Exam 9: Applications of the Competitive Model

The market demand for cars is P = 1000 - Q and the supply is P = 100 + 2Q. A quota of 150 units will create a dead weight loss of:

If 80,000 Blue Jays fans wanted tickets to the fifth game of the World Series, but there are only 55,000 tickets available:

The market demand for cars is P = 1000 - Q and the supply is P = 100 + 2Q. A quota of 150 units will:

An effective quota does not:

In the long run, if the demand curve in a decreasing cost market shifts up and to the right, then:

New York City taxis require medallions to operate legally. These medallions are only available from other taxis. Explain why the market price of these medallions exceeds $750,000.

Crazy Horse is one of many identical competitive firms producing horse shoes. Its cost function is given by C(Q) = Q² + 4, where Q is the number of horse shoes produced. i)Give an equation for and graph the horse shoe industry long run supply curve. ii)Suppose the demand for horse shoes is given by Q = D(p)= 5000 - 500p. Graph the demand curve. Find the equilibrium price and quantity of horse shoes. iii)Bowing to pressure from the horse ranchers lobby, the government decides to impose a $1 per unit tax on horse shoes. What is the effect of the tax on the price paid by consumers and the equilibrium quantity?

Which of the following will not cause an increase in the equilibrium price?

Suppose that the demand for labour is given by P = 30 - Q and the supply of labour is given by P = 2Q. Which of the following is true if a minimum wage of 24 is imposed on the labour market?

Suppose the market demand for cigarettes is: D=10- P, and the supply of cigarettes is: S=- 2+P, where P is the price per pack of cigarettes. If the government imposes a cigarette tax of $1 per pack, the producers' tax burden is:

The dead weight loss of a tax is a result of

A rent controlled market is an example of:

The observation that over time demand curves become more elastic is labeled:

Import tariffs have the effect of:

A tax on an industry with a perfectly inelastic demand curve will generate a dead weight loss:

Rent control:

The demand function for coffee was q = 381 - 3p and the supply function was q = 5 + 7p where p is the price in dollars and q is kg. The government made it illegal to sell coffee for a price above $32 per kg. To avoid shortages, they agreed to pay coffee traders enough of a subsidy for each lkg of coffee so as to make supply equal demand. How much would the subsidy per kg have to be?

Do consumers benefit if government sets a price ceiling in a market?

An effective quota system does not:

If the elasticity of demand is low, then the introduction of excise taxes implies: