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

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 $10.50 an hour is mandated,what is the quantity of labor demanded?

The difference between the lowest price a firm would have been willing to accept and the price it actually receives from the sale of a product is called

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 second 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 the champagne falls from $24 to $14

FICA is a payroll tax imposed on employers and workers that is used to fund Social Security and Medicare.Which of the following statements regarding the tax is true?

Hourly Wage (dollars) Quantity of Labor Supplied Quantity of Labor Demanded \ 7.50 530,000 650,000 8.50 550,000 630,000 9.50 570,000 610,000 10.50 590,000 590,000 11.50 610,000 570,000 12.50 630,000 550,000 Table 4-7 shows the demand and supply schedules for the labor market in the city of Pixley. -Refer to Table 4-7.If a minimum wage of $11.50 is mandated there will be a

When a competitive equilibrium is achieved in a market

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 consumer surplus at a price of $18?

Price ceilings result in shortages.

Deadweight loss refers to

The graph below represents the market for lychee nuts.The equilibrium price is $7.00 per bushel,but the market price is $5.00 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 $5.00.

Economists have shown that the burden of a tax is

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 $9.50 an hour is mandated,what is the quantity of labor supplied?

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

When ________ in a market,the total net benefit to society is maximized.

Figure 4-18 shows the market for cigarettes.The government plans to impose a unit tax in this market. -Refer to Figure 4-18.What is the size of the unit tax?

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 Kendra's consumer surplus?

If the price of chewing gum is represented by P in equation P = 25 - 0.5 QD,then the corresponding quantity of chewing gum demanded is represented by the demand equation

Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $1.00,what is Arnold's consumer surplus?

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.Suppose that instead of a rent ceiling,the government imposed a price floor of $2,000 per month for apartments.What is the quantity of apartments demanded at the new price?