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Exam 4: Economic Efficiency, Government Price Setting, and Taxes

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Question 121

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Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1. If the market price is $2.00, what is the consumer surplus on the first burrito?

A) $0.50
B) $1.00
C) $2.00
D) $7.50

E) B) and C)
F) A) and D)

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Question 122

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The graph below represents the market for alfalfa. The equilibrium price is $7.00 per bushel, but the market price is $9.00 per bushel. Identify the areas representing consumer surplus, producer surplus, and deadweight loss at the equilibrium price of $7.00 and at the market price of $9.00.

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At the equilibrium price of $7.00:
Consu...

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Question 123

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When the government taxes a good or service, it

In cities with rent controls, the actual rents paid can be ________ than the legal maximum. One explanation for this is because there is a ________ of apartments, tenants are ________.

The demand and supply equations for the peach market are: Demand: P = 24 - 0.5Q Supply: P = -6 + 2.5Q where P = price per bushel, and Q = quantity (in thousands). a. Calculate the equilibrium price and quantity. b. Suppose the government guaranteed producers a price of $24 per bushel. What would be the effect on quantity supplied? Provide a numerical value. c. By how much would the $24 price change the quantity of peaches demanded? Provide a numerical value. d. Would there be a shortage or surplus of peaches? e. What is the size of this shortage or surplus? Provide a numerical value.

Table 4-8 Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -To affect the market outcome, a price floor

Table 4-8 Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-8. Suppose that the quantity of labor supplied decreases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Figure 4-9 Figure 4-9 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. -Which of the following is not a result of imposing a rent ceiling?

"Taxes are what we pay for a civilized society." This statement was made by

In a city with rent-controlled apartments, all of the following are true except

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice-cream cones. -Refer to Figure 4-3. What is the total amount that Kendra is willing to pay for 1 ice cream cone?

Using a supply and demand graph, illustrate the effect of the addition of a $10.00 unit tax on digital cameras, where the entire tax burden falls on the seller. Assume the equilibrium price before the tax is $125 and the equilibrium quantity is 50,000. What happens to the price and quantity after the tax is implemented?

The following equations represent the demand and supply for kumquats. QD = 60 - 3P QS = -20 + 5P What is the equilibrium price (P) and quantity (Q - in thousands) of kumquats?

A tax that imposes a small excess burden relative to the tax revenue that it raises is

Figure 4-8 Figure 4-8 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per month. -Refer to Figure 4-8. Suppose that instead of a rent ceiling, the government imposed a price floor of $2,000 per month for apartments. What is the quantity of apartments demanded at the new price?

Figure 4-7 -Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. If 20,000 units of iced tea are sold,

In Singapore the government places a $5,000 tax on the buyers of new automobiles. After the purchase of a new car, a buyer must pay the government $5,000. How would the imposition of the tax on buyers be illustrated in a graph?

Table 4-8 Table 4-8 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. -Refer to Table 4-8. Suppose that the quantity of labor demanded increases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?

Figure 4-21 -Refer to Figure 4-21. The figure above represents demand and supply in the market for cigarettes. Use the diagram to answer the following questions. a. How much is the government tax on each pack of cigarettes? b. What portion of the unit tax is paid by consumers? c. What portion of the unit tax is paid by producers? d. What is the quantity sold after the imposition of the tax? e. What is the after-tax revenue per pack received by producers? f. What is the total tax revenue collected by the government? g. What is the value of the excess burden of the tax? h. Is this cigarette tax efficient?

Table 4-4 -Refer to Table 4-4. The table above lists the highest prices three consumers, Curly, Moe, and Larry, are willing to pay for a bottle of champagne. If the price of one of the bottles is $24 dollars