Exam 5: Economic Efficiency, Government Price Setting and Taxes

Figure 5-4 -Refer to Figure 5-4.The figure above represents the market for pecans.Assume that this is a competitive market.If the price of pecans is $3,

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.If the market price is $3.00,what is the maximum number of burritos that Arnold will buy?

The following equations represent the demand and supply for silver pendants. Q_D = 50 - 2P Q_S = -10 + 2P What is the equilibrium price (P)and quantity (Q - in thousands)of pendants?

Figure 5-1 Figure 5-1 shows Arnold's demand curve for burritos. -Refer to Figure 5-1.What is the total amount that Arnold is willing to pay for 4 burritos?

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 Arnold's consumer surplus?

Figure 5-2 -Refer to Figure 5-2.What area represents producer surplus at a price of P₂?

Table 5-4 Table 5-4 shows the demand and supply schedules for labour market in the city of Pixley. -Refer to Table 5-4.Suppose that the quantity of labour supplied increases by 40 000 at each wage level.What are the new free market equilibrium hourly wage and the new equilibrium quantity of labour?

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 producer surplus after the imposition of the ceiling?

The demand and supply equations for the apple market are: Demand: P = 12 - 0.01Q Supply: P = 0.02Q where P= price per bushel,and Q = quantity. a.Calculate the equilibrium price and quantity. b.Suppose the government guaranteed producers a price of $10 per bushel.What would be the effect on quantity supplied? Provide a numerical value. c.By how much would the $10 price change the quantity of apples demanded? Provide a numerical value. d.Would there be a shortage or surplus of apples? e.What is the size of this shortage or surplus? Provide a numerical value.

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.Suppose that instead of a rent ceiling,the government imposed a price floor of $2000 per month for apartments.What is the quantity of apartments demanded at the new price?

________ refers to the reduction in economic surplus resulting from not being in competitive equilibrium.

What is producer surplus? What does producer surplus measure?

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.Suppose that instead of a rent ceiling,the government imposed a price floor of $2000 per month for apartments.What is the value of consumer surplus after the imposition of the price floor?

Table 5-2 -Refer to Table 5-2.The table above lists the highest prices five consumers are willing to pay for a theatre ticket.If the price of one ticket falls from $25 to $10,

Table 5-5 -Refer to Figure 5-6 which shows the market for vitamins.Suppose the government imposes a price ceiling of P_v.How will the price ceiling affect the quantity supplied,quantity demanded and quantity exchanged?

Figure 5-7 Figure 5-7 shows the market for beer.The government plans to impose a unit tax in this market. -Refer to Figure 5-7.How much of the tax is paid by producers?

Consumer surplus in a market for a product would be equal to ________ if the market price was zero.

Will equilibrium in a market always result in an outcome that is economically efficient? Explain.

Figure 5-4 -Refer to Figure 5-4.The figure above represents the market for pecans.Assume that this is a competitive market.If 4000 pounds of pecans are sold,

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 market price of cowboy hats is $35,The Waco Kid will produce