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

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 producer surplus at a price of $18?

What is marginal benefit? Which curve is also referred to as a marginal benefit curve?

Table 4-14 Demand Supply P=60-2Q =15+Q =30-0.5P = -15 -Refer to Table 4-14.The equations above describe the demand and supply for Pauline's Pickled Pomegranates.The equilibrium price and quantity for Pauline's Pickled Pomegranates are $30 and 15 thousand units.What is the value of consumer surplus?

Government intervention in agricultural markets in the U.S.began in the

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 of the tickets is $36

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 $13,Marko's will produce

The total amount of consumer surplus in a market is equal to the area below the demand curve.

Figure 4-14 shows the market for taxi rides.The following question(s)are based on this figure. -Refer to Figure 4-14.To legally drive a taxicab in New York City,you must have a medallion issued by the city government.Assume that only 13,200 medallions have been issued.Let's also assume this puts an absolute limit on the number of taxi rides that can be supplied in New York City on any day,because no one breaks the law by driving a taxi without a medallion.Assume as well that each taxi provides 6 trips per day.In that case,the quantity of taxi rides supplied is 79,200 (or 6 rides per taxi × 13,200 taxis).This is shown in the diagram with a vertical line at this quantity.Assume that there are no government controls on the prices that drivers can charge for rides. a.What would the equilibrium price and quantity be in this market if there was no medallion requirement? b.If there was no medallion requirement,indicate the area that represents consumer surplus. c.If there was no medallion requirement,indicate the area that represents producer surplus. d.If there was no medallion requirement,indicate the area that represents economic surplus. e.What are the price and quantity with the medallion requirement? f.With a medallion requirement in place,what area represents consumer surplus? g.With a medallion requirement in place,what area represents producer surplus? h.With a medallion requirement in place,what area represents the deadweight loss? i.Based on your answers to parts (c)and (g),are taxicab drivers better off with the medallion requirement for taxicabs than without? j.Are consumers better off with or without the medallion requirement for taxicabs?

Rent control is an example of

Table 4-14 Demand Supply P=60-2Q =15+Q =30-0.5P = -15 -Refer to Table 4-14.The equations above describe the demand and supply for Pauline's Pickled Pomegranates.What are the equilibrium price and quantity (in thousands)for Pauline's Pickled Pomegranates?

Economic efficiency in a competitive market is achieved when

A black market is a market where buying and selling take place

Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of the last unit produced is equal to the marginal cost of production,and in which

All renters benefit from rent control and all landlords lose.

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 is $25

If marginal benefit is greater than marginal cost,output is inefficiently high.

Figure 4-7 -Refer to Figure 4-7.The figure above represents the market for iced tea.Assume that this is a competitive market.If the price of iced tea is $3,what changes in the market would result in an economically efficient output?

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 consumer surplus?

Figure 4-19 -Refer to Figure 4-19.The figure above illustrates the markets for two goods,Good X and Good Y.Suppose an identical dollar tax is imposed on sellers in each market. a.Compare the consumer burden and producer burden in each market.Illustrate your answer graphically. b.If the goal of the government is to raise revenue with minimum impact to quantity consumed,in which market should the tax be imposed? c.If the goal of the government is to discourage consumption,in which market should the tax be imposed?

Figure 4-7 -Refer to Figure 4-7.The figure above represents the market for iced tea.Assume that this is a competitive market.If 10,000 units of iced tea are sold