Exam 9: Properties and Applications of the Competitive Model

-The above figure shows supply and demand curves for milk.In an effort to help farmers,the government passes a law that establishes a $3 per gallon price support.To maintain the price support,government expenditures must equal

Rent seeking in the form of lobbying for an increase in import tariffs by domestic producers

-The above figure shows the market for rice in Japan.SDₒmₑstᵢc represents the domestic supply curve,and Swₒᵣld represents the world supply curve.A $1 per unit tariff has the same effect on producer and consumer surplus as a quota of

The larger the U.S.imposed per unit import tariff on a good imported and produced in the U.S.,

Explain why the competitive output maximizes welfare.

-The above figure shows supply and demand curves for milk.In an effort to help farmers,the government passes a law that establishes a $3 per gallon price support.As a result,consumer surplus falls by

-The above figure shows supply and demand curves for milk.If amount Q2 is produced in the market

Even if two competitive firms in the same market have different production technologies,they will each earn long-run zero profits.Why?

In the short run,if a firm operates,it earns a profit of $500.The fixed costs of the firm are $100.This firm has a producer surplus of

The inverse supply curve in a market is given by Q = 3p².What is the producer surplus when the market price is $6? Illustrate using a graph.

Producer surplus equals

-The above figure shows supply and demand curves for apartment units in a large city.If the city government passes a law that establishes $350 per month as the legal maximum rent,the loss in social welfare equals

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

A ban on imports,a tariff,or a quota raises the price to domestic consumers.This means that consumers will buy less of the product at a higher price.The loss associated with this is called

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 social welfare will most likely

If a city decides to restrict the number of pizza parlors

-The above figure shows supply and demand curves for apartment units in a large city.At the unregulated equilibrium,producer surplus will be

-The above figure shows the market for rice in Japan.SDₒmₑstᵢc represents the domestic supply curve,and Swₒᵣld represents the world supply curve.If imported rice is banned,the consumption distortion loss is equal to

For the following, please answer "True" or "False" and explain why. -Producer surplus equals total revenue minus the sum of all marginal cost.

For the following, please answer "True" or "False" and explain why. -A per unit subsidy increases both consumer and producer surplus,but results in a deadweight loss.