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

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.If a minimum wage of $10.00 is mandated there will be a

The following equations represent the demand and supply for bird feeders. QD = 35 - P QS = -5 + 3P What is the equilibrium price (P)and quantity (Q - in thousands)of bird feeders?

If buyers were required to pay the federal excise tax on gasoline directly to the government,the demand curve for gasoline would shift up.

Which of the following is a result of imposing a rent ceiling?

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-1.If the market price is $3.50,what is the maximum number of ice cream cones that Kendra will buy?

To affect the market outcome,a price floor

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 P2?

Because minimum wage is a price floor

Table 4-6 -Refer to Table 4-6.The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion.What are the equilibrium price and quantity (in thousands)for Aunt Maud's Lotion?

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.Suppose that instead of a price ceiling,the government imposed a price floor of R1.What is the quantity of apartments demanded at the new price?

The graph below represents the market for alfalfa.The market price is $7.00 per bushel.Identify the areas representing consumer surplus,producer surplus,and economic surplus.

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

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.Suppose that instead of a price ceiling,the government imposed a price floor of R1.What is the area representing consumer surplus after the imposition of the price floor?

Figure 4-8 Figure 4-8 shows the market for taxi rides.The following question(s)are based on this figure. -Refer to Figure 4-8.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?

Table 4-3 -Refer to Table 4-3.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 $18

Table 4-2 -Refer to Table 4-2.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

Economists ________ that price controls are desirable.

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-1.If the market price is $2.50,what is the consumer surplus on the first ice cream cone?

Juanita goes to the Hardware Emporium to buy a new circular saw.She is willing to pay $120 for a new saw,but buys one on sale for $85.Juanita's consumer surplus from the purchase is

Figure 4-6 Figure 4-6 shows the demand and supply curves for the coffee market.The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at $7.00. -Refer to Figure 4-6.What is the value of producer surplus after the imposition of the price floor?