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

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Question 151

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In the market for gasoline, an increase in the federal excise tax on gasoline would shift the supply curve up.

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Question 152

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Suppliers will be willing to supply a product only if

A) the price received is less than the additional cost of producing the product.
B) the price received is at least equal to the additional cost of producing the product.
C) the price is higher than the average cost of producing the product.
D) the price received is at least double the additional cost of producing the product.

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Question 153

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To affect the market outcome, a price floor

Figure 4-4 Figure 4-4 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 4-4. What is the value of producer surplus at a price of $18?

The sum of consumer surplus and producer surplus is equal to

Rent control is an example of a price floor.

If the quantity of soccer balls demanded is represented by the demand equation Q^D = 80 - 2P, then to solve for the price of soccer balls, the equation would be rewritten as

The following equations represent the demand and supply for bird feeders. Q_D = 35 - P Q_S = -5 + 3P What is the equilibrium price (P) and quantity (Q - in thousands) of bird feeders?

What area on a supply and demand graph represents consumer surplus?

A ________ curve shows the marginal cost of producing one more unit of a good or service.

Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchase. How much does Brett value his cell phone?

Figure 4-3 Figure 4-3 shows Kendra's demand curve for ice cream cones. -Refer to Figure 4-3. If the market price is $4.00, what is the maximum number of ice cream cones that Kendra will buy?

In New York City, government limits on the supply of taxis resulted in a price ________ the competitive market level, which would typically ________ economic efficiency.

Is there a difference between the "true burden" of a tax and who is legally required to pay a tax? Briefly explain.

Figure 4-16 -Refer to Figure 4-16. Suppose the market is initially in equilibrium at price P₁ and now the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax? For demand curve D₁

For most goods and services, the burden of a tax is on the sellers.

Table 4-5 -Refer to Table 4-5. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one of the tickets is $36,

Table 4-13 -Refer to Table 4-13. The equations above describe the demand and supply for Aunt Maud's Premium Hand Lotion. The equilibrium price and quantity for Aunt Maud's lotion are $20 and 30 thousand units. What is the value of consumer surplus?

Figure 4-10 Figure 4-10 shows the market for apartments in Bay City. Recently, the government imposed a rent ceiling at R₀. -Refer to Figure 4-10. What is the area that represents consumer surplus after the imposition of the ceiling?

Figure 4-11 Figure 4-11 shows the demand and supply curves for the coffee market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at $7.00. -Refer to Figure 4-11. What is the value of the deadweight loss after the imposition of the price floor?