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

Figure 4-4 -Refer to Figure 4-4.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?

What area on a supply and demand graph represents producer surplus?

If the price of garlic is represented by equation P = 25 - QD,then the corresponding quantity of garlic demanded is represented by the equation

Figure 4-3 Figure 4-3 shows the market for granola.The market is initially in equilibrium at a price of P1 and a quantity of Q1.Now suppose producers decide to cut output to Q2 in order to raise the price to P2. -Refer to Figure 4-3.What area represents producer surplus at P2?

The difference between the ________ for a good and the ________ is called consumer surplus.

Table 4-4 Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-4.Suppose that the quantity of labor demanded increases by 40,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

You are given the following market data for Venus automobiles in Saturnia. Demand: P = 35,000 - 0.5Q Supply: P = 8,000 + 0.25Q where P = Price and Q = Quantity. a.Calculate the equilibrium price and quantity. b.Calculate the consumer surplus in this market. c.Calculate the producer surplus in this market.

Figure 4-3 Figure 4-3 shows the market for granola.The market is initially in equilibrium at a price of P1 and a quantity of Q1.Now suppose producers decide to cut output to Q2 in order to raise the price to P2. -Refer to Figure 4-3.What area represents the deadweight loss at the equilibrium price of P1?

If the quantity of hearing aids demanded is represented by the equation QD = 40 - P then the corresponding price of hearing aids is represented by the equation

Price floors are illegal in the United States.

Which of the following is a result of government price controls?

Figure 4-5 Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at R0. -Refer to Figure 4-5.What is the area that represents the portion of producer surplus transferred to consumers as a result of the rent ceiling?

Which of the following statements is not true?

Deadweight loss refers to a loss in revenue resulting from producers having to reduce their selling price to remain competitive.

Equilibrium in a competitive market results in the greatest amount of economic surplus from the production of a good or service.

Compared to prices charged by Uber,traditional taxi companies charge government-regulated prices.These government-regulated prices ________ in the market for shared rides.

The additional benefit to a consumer from consuming one more unit of a good or service is the marginal benefit.

Figure 4-11 -Refer to Figure 4-11.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?

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

Table 4-7 -Refer to Table 4-7.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?