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

Suppose there are two cities that have rent controlled apartments.In one city (Albany)all apartments are subject to rent control;in the other city (Halftrack)one-half of the apartments are rent controlled.Which of the following is most likely to be true?

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 the maximum number of ice cream cones that Kendra will buy?

Hourly Wage (dollars) Quantity of Labor Supplied Quantity of Labor Demanded \ 8.00 350,000 390,000 8.50 360,000 380,000 9.00 370,000 370,000 9.50 380,000 360,000 10.00 390,000 350,000 10.50 400,000 340,000 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 an hour is mandated,what is the quantity of labor demanded?

Which of the following statements best describes the concept of consumer surplus?

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 consumer surplus on the third ice cream cone?

Table 4-4 Consumer Willingness to Pay Curly \ 50 Moe 30 Larry 15 -Refer to Table 4-4.The table above lists the highest prices three consumers,Curly,Moe,and Larry,are willing to pay for a bottle of champagne.If the price of one of the bottles is $95 dollars,total consumer surplus will be

The market price for coffee is $2.25 per cup.Austin is willing to pay $5.00 per cup,Colin is willing to pay $4.00 per cup,Lucy is willing to pay $3.00 per cup,and Ike is willing to pay $2.00 per cup.Construct a graph showing the consumer surplus for each cup of coffee purchased.How many cups of coffee will be purchased? What is the value of the consumer surplus each of the four consumers receives from their coffee purchases?

In cities with rent control,people have an incentive to list their apartments on sites such as Airbnb at rents ________ the controlled rates,because rent control causes a ________ of apartments.

Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $3.00,what is the maximum number of burritos that Arnold will buy?

Table 4-5 Consumer Willingness to Pay Violet \ 48 Walter 40 Xavier 30 Yolanda 24 Zachary 14 -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 rises from $20 to $38

"Taxes are what we pay for a civilized society." This statement was made by

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

Table 4-6 Marko's Polos Marginal Cost (dollars) 1 st shirt \ 7 2nd shirt 10 3rd shirt 15 4th shirt 20 -Refer to Table 4-6.The table above lists the marginal cost of polo shirts by Marko's,a firm that specializes in producing men's clothing.If the market price of Marko's polo shirts is $30,producer surplus is

Which of the following is not a result of government price controls?

Price Per Bushel (dollars) Quantity Demanded (bushels) Quantity Supplied (bushels) \ 3 36,000 0 6 30,000 2,000 9 25,000 5,000 12 20,000 10,000 15 16,000 16,000 18 13,000 23,000 21 8,000 30,000 24 3,000 36,000 Table 4-10 above contains information about the wheat market.Answer the following questions based on this table. -Refer to Table 4-10.An agricultural price floor is a price that the government guarantees farmers will receive for a particular crop.Suppose the federal government sets a price floor for wheat at $21 per bushel. a.What is the amount of shortage or surplus in the wheat market as result of the price floor? b.If the government agrees to purchase any surplus output at $21,how much will it cost the government? c.If the government buys all of the farmers' output at the floor price,how many bushels of wheat will it have to purchase and how much will it cost the government? d.Suppose the government buys up all of the farmers' output at the floor price and then sells the output to consumers at whatever price it can get.Under this scheme,what is the price at which the government will be able to sell off all of the output it had purchased from farmers? What is the revenue received from the government's sale? e.In this problem we have considered two government schemes: (1)a price floor is established and the government purchases any excess output and (2)the government buys all the farmers' output at the floor price and resells at whatever price it can get.Which scheme will taxpayers prefer? f.Consider again the two schemes.Which scheme will the farmers prefer? g.Consider again the two schemes.Which scheme will wheat buyers prefer?

If the quantity of nail polish supplied is represented by the equation QS = -3 + 2P then the corresponding price of nail polish is represented by the equation

Marginal cost is

Figure 4-4 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 4-4.What is the value of the deadweight loss at a price of $18?

Congress passed the ________ in 1996,the purpose of which was to phase out price floors and return to a free market in agriculture

Table 4-11 Demand Supply P=80- P=50+1/2 =80-P =2P-100 -Refer to Table 4-11.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 economic surplus in this market?