Exam 5: Efficiency and Equity

-The figure illustrates the market for bagels. Initially the market is in equilibrium, Then the number of bagels produced is cut from 20 to 10 an hour and the price rises to $2.00 per bagel. Consumer surplus decreases by ________.

The pollution created when coal is burned by utilities to generate electricity is an example of ________.

-The figure above shows Clara's demand for CDs. At a price of $5 for a CD, the value of Clara's total consumer surplus for all the CDs she buys is

-The above figure shows the marginal social benefit and marginal social cost curves of chocolate in the nation of Kaffenia. What is the efficient quantity of chocolate to produce each day?

Underproduction of good ________ create a deadweight loss and overproduction of a good ________ create a deadweight loss.

-The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. Which of the following would result in the quantity of coffee in Kaffenia differing from the efficient quantity?

The producer surplus from a good is equal to the

-The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then the maximum that Dana is willing to pay for the 8th gallon of ice cream is

-The table above gives the demand and supply schedules for bread. Assume that the only people who benefit from bread are the people who consume it and the only people who bear the cost of bread are the people who produce it. a) What is the maximum price that consumers are willing to pay for the 80th loaf of bread? b) What is the minimum price that producers are willing to accept to produce 200 loaves of bread? c) What is the efficient quantity of bread? d) If the market is efficient, what is the consumer surplus? e) If the market is efficient, what is the producer surplus? f) If one firm owns all the bread outlets and sells 120 loaves per day, what is the deadweight loss (if any)?

-The schedules in the table give the marginal social benefit and marginal social cost of a DVD. If there are no external benefits or external costs, the efficient number of DVDs to produce is ________ a week.

What is consumer surplus?

If the government restricts the selling of corn so that the quantity is less than the equilibrium quantity, then the policy I. creates a deadweight loss. II) decreases total surplus.

What is the marginal cost of a good?

-Suppose consumers decide they value a product more highly than before. Then the efficient quantity to produce of that product ________.

The producer surplus on a unit of a good is the

Sal likes to eat pizza. The ________ is the maximum amount that Sal is willing to pay for one more piece of pizza.

The value of one more unit of a good or service is the

Why does the problem of the big tradeoff arise when the government engages in the process of redistributing income using taxes and transfers?

-The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then the gallon that gives Dana exactly zero consumer surplus is

When economists refer to "the invisible hand," what do they mean?