Exam 10: Using the Competitive Model

Use the following figure to answer the questions : Figure 10-5 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. -Refer to Figure 10-5.Which of the following should necessarily be true?

The Civil Aeronautics Board (CAB).allowed airlines to charge prices above the equilibrium price.Even then the airlines were not profitable because:

Suppose an increasing-cost competitive industry is in equilibrium at a price of $100 and an output of 1,000 units.When a price ceiling of $80 is imposed the quantity traded in the market reduces to 800 units.Which of the following is true?

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. Refer to Figure 10-4.The quantity of imports into the domestic market 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?

Use the following figure to answer the questions : Figure 10-4 : 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. -Refer to Figure 10-4.In the absence of trade,the total consumer surplus is given by _____.

What is meant by producer surplus?

The U.S.airline industry,prior to deregulation,was characterized by _____.

In the short run,an excise tax placed on all firms in an increasing-cost competitive industry will result in:

Use the following figure to answer the questions : Figure 10-2 :shows the intersection of demand and supply at the price P₂ and quantity Q₂ in a competitive market. -Refer to Figure 10-2.What is the consumer surplus at the equilibrium level of output?

One of the reasons for the low profitability of U.S.airlines during the era of regulation by the Civil Aeronautics Board (CAB)was _____.

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

What is meant by consumer surplus?

The area under the supply curve represents _____.

If a commodity has a(n)_____,a greater share of the burden of an excise tax levied on the commodity would be borne by the consumers.

Suppose the demand and supply for apples is given by the following supply and demand curves: Q_S = (1/3)P - (4/3)and Q_D = 12 - P. a)Graph and calculate the equilibrium price [P*] and quantity [Q*]. b)Show that the effect of a per-unit tax of $1 levied on suppliers is the same as when levied on buyers. c)What percent of the $1 per-unit tax is borne by sellers? What percent is borne by buyers?

Which of the following is true of deregulation and airline safety in the U.S.?

Use the following figure to answer the questions : Figure 10-2 :shows the intersection of demand and supply at the price P₂ and quantity Q₂ in a competitive market. -Refer to Figure 10-2.What is the producer surplus at the equilibrium level of output?

The equilibrium of a competitive industry is:

An excise tax imposed on junk food reduces consumer surplus by $50,producer surplus by $80,and results in tax revenue of $40 for the government.What is the welfare effect of this tax?