Exam 9: Applying the Competitive Model

-The above figure shows the market for rice in Japan where price is expressed in dollars. S represents the domestic supply curve, and the horizontal line at P = 1 represents the world supply curve. Suppose a free market exists. If a $1 per unit tariff is imposed on imported rice, the quantity of imported rice will decrease by

Advocates of steel tariffs to protect U.S. steel firms realize that when imposing such tariffs, the gains of firms are outweighed by the losses to consumers. This implies that

Survivability in a perfectly competitive world requires that

Mister Jones was selling his house. The asking price was $220,000, and Jones decided he would take no less than $200,000. After some negotiation, Mister Smith purchased the house for $205,000. Jones' producer surplus is

Joe's demand for spring water can be represented as p = 10 - Q (where p is measured in $/gallon and Q is measured in gallons). He recently discovered a spring where water can be obtained free of charge. His consumer surplus from this water is

-The above figure shows the demand and supply curves in the market for milk. If the government imposes a quota at 500 gallons, calculate the deadweight loss.

The services of real estate brokers are provided in a competitive market. If the state Board of Realtors enacts several requirements that limit the number of real estate brokers, then consumer surplus will most likely

A minimum wage is an example of a

If a firm enjoys producer surplus in perfectly competitive Market A of $1000 and would enjoy producer surplus in perfectly competitive Market B of $1200, the firm would consider moving to Market B if

Which of the following is a potential result of a price ceiling?

The welfare loss from an import quota is greater than that of an equivalent tariff because

Does a competitive long-run equilibrium require cost-minimization?

If a market produces a level of output that exceeds the competitive equilibrium output, then

Sheri is currently purchasing 10 units of a normal good and her indifference curves exhibit diminishing marginal rate of substitution. Suppose there is a decrease in the market price of this good. Then

In a perfectly competitive market the long-run demand and supply curves are Q = 12 - P and Q = 5P respectively. Producer surplus in this market equals

-The above figure shows the market for rice in Japan where price is expressed in dollars. S represents the domestic supply curve, and the horizontal line at P = 1 represents the world supply curve. Suppose a free market exists. An import quota of Q₂ units would

In the long-run equilibrium in perfect competition, consumer surplus is

What is one reason activists might lobby the government for regulation limiting the production of a product to less than would normally be in a perfectly competitive market?

-The above figure shows supply and demand curves for milk. In an effort to help farms, the government passes a law that establishes a $3 per gallon price support, but allows farmers to decide how much milk to produce. The government then provides a deficiency payment to guarantee that the farmers receive $3 per gallon. The required deficiency payment equals

What is one reason perfectly competitive firms wish to be ever more efficient?