Exam 5: Efficiency and Equity

The annual Great Sofa Round-up is a collaborative event between Colorado State University and the City of Fort Collins aims to help students and neighbors get rid of unwanted furniture, while giving people in need access to inexpensive sofas. Suppose on the day of the Round-up, your friends take their couches to the main parking lot on campus where the Round-up is held. Raj will not sell his couch for less than $30, Emily will not sell her couch for less than $50, Nara will not sell her couch for less than $20, Sergio just wants to get rid of his couch and he is willing to give it away for free. At the Round-up, potential buyers think that all the couches available are basically the same and they are willing to buy a couch for $25. Who will sell their couch and what is the value of the market producer surplus?

-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the producer surplus?

The Wii is a wildly popular home video game console released by Nintendo. The Wii system was first available in the U.S. in November, 2006 and has sold more than 30 million units as of August 2010. The Wii retails for $199. Suppose Ahmed is willing to pay $230, Lana is willing to pay $175, and Bodie is willing to pay $300 for a Wii. What is the value of Lana's consumer surplus?

Marginal cost is the

-The figure above shows the market for coffee. If more coffee plantations are planted in Brazil and Vietnam so that the supply of coffee increases, the efficient quantity of coffee will ________ and the consumer surplus will ________.

-The table above gives the demand and supply schedules for bottled spring water in Springsboro. Assume that the only people who benefit from spring water are the people who drink it and the only people who bear the cost of bottled spring water are the people who produce it. a) Draw the market demand and market supply curves. What are the equilibrium price and equilibrium quantity of spring water? Is this equilibrium efficient? Explain. b) What is the maximum price that consumers are willing to pay for the 400th bottle? What is the minimum price that producers are willing to accept for the 400th bottle? Explain. c) Are 400 bottles a day less than or greater than the efficient quantity? Explain your answer. d) If the market for spring water is efficient, what is the consumer surplus? Show it on your graph. What is the producer surplus? Show it on your graph. e) If spring water bottlers produce 400 bottles a day, is there a deadweight loss? If yes, what is it? Explain your answer using your graph.

-The figure above shows the market demand curve for pizza. a) What is the marginal social benefit of the 20th pizza? b) What is the maximum price a consumer is willing to pay for the 20th pizza? c) If the price of a pizza is $6, what is the consumer surplus of the 20th pizza? d) If the price of a pizza is $10, what is the consumer surplus? e) If the price of a pizza is $6, what is the consumer surplus?

At the current level of output, the marginal social benefit from a slice of pizza is less than the marginal social cost of producing a slice of pizza. Resources will be used more efficiently if ________ slices of pizza are produced and ________ other goods are produced.

Jason needs help getting ready for the next test in his economics course and would like to hire Maria, an economics tutor to help him. Jason is willing to pay $30 for the first hour of tutoring, $25 for the second, $20 for the third, $15 for the fourth, and $10 for the fifth. The equilibrium price for tutoring is $15 per hour. For how many hours of tutoring will Jason hire Maria? Why this amount of hours? What is Jason's consumer surplus, if any, from the tutoring? What is Maria's consumer surplus from the tutoring?

The night before enrollment was to open for the University of Johannesburg a line of people more than a mile long formed outside the gates. When the gates opened, a stampede started, and a woman lost her life in her attempt to secure her son a spot at the university and a chance for a better life. The allocation of resources in this case was made using

-The figure above shows the market for umbrellas in Sunville. Suppose one firm owns all umbrella stores in Sunville and charges $40 per umbrella. In this situation, the market for umbrellas is

As a method of resource allocation, force

-The above figure shows the marginal social benefit and marginal social cost curves of coffee in the nation of Kaffenia. When 400 pounds of coffee are produced and consumed in Kaffenia each day, that is

A contest is a good way to allocate scarce resources when

Fitness is a magazine for women about health and exercise. Fitness offers year subscriptions for $12 on their website. Jess, Ania, Mandy, and Chloe exercise together and each enjoy reading Fitness. Jess is willing to pay $10, Ania is willing to pay $16, Mandy is willing to pay $24, and Chloe is willing to pay $12 for a subscription to the magazine. Who will subscribe to the magazine?

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

How can a person argue that health care services in America are provided efficiently, but not fairly?

-The above table gives the market demand and market supply schedules for soda. What is the minimum price that producers are willing to accept for the 400th can of soda?

A cost borne not by the producer but by other people is called ________ cost.

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