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Exam 4: Market Efficiency and Market Failure

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Question 111

Multiple Choice

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Figure 4-17 -Refer to Figure 4-17.The efficient output level is

A) Qm.
B) Qn.
C) Qₒ.
D) Qₒ - Qm.

E) All of the above
F) B) and C)

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Question 112

Multiple Choice

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The cost borne by a producer in the production of a good or service is called

A) private cost.
B) public cost.
C) social cost.
D) internal cost.

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

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Question 113

Multiple Choice

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Private costs

Government intervention in agricultural markets in the U.S.began

Deadweight loss refers to a loss in revenue resulting from producers having to reduce their selling price to remain competitive.

Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos. -Refer to Figure 4-1.If the market price is $1.50,what is Arnold's consumer surplus?

Two economists from Northwestern University estimated the benefit households received from subscribing to broadband Internet service.The economists found that

Companies in the sharing economy,such as Airbnb and Uber,have the potential to increase consumer surplus and decrease deadweight loss.This would occur by ________ the equilibrium price in their market,and by doing so ________ efficiency.

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 producer surplus after the imposition of the price floor?

Table 4-8 $\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Hourly Wage } \\\text { (dollars) }\end{array} & \begin{array} { c } \text { Quantity of } \\\text { Labor } \\\text { Supplied }\end{array} & \begin{array} { c } \text { Quantity of } \\\text { Labor } \\\text { Demanded }\end{array} \\\hline \$ 8.00 & 350,000 & 390,000 \\\hline 8.50 & 360,000 & 380,000 \\\hline 9.00 & 370,000 & 370,000 \\\hline 9.50 & 380,000 & 360,000 \\\hline 10.00 & 390,000 & 350,000 \\\hline 10.50 & 400,000 & 340,000 \\\hline\end{array}$ 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?

If policymakers use a pollution tax to control pollution,the tax per unit of pollution should be set

Figure 4-12 -Refer to Figure 4-12 which shows the market for watermelons.Suppose the government imposes a price floor of Pw.How will the price floor affect the quantity supplied,quantity demanded and quantity exchanged?

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.Suppose that instead of a price ceiling,the government imposed a price floor of R₁.What is the area representing consumer surplus after the imposition of the price floor?

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 value of producer surplus after the imposition of the price floor?

Table 4-5 $\begin{array} { | l | l | } \hline \text { Consumer } & \text { Willingness to Pay } \\\hline \text { Violet } & \$ 48 \\\hline \text { Walter } & 40 \\\hline \text { Xavier } & 30 \\\hline \text { Yolarada } & 24 \\\hline \text { Zachary } & 14 \\\hline\end{array}$ -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 ticket falls from $50 to $20

The additional cost to a firm of producing one more unit of a good or service is the

In New York City,about 1 million apartments are subject to rent control by the local government.Rent control

Rent control is an example of a price ceiling.

Assume that emissions from electric utilities contribute to pollution in the form of acid rain.Which of the following describes how this affects the market for electricity?

The additional cost to a firm of producing one more unit of a good or service is equal to producer surplus.