Exam 4: Demand and Supply Applications

Refer to the information provided in Figure 4.2 below to answer the question(s) that follow. Figure 4.2 -Refer to Figure 4.2. The market is initially in equilibrium at Point A and supply shifts from S₁ to S₂. Which of the following statements is true?

The total of consumer plus producer surplus is ________ at the market equilibrium.

Deadweight loss is the difference between consumer surplus and producer surplus.

A surplus will occur if a ________ is set ________ the equilibrium price.

A U.S. import fee on oil would reduce imports and raise the price of U.S. oil products.

Favored customers are customers who receive special treatment from dealers during periods of

If a price ceiling is set above the equilibrium price

The difference between the maximum a person is willing to pay and current market price is known as

If someone is willing to pay $500 to go to the Super Bowl but can buy a ticket for $300, they will get $200 in consumer surplus.

Queuing, or waiting in line, is an alternative rationing mechanism to price rationing.

Refer to the information provided in Figure 4.6 below to answer the question(s) that follow. Equilibrium in this market occurs at the intersection of curves S and D. Figure 4.6 -Refer to Figure 4.6. If price is P1, the deadweight loss due to under production is area

Refer to the information provided in Figure 4.6 below to answer the question(s) that follow. Equilibrium in this market occurs at the intersection of curves S and D. Figure 4.6 -Refer to Figure 4.6. Producer surplus changes by the area [E + F] if price goes from equilibrium to

Refer to the information provided in Figure 4.1 below to answer the question(s) that follow. Figure 4.1 -Refer to Figure 4.1. Assume that initially there is free trade. If the United States then imposes a 10-cent tax per apple

A U.S. import fee on oil would reduce the domestic quantity of oil demanded.

An effective price floor must be set

The government imposes a price floor on wheat that is below the market price. You are asked to suggest a rationing scheme that will minimize the misallocation of resources. You suggest

In the short run, whenever excess demand exists, it is necessary to

Quantity demanded will equal quantity supplied if a ________ is set ________ the equilibrium price.

The benefit of a price ceiling to ________ is ________.

Refer to the information provided in Figure 4.4 below to answer the question(s) that follow. Figure 4.4 -Refer to Figure 4.4. The price of oil in the United States would be $125 per barrel, and the United States would import 6 million barrels of oil per day if the United States levies ________ per barrel tax on imported oil.