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

Using a supply and demand graph,illustrate the effect of the addition of a $10.00 unit tax on digital cameras,where the entire tax burden falls on the seller.Assume the equilibrium price before the tax is $125 and the equilibrium quantity is 50,000.What happens to the price and quantity after the tax is implemented?

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.The price buyers pay after the tax is

The excess burden of a tax is also a deadweight loss.

Figure 4-5 Figure 4-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. -Refer to Figure 4-5.With rent control,the quantity supplied is 200 apartments.Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get.What is the highest rent they can get per month?

A ________ curve shows the marginal cost of producing one more unit of a good or service.

Figure 4-5 Figure 4-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. -Refer to Figure 4-5.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 the deadweight loss after the imposition of the price floor?

Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia.What will be the likely effect on the market for sparkling wine in Vinyardia?

Suppose an excise tax of $1 is imposed on every case of beer sold and sellers are responsible for paying this tax.How would the imposition of the tax be illustrated in a graph?

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 4-2 -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 ticket is $25

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 the equilibrium price of $15 consumers are willing to buy 80 pounds of tiger shrimp.Is this an economically efficient quantity?

When a competitive equilibrium is achieved in a market

The cities of Francistown and Nalady are five miles apart.Francistown enacts a rent control law that puts a ceiling on rents well below their equilibrium market value.Predict the impact of this law on the competitive equilibrium rent in Nalady,which does not have a rent control law. a.Illustrate your answer with one demand and supply graph for the apartment market in Francistown and another demand and supply graph for the apartment marketing Nalady. b.Make sure that your graphs clearly show (1)the initial equilibrium before the rent control in both markets and (2)what happens after the imposition of rent control. c.Clearly show any shifts in the demand or supply curves,and the movement along the curves for each market. d.Label your graphs fully and provide written explanation for your graphs.

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

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

Table 4.7 -Refer to Table 4-7.The equations above describe the demand and supply for Bubba's Fried Jellybeans.What are the equilibrium price and quantity (in thousands)for Bubba's Fried Jellybeans?

The minimum wage is an example of a price ceiling.

The difference between the ________ and the ________ from the sale of a product is called producer surplus.

Producer surplus is the difference between the lowest price a firm is willing to accept for a product and the price it actually receives for the product.

The incidence of a tax depends on whether the government collects the tax from buyers or sellers.