Exam 5: Economic Efficiency, Government Price Setting and Taxes

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.If the market price is $1.50,what is the consumer surplus on the second burrito?

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.If the market price is $1.00,what is the consumer surplus on the third burrito?

Table 5.7 -Refer to Table 5-7.The equations above describe the demand and supply for Bubba's Fried Jellybeans.What are the equilibrium price and quantity (in thousands)for Bubba's Fried Jellybeans?

If the quantity of donuts supplied is represented by the equation Q_S = -15 + 5P,then the corresponding price of donuts is represented by the equation

Willingness to pay measures

Table 5-3 -Refer to Table 5-3.The table above lists the marginal cost of cowboy hats by The Waco Kid,a firm that specialises in producing fancy dress costumes.If the price of cowboy hats decreases from $38 to $30

Figure 5-4 -Refer to Figure 5-4.The figure above represents the market for pecans.Assume that this is a competitive market.At a price of $9,

________ is maximised in a competitive market when marginal benefit equals marginal cost.

Shortage means the same thing as scarcity.

The total amount of producer surplus in a market is equal to

Table 5-6 -Refer to Table 5-6.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of producer surplus?

The marginal cost for Java Joe's to produce its first cup of coffee is $0.75.Its marginal cost to produce its second cup of coffee is $1.25.Its marginal cost increases by $0.50 for each additional cup of coffee it produces.Suppose the market price for coffee is $2.25.Construct a graph showing the producer surplus for each cup of coffee Java Joe's will sell.How many cups of coffee will Java Joe's sell? What is the value of the producer surplus Java Joe's receives for each cup of coffee it sells?

Rent control is an example of a price ceiling.

Figure 5-5 Figure 5-5 shows the market for apartments in Springfield.Recently,the government imposed a rent ceiling of $1000 per month. -Refer to Figure 5-5.What is the value of the deadweight loss after the imposition of the ceiling?

Economic efficiency is a market outcome in which the marginal benefit of consumers is equal to the marginal cost of production,and the sum of consumer surplus and producer surplus is maximised.

In cities with rent controls,the actual rents paid can be higher than the legal maximum.One explanation for this is

In the economic sense,almost everything is scarce.________ of a good or service occurs when the quantity demanded is greater than the quantity supplied at the current market price.

Arthur buys a new mobile phone for $150.He receives consumer surplus of $150 from the purchase.How much does Arthur value his cell phone?

Figure 5-3 Figure 5-3 shows the market for tiger shrimp.The market is initially in equilibrium at a price of $15 and a quantity of 80.Now suppose producers decide to cut output to 40 in order to raise the price to $18. -Refer to Figure 5-3.What is the value of consumer surplus at a price of $18?

If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximised,then