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

The maximum price that a buyer is willing to pay for a good measures his

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 producer surplus after the imposition of the price floor?

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 consumer surplus on the first ice cream cone?

The additional cost to a firm of producing one more unit of a good or service is equal to producer surplus.

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 ticket rises from $20 to $38

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

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 consumer surplus at the equilibrium price of P1?

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 consumer surplus after the imposition of the price floor?

Suppose the demand curve for a product is downward sloping and the supply curve is upward sloping.If a unit tax is imposed in the market for this product,

Which of the following statements best describes the concept of consumer surplus?

Each point on a demand curve shows

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 producer surplus after the imposition of the ceiling?

Suppose there are two cities that have rent controlled apartments.In one city (Albany)all apartments are subject to rent control;in the other city (Halftrack)one-half of the apartments are rent controlled.Which of the following is most likely to be true?

Economic efficiency is achieved when there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and

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 ticket falls from $50 to $20

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?

Figure 4-2 -Refer to Figure 4-2.What area represents producer surplus at a price of P1?

Figure 4-9 Figure 4-9 shows the market for cigarettes.The government plans to impose a unit tax in this market. -Refer to Figure 4-9.What is the size of the unit tax?

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

The market price for coffee is $2.25 per cup.Austin is willing to pay $5.00 per cup,Colin is willing to pay $4.00 per cup,Lucy is willing to pay $3.00 per cup,and Ike is willing to pay $2.00 per cup.Construct a graph showing the consumer surplus for each cup of coffee purchased.How many cups of coffee will be purchased? What is the value of the consumer surplus each of the four consumers receives from their coffee purchases?