Exam 5: Efficiency and Equity

-The figure above shows the market for hot dogs. a) What is the maximum price consumers are willing to pay for the 25th hot dog? b) What is the efficient quantity? c) Suppose that the production was limited to 25 hot dogs. In the figure, indicate the amount of the deadweight loss.

When there are external costs of production, such as when electric utilities burn coal, a competitive market will produce an inefficient level of output.

-The diagram above depicts the market demand for, and market price of, buckets of raw oysters in Orlando. a) What is the consumer surplus of the person who buys the 100th bucket of oysters? b) What is the consumer surplus of the person who buys the 200th bucket of oysters? c) What is the consumer surplus of the person who buys the 300th bucket of oysters? d) What is the consumer surplus in the market?

Alice is willing to pay $3 for the second slice of pizza she eats. The price she pays is $2. Alice's consumer surplus for this slice of pizza equals

-In the above figure, if the market produces the efficient amount of purses then producer surplus equals triangle

-In the above figure, the total producer surplus at the efficient level of output is ________.

-In the above figure, suppose the government subsidizes the production of milk so that milk production increases to 8 million gallons per day. What is the size of the deadweight loss? (Hint: It is equal to the triangular area of negative consumer and producer surplus that results when output exceeds the efficient level.)

In the United States, resources are most often allocated by

-In the above figure, what is the marginal social cost to the economy of producing the four-hundredth pretzel?

-In the above figure, suppose that the government sets a limit that may be produced of 10 units of output and the price rises to $4. In comparison to a competitive market the producer surplus would rise by

Which of the following conditions could lead to an inefficient quantity of pretzels being produced?

-The figure above shows the market for coffee. If the efficient quantity of coffee is produced, the consumer surplus is

The cost of producing one more pizza is the

According to John Rawls, the fair distribution of income is the one that

-In the figure above, for each CD, the price a consumer is willing to pay is equal to the

Marginal cost is the minimum price that producers must receive to induce them to produce another unit of a good or service.

Which curve is the same as the market demand curve? Why are the curves the same?

When the efficient quantity of output is produced,

When the competitive market is using its resources efficiently, the

-In the above figure, if output is 30 units, then the total deadweight loss is