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

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.At the equilibrium price of P1,consumers are willing to buy Q1 pounds of granola.Is this an economically efficient quantity?

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 $1,what changes in the market would result in an economically efficient output?

When the marginal benefit equals the marginal cost of the last unit sold in a competitive market

Employers withhold several taxes from employees ' paychecks,one of which is FICA.Congress requires employers to pay half of the FICA tax and workers to pay the other half.Does this mean that the burden of the FICA tax falls evenly on employers and employees? Briefly explain.

The difference between the lowest price a firm would have been willing to accept and the price it actually receives from the sale of a product is called

The following equations represent the demand and supply for kumquats. QD = 60 - 3P QS = -20 + 5P What is the equilibrium price (P)and quantity (Q - in thousands)of kumquats?

There will be no deadweight loss if the marginal benefit to consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized.

________ 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 the sum of consumer surplus and producer surplus is at a maximum.

What is meant by the term "economic efficiency"?

In cities with rent control,people have an incentive to list their apartments on sites such as Airbnb at rents ________ the controlled rates,because rent control causes a ________ of apartments.

The additional benefit to a consumer from consuming one more unit of a good or service

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 $10.50 an hour is mandated,what is the quantity of labor demanded?

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 producer surplus?

Two economists from Northwestern University estimated the benefit households received from subscribing to broadband Internet service.They found that in the year they analyzed,47 million consumers paid an average of $36 per month to subscribe to a broadband Internet service,and estimated the value of total consumer surplus for these subscribers was equal to $890.4 million.Based on these numbers,what was the average monthly consumer surplus per subscriber for broadband Internet service?

Figure 4-1 Figure 4-1 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-1.Kendra's marginal benefit from consuming the first ice cream cone is

The minimum wage is an example of

What is deadweight loss? When is deadweight loss equal to zero?

Which of the following is a consequence of minimum wage laws?

Producer surplus is the difference between the highest price someone is willing to pay and the price he actually pays.

Assume the market price for tangerines is $18.00 per bushel.At the market price,tangerine growers are willing to supply a quantity of 12,000 bushels per week.The quantity supplied drops to zero when the price falls to $5.00 per bushel.Construct a graph showing this data,calculate the total producer surplus in the market for tangerines,and show the total producer surplus on the graph.