Chapter 21

According to the graph what is the producer surplus from selling the 40th cup of coffee if the market price is $2.00?

$0.20

This graph shows an individual's demand curve for tea. If the price is $2.00, what is the consumer surplus for the fourth cup of tea?

$1.00

If the average price that cable subscribers are willing to pay for satellite TV service is $200 but the actual price they pay is $80, how much is the consumer surplus per subscriber?

$120

For Japanese ​consumers, the average consumer surplus per month for Internet service is For U.S. ​consumers, the average consumer surplus per month for Internet service is 45

1623

If $300 is the maximum price allowed for this product, what is the triangle bounded by des called?

A deadweight loss

Producer surplus equals the price a producer receives for a product minus the marginal cost of production.

As the market price decreases​, consumer surplus increases and producer surplus decreases .

According to the graph the tax revenue generated for the government is represented by:

B + D

The deadweight loss from the tax is represented in this graph by area __________.

C +E

In​ 1994, President Bill Clinton proposed an immediate​ $0.75 per pack increase in the cigarette tax. The tax had two​ purposes: to generate revenue fo

Clinton's health-care reform plan and to decrease medical costs by discouraging smoking.

Which of these graphs best describes a minimum price imposed for milk?

Graph A

According to the graph, what is the impact of a quantity restriction (known as a taxi medallion) on the number of taxis allowed to service this market?

There is an excess demand for taxi service and a higher price.

Which of the following statements about a shortage is correct?

There is no shortage of most scarce goods.

According to this graph the existence of a minimum wage in the market for low-skilled workers results in:

an increase in wages but lower employment

For markets to generate the greatest benefit and function in the most efficient manner they must:

be perfectly competitive

The difference between the highest price a consumer is willing to pay and the price the consumer pays is known as:

consumer surplus

if a city imposes a tax of​ $100 per apartment and collects the tax from housing​ firms, the tax will be paid by

consumers and input suppliers.

Consumers will pay the bulk of the tax when the

demand for a taxed good is inelastic.

Rent controls:

make tenants less mobilemake tenants less mobile

if an effective minimum wage is imposed, then:

more workers will be unable to find jobs

According to the graph, the tax in this scenario is:

paid by consumers

A legally determined maximum that sellers may charge is known as a:

price ceiling

In response to information regarding the salaries of executives at firms receiving bailout funds in the United States, some people called for a limit on the salaries paid to executives. Such a limit on the compensation executives can receive is an example of a:

price ceiling

A legally determined minimum price that sellers must receive is known as a:

price floor

Some people believe there should be a legally determined minimum price for farm products such as milk. A limit on the price of milk would be an example of:

price floor

Prolonged shortages arise if:

prices are not allowed to rise to equilibrium

The difference between the lowest price a firm would have been willing to accept and the price it actually receives is known as:

producer surplus

Price performs a(n) __________ function. Inputs or outputs go to the __________ bidders if people are free to exchange voluntarily in the markets without government intervention or other market friction.

rationing, highest

Prolonged agricultural surpluses can arise if governments:

set the price above equilibrium

The steep luxury tax on boats and other luxury goods that Congress passed in 1990 was

shared by consumers and input suppliers.

Price controls that put a price ceiling on goods and services create __________.

shortages

Price controls that put a price floor on goods and services create __________.

surpluses

The deadweight loss from taxation is the difference between the

total burden of a tax and the amount of revenue collected by the government.