Question 1

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

Accepted Answer

A) Violet and Walter will each buy two tickets. 
B) Walter will receive $4 of consumer surplus from buying one ticket. 
C) Violet and Walter receive a total of $52 of consumer surplus from buying one ticket each.No one else will buy a ticket. 
D) Xavier,Yolanda,and Zachary will receive a total of $68 of consumer surplus since they will buy no tickets.

Question 2

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?

Accepted Answer

A) The price would increase,the quantity supplied would increase,and the quantity demanded would decrease. 
B) The quantity supplied would increase,the quantity demanded would decrease,and the equilibrium price would increase. 
C) The price would increase,the demand would increase,and the supply would decrease. 
D) The price would increase,quantity demanded would increase,and quantity supplied would decrease.

Question 3

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

Accepted Answer

A) deadweight loss is maximized 
B) a competitive equilibrium is achieved 
C) consumer surplus is minimized 
D) producer surplus is minimized

Question 4

Figure 4-5  Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at RS1U1B10S1U1B0.
-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?

Accepted Answer

A) A 
B) B + D + F 
C) C + E 
D) B + C + D + E + F

Question 5

Is there a difference between the "true burden" of a tax and who is legally required to pay a tax? Briefly explain.

Accepted Answer

The answer of Is there a difference between the "true...

Question 6

Figure 4-5  Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at RS1U1B10S1U1B0.
-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?

Accepted Answer

A) D + E 
B) D + F 
C) D 
D) F

Question 7

Which term refers to a legally established maximum price that firms may charge?

Accepted Answer

A) a price ceiling 
B) a subsidy 
C) a price floor 
D) a tariff

Question 8

The total amount of consumer surplus in a market is equal to the area below the market demand curve and above the market price.

Accepted Answer

A) True 
 B)False

Question 9

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 supplied increases by 40,000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Accepted Answer

A) W = $9.00; Q = 410,000 
B) W = $9.50; Q = 420,000 
C) W = $8.50; Q = 400,000 
D) W = $8.00; Q = 390,000

Question 10

Which of the following describes the difference between "scarcity" and "shortage"?

Accepted Answer

A) There is no difference; either word can be used to describe the situation that exists when there is less of a good or service available than people want. 
B) In the economic sense,almost everything is scarce.A shortage of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price. 
C) There is a shortage of almost everything.Scarcity occurs only if the quantity demanded of a good or service is greater than the quantity supplied at the current market price. 
D) In the economic sense,almost everything is scarce.A shortage of a good or service occurs when the quantity demanded is greater than the quantity supplied at the equilibrium price.

Question 11

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 third ice cream cone is

Accepted Answer

A) $13.00. 
B) $2.50. 
C) $1.50. 
D) $0.50.

Question 12

A tax is imposed on employers and workers that are used to fund Social Security and Medicare.This tax is sometimes referred to as

Accepted Answer

A) the Income Security Tax. 
B) the federal income tax. 
C) the ACIF. 
D) the payroll tax.

Question 13

Marco goes to the pet store to buy a dozen Koi fish for his new Koi pond.He is willing to pay $200 for the dozen fish,but buys them for a total of $140.Marco's consumer surplus from the purchase is

Accepted Answer

A) $5. 
B) $60. 
C) $140. 
D) $200.

Question 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 $2.50,what is the consumer surplus on the second ice cream cone?

Accepted Answer

A) $0.50 
B) $1.50 
C) $3.00 
D) $10.50

Question 15

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?

Accepted Answer

The answer of Figure 4-8  Figure 4-8 shows the...

Question 16

Figure 4-5  Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at RS1U1B10S1U1B0.
-Refer to Figure 4-5.What is the area that represents the producer surplus after the imposition of the ceiling?

Accepted Answer

A) F + G 
B) F 
C) D + F + G 
D) A + B + D + F + G

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Figure 4-5  Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at RS1U1B10S1U1B0.
-Refer to Figure 4-5.With rent control,the quantity supplied is Q1.Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get.What is the highest rent they can get?

Accepted Answer

A) R* 
B) R1 
C) R0 
D) more than R1

Question 19

Figure 4-9  Figure 4-9 shows the market for cigarettes.The government plans to impose a per-unit tax in this market.
-Refer to Figure 4-9.How much of the tax is paid by buyers?

Accepted Answer

A) $8 
B) $5 
C) $4 
D) $3

Question 20

Figure 4-5  Figure 4-5 shows the market for apartments in Bay City.Recently,the government imposed a rent ceiling at RS1U1B10S1U1B0.
-Refer to Figure 4-5.What is the area that represents consumer surplus after the imposition of the ceiling?

Accepted Answer

A) A + B + D 
B) A + B + C 
C) A + B + D + F 
D) A + B + D + F + G

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

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

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

Is there a difference between the "true burden" of a tax and who is legally required to pay a tax? Briefly explain.

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 term refers to a legally established maximum price that firms may charge?

The total amount of consumer surplus in a market is equal to the area below the market demand curve and above the market price.

Which of the following describes the difference between "scarcity" and "shortage"?

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 third ice cream cone is

A tax is imposed on employers and workers that are used to fund Social Security and Medicare.This tax is sometimes referred to as

Marco goes to the pet store to buy a dozen Koi fish for his new Koi pond.He is willing to pay $200 for the dozen fish,but buys them for a total of $140.Marco's consumer surplus from the purchase is

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 second ice cream cone?

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?

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

Figure 4-9 Figure 4-9 shows the market for cigarettes.The government plans to impose a per-unit tax in this market. -Refer to Figure 4-9.How much of the tax is paid by buyers?

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 consumer surplus after the imposition of the ceiling?

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

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

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

Is there a difference between the "true burden" of a tax and who is legally required to pay a tax? Briefly explain.

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 term refers to a legally established maximum price that firms may charge?

The total amount of consumer surplus in a market is equal to the area below the market demand curve and above the market price.

Which of the following describes the difference between "scarcity" and "shortage"?

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 third ice cream cone is

A tax is imposed on employers and workers that are used to fund Social Security and Medicare.This tax is sometimes referred to as

Marco goes to the pet store to buy a dozen Koi fish for his new Koi pond.He is willing to pay $200 for the dozen fish,but buys them for a total of $140.Marco's consumer surplus from the purchase is

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 second ice cream cone?

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?

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

Figure 4-9 Figure 4-9 shows the market for cigarettes.The government plans to impose a per-unit tax in this market. -Refer to Figure 4-9.How much of the tax is paid by buyers?

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 consumer surplus after the imposition of the ceiling?

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?

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?

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 consumer surplus after the imposition of the ceiling?