention in agricultural markets in the U.S.began in the

In the economic sense,almost everything is scarce.________ of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price.

When a competitive equilibrium is achieved in a market

Which term refers to a legally established minimum price that firms may charge?

Figure 4-3 Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18. -Refer to Figure 4-3.What is the value of consumer surplus at a price of $18??

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

Figure 4-4 -Refer to Figure 4-4.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?

________ is maximized in a competitive market when marginal benefit equals marginal cost.

Figure 4-8 Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 4-8.As a result of the tax,is there a loss in consumer surplus?

If the demand curve for a product is vertical,any tax increase on the product is paid for entirely by the consumer.

A minimum wage law dictates

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

Figure 4-8 Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market. -Refer to Figure 4-8.How much of the tax is paid by buyers?

Table 4-2 -Refer to Table 4-2.The table above lists the marginal cost of cowboy hats by The Waco Kid,a firm that specializes in producing western wear.If the market price of The Waco Kid's cowboy hats is $40

Will equilibrium in a market always result in an outcome that is economically efficient? Explain.

In cities with rent controls,the actual rents paid can be higher than the legal maximum.One explanation for this is