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

If,in a competitive market,marginal benefit is less than marginal cost

Suppliers will be willing to supply a product only if

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?

A tax is efficient if it imposes a large excess burden relative to the tax revenue it raises.

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?

If equilibrium is achieved in a competitive market

Consumers are willing to purchase a product up to the point where

The total amount of producer surplus in a market is equal to

The graph below represents the market for walnuts.Identify the values of the marginal benefit and the marginal cost at the output levels of 2,000 pounds,4,000 pounds and 6,000 pounds.At each of these output levels,state whether output is inefficiently high,inefficiently low,or economically efficient.

Consumer surplus is the difference between the highest price someone is willing to pay for a product and the price he actually pays for the product.

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?

If the quantity of donuts supplied is represented by the equation Q_S = -15 + 5P then the corresponding price of donuts is represented by the equation

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

Marginal benefit is equal to the ________ benefit to a consumer receives from consuming one more unit of a good or service.

Economic surplus

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

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 producers?

Rent control is an example of a price ceiling.

Marginal cost is the additional cost to a firm of producing one more unit of a good or service.

Assume the market price for lemon grass is $4.00 per pound,but most buyers are willing to pay more than the market price.At the market price of $4.00,the quantity of lemon grass demanded is 1,500 pounds per month,and quantity demanded does not reach zero until the price reaches $30.00 per pound.Construct a graph showing this data,calculate the total consumer surplus in the market for lemon grass,and show the consumer surplus on the graph.