Exam 9: Applying the Competitive Model

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

Which of the following is not a potential result of a price floor?

The tax revenue that is generated by a government tax is counted towards total welfare.

Firms are ________ with an economic profit of zero,they will ________ in the industry since they ________ be better off in another industry.

-The above figure shows the market for rice in Japan.S represents the domestic supply curve,and the horizontal line at P =1 represents the world supply curve.If imported rice is banned,the loss in social welfare 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 total welfare associated with a market that includes a government sales tax equals

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

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

If a city decides to restrict the number of pizza parlors,

If lower-income households spend a greater share of their income on cigarettes than do higher-income households,then a tax that raises the price of cigarettes will

-The above figure shows supply and demand curves for milk.If the government passes a $2 per gallon specific tax,the loss in social welfare will equal

The difference between producer surplus and profit is always the associated with

A new law applied to a competitive market that requires laid off workers be paid a large severance payment will

Suppose consumers of cigarettes can be classified into two groups: heavy users and light users.Heavy users purchase more cigarettes and are less sensitive to price changes relative to light users.To determine whether a heavy user suffers a greater loss of consumer surplus than a light user does when the price of cigarettes increases,one would need to know

Suppose an industry trade group has convinced legislators that a price floor should be used so that producer surplus is maximized in the market for milk.The group argues that such a policy would save the "family farm." Assuming a downward-sloping linear demand curve and a horizontal long-run supply curve,determine the resulting price,output and social welfare from such a policy.Compare this result to the competitive equilibrium.

In a competitive market,the demand and supply curves are Q = 12 - P and Q = 5P,respectively.If output is fixed at Q = 5,what is the amount of the resulting deadweight loss?

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

In economics,welfare analysis is useful to

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.Smith's consumer surplus is