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

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.

Figure 4-10 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R0. -Refer to Figure 4-10.What is the area that represents consumer surplus after the imposition of the ceiling?

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.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?

If the quantity of tacos demanded is represented by the equation QD = 20 - 0.5P then the corresponding price of tacos is represented by the equation

Explain how both renters and landlords could be either winners or losers with the imposition of rent control.

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

Figure 4-5 -Refer to Figure 4-5.The figure above represents the market for pecans.Assume that this is a competitive market.If 8,000 pounds of pecans are sold

Consumer surplus in a market for a product would be equal to ________ if the market price was zero.

Figure 4-3 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-3.If the market price is $3.00,what is the consumer surplus on the first ice cream cone?

Table 4-3 The Waco Kid's Cowboy Hats Marginal Cost (dollars) 1st hat \ 24 2nd hat 30 3rd hat 38 4th hat 46 -Refer to Table 4-3.The table above lists the marginal cost of cowboy hats by The Waco Kid,a firm that specializes in producing western wear.If the price of cowboy hats increases from $38 to $46

Figure 4-17 -Refer to Figure 4-17.Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold.Which of the following statements best describes the impact of the tax?

Table 4-13 Demand Supply P=50-Q P=10+1/3Q Q=50-P Q=3P-30 -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 producer surplus?

If the price of hairspray is represented by P in the equation P = 10 - 0.2 QD,then the corresponding quantity of hairspray demanded is represented by the demand equation

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 $24 dollars

Congress passed the Freedom to Farm Act in 1996.What was the purpose of this Act?

Using a supply and demand graph,illustrate the market for rent-controlled apartments with the following data: Equilibrium rent without rent control: $1,500 Rent with rent control: $700 Quantity of apartments demanded with rent control: 50,000 Quantity of apartments supplied with rent control: 20,000 What is the value of the initial shortage of apartments with rent control? Now assume rent control leads to a reduction in the supply of apartments,and the new quantity supplied is now 15,000.Illustrate this on your graph. What is the value of the shortage of apartments following the decrease in supply?

The graph below represents the market for alfalfa.The equilibrium price is $7.00 per bushel,but the market price is $9.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and deadweight loss at the equilibrium price of $7.00 and at the market price of $9.00.

Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $2.00,what is the consumer surplus on the first burrito?

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.

Table 4-2 Consumer Willingness to Pay Anya \ 24 Basil 20 Celeste 15 Dralon 12 Esther 7 -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 falls from $25 to $10