Exam 9: Properties and Applications of the Competitive Model

-The above figure shows the demand and supply curves in the market for milk.Currently the market is in equilibrium.If the government imposes a $2 per gallon tax to be collected from sellers,estimate the change in p,Q,and social welfare.

-The domestic demand curve,domestic supply curve,and world supply curves for a good are given in the above figure.All the curves are linear.Initially,the country allows imports.Then imports are banned.Calculate how consumer and producer surplus change because of the ban.Is the country better off with the ban on imports? Why?

-The above figure shows the demand and supply curves in the market for milk.Currently the market is in equilibrium.If the government establishes a $2 per gallon price ceiling to ensure that children are nourished,estimate the change in p,Q,and social welfare.

The total welfare associated with a market that includes a government sales tax equals

For the following, please answer "True" or "False" and explain why. -The welfare loss of a tariff equals that of a import quota that leads to the same level of imports.

-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 consumer's net gain in surplus equals

Suppose the market supply curve is p = 5 + Q.If price increases from 10 to 15,the change in producer surplus is

-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 must purchase

For the following, please answer "True" or "False" and explain why. -If a city decides to lift restrictions on how many taxi cabs can operate,social welfare will increase.

The difference between producer surplus and profit is always the associated

-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 loss in social welfare is

-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.The loss in social welfare resulting from this price support equals

If a city government enacts a maximum price on rent,

Which of the following best describes the market reaction if a city restricts the number of firms that are allowed to operate in a market?

"Supporters of import restrictions and protectionist policies place greater weight on producer welfare than on consumer welfare." Comment.

A competitive market maximizes social welfare because in a competitive market,

-The above figure shows the demand and supply curves in the market for milk.Currently,the market is in equilibrium.If the government imposes a $2 per gallon tax to be collected from sellers,calculate the dead weight loss associated with the tax,and explain why the dead weight loss occurs.

-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,producer surplus decreases by

-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,deadweight loss occurs because

-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.