Exam 10: Using the Competitive Model

Suppose the demand for ice cream sundaes can be represented by the equation Q_D = 10 - P,and the supply is given by the equation Q_S = P.Which of the following is the best estimate of the producer surplus in this market?

Explain how entry restrictions imposed on taxis by a city affects fares and profits of licensed taxi owners as demand increases over time.

When a price ceiling is imposed in a competitive market at a level below the equilibrium price:

For an excise tax which causes output in a market to fall to zero:

When a price ceiling is imposed on a competitive market at a level equal to the equilibrium price:

The following figure shows the domestic U.S.market for bananas and the global market for bananas.The domestic supply curve is given by SUPPLY_US.With free trade,the equilibrium output in the U.S.market is Q.The import quota imposed by the government is equal to 0A. Figure 10-5 -Refer to Figure 10-5.Which of the following should necessarily be true in the absence of a quota?

When a price ceiling is imposed on a competitive market at a level above the equilibrium price:

The following figure shows the intersection of the demand and supply curves for a commodity in the domestic market at price P₂ and quantity Q₂,in the absence of trade.With trade,the supply curve shifts to Supply_trade. Figure 10-4 -Refer to Figure 10-4.In the absence of trade,the total consumer surplus is given by _____.

Suppose the demand for raspberry frozen yogurt can be represented by the equation Q_D = 5 - 2P,and the supply is given by the equation Q_S = 3P.Which of the following is the best estimate of the consumer surplus in this market?

The following figure shows the demand and supply for a commodity in the domestic U.S.market as well as the global market.The commodity is imported from the rest of the world to the U.S.market. Figure 10-3 -Refer to Figure 10-3.The total producer surplus prior to trade was _____.

Which of the following is true of international trade?

The following figure shows the intersection of the demand and supply curves for a commodity in the domestic market at price P₂ and quantity Q₂,in the absence of trade.With trade,the supply curve shifts to Supply_trade. Figure 10-4 -Refer to Figure 10-4.The net gain to domestic residents when they trade with foreign suppliers is represented by _____.

The following figure shows the effect of a price ceiling in the market for yams.The market was initially in equilibrium at price P₂ and quantity B. Figure 10-1 -In Figure 10-1,the deadweight loss due to a price ceiling set at P₁ is area _____.

The following figure shows the domestic U.S.market for bananas and the global market for bananas.The domestic supply curve is given by SUPPLY_US.With free trade,the equilibrium output in the U.S.market is Q.The import quota imposed by the government is equal to 0A. Figure 10-5 -Refer to Figure 10-5.Given that trade in bananas is free from any restrictions,which of the following would be true if P₅ was lesser than P₃?

In 2002,the U.S.imposed higher tariffs on steel imports to save American jobs.However,the 30 percent increase in tariffs on steel imports imposed a net job loss on the U.S.in part because:

Suppose a city limits the number of cabs that can provide taxi service by issuing medallions. If the medallions can be bought and sold and they command a positive price,you can conclude that: