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

If a tax is imposed on a product,the buyer will always bear the entire burden of the tax.

Table 4-1 -Refer to Table 4-1.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

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 $3.00,what is the consumer surplus on the first ice cream cone?

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 the portion of consumer surplus that has been transferred to producer surplus as a result of the price floor?

A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

Figure 4-4 -Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.At an output of 30,000 units

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 the equilibrium price of P1?

Figure 4-12 -Refer to Figure 4-12.The figure above represents demand and supply in the market for cigarettes.Use the diagram to answer the following questions. a.How much is the government tax on each pack of cigarettes? b.What portion of the unit tax is paid by consumers? c.What portion of the unit tax is paid by producers? d.What is the quantity sold after the imposition of the tax? e.What is the after-tax revenue per pack received by producers? f.What is the total tax revenue collected by the government? g.What is the value of the excess burden of the tax? h.Is this cigarette tax efficient?

If the government implements a price ceiling on insulin,this will have all of the following effects on the market for insulin except

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 area represents the deadweight loss after the imposition of the price floor?

Suppliers will be willing to supply a product in all of the following situations except when

Government intervention in agriculture began in the United States in the 1890s.

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 is $50

When Airbnb customers in Malibu start paying hotel taxes,this will have the potential to ________ the equilibrium price in this market and,therefore,________ efficiency.

Rent control is an example of a price floor.

What is consumer surplus? Why would policy makers be interested in consumer surplus?

________ dictates the lowest wage that firms may pay for labor.

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 $9.50 is mandated there will be a

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

Economic surplus is maximized in a competitive market when