Exam 9: Applying the Competitive Model

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

As the price of a good increases,the loss in consumer surplus is larger,

Policies that restrict supply could generate an increase in social welfare because the increase in producer surplus could exceed the decrease in consumer surplus.

Suppose the market supply curve is p = 5 + Q.At a price of 10,producer surplus equals

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

Assume the price of tomatoes increases.Which of the following causes would correspond to greater producer surplus?

-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

In the long run,competitive firms MUST be profit maximizers because if they do not maximize profits,

If activists successfully lobbied government to force firms to produce more output than they normally would in a perfectly competitive market,

Assume government policy increases the demand for corn.

-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.Currently Q₁ units are imported.The loss from shifting production from foreign to domestic producers equals

You enter a store and buy a bottle of soda.Do you usually receive consumer surplus?

-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 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

If a firm is in a perfectly competitive world but decides to charge a higher price than its competitors,

-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 above figure shows supply and demand curves for milk.Suppose that the government passes a $2 per gallon subsidy.The deadweight loss resulting from this policy will be

-Figure 9.6 shows an individual's demand curve for time per month spent telecommunicating while driving (talking on the car phone.)A car phone is useless except for talking with somebody who is not in the car.If calls are priced at ten cents per minute,what is the consumer surplus derived from talking? What is the most this person would pay for the car phone? Explain.

Deadweight loss occurs when

The deadweight loss associated with output less than the competitive level can be determined by