Chapter 4 and 9.4 micro

Figure 9-4 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-4. Under autarky, the equilibrium price is $54. $30. $24. $0.

$30.

Figure 4-15 shows the market for beer. The government plans to impose a per-unit tax in this market. Refer to Figure 4-15. How much of the tax is paid by buyers? $2 $5 $7 $12

$5

Figure 4-15 shows the market for beer. The government plans to impose a per-unit tax in this market. Refer to Figure 4-15. What is the size of the per-unit tax? $2 $5 $7 $12

$7

Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2. Refer to Figure 4-6. What area represents the deadweight loss at P2? C + E + H G + H C + E B + C

C + E

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 the portion of producer surplus transferred to consumers as a result of the rent ceiling? D + E D D + F F

D

Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2. Refer to Figure 4-6. At the price P2, consumers are willing to buy the Q2 pounds of granola. Is this an economically efficient quantity? No, the marginal benefit of the last unit (Q2) exceeds the marginal cost of that last unit. No, the marginal cost of the last unit (Q2) exceeds the marginal benefit of the last unit. Yes, otherwise consumers would not buy Q2 units. Yes, because the price P2 shows what consumers are willing to pay for the product.

No, the marginal benefit of the last unit (Q2) exceeds the marginal cost of that last unit.

Figure 9-4 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-4. Suppose the government allows imports of leather footwear into the United States. What will be the quantity of imports? Q0 Q1 Q2 Q2 - Q0

Q2 - Q0

Rent control is an example of a subsidy for low-skilled workers. a black market. a price ceiling. a price floor.

a price ceiling.

To affect the market outcome, a price ceiling must be set below the equilibrium price. must be set below the black market price. must be set below the legal price. must be set below the price floor.

must be set below the equilibrium price.

Curly-$50 Moe-$30 Larry-$15 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 $95 dollars, total consumer surplus will be $0. $35. $80. $95.

$0.

Figure 4-15 shows the market for beer. The government plans to impose a per-unit tax in this market. Refer to Figure 4-15. For each unit sold, the price sellers receive after the tax (net of tax) is $20. $22. $27. $32.

$20.

Curly-$50 Moe-$30 Larry-$15 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 $27 dollars, total consumer surplus will be $0. $14. $26. $53.

$26.

Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is $325. $200. $125. $75.

$75.

Refer to Figure 4-2. What area represents the increase in producer surplus when the market price rises from P1 to P2? A + C + E A + B B + D C + E

A + B

Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2. Refer to Figure 4-6. What area represents consumer surplus at the equilibrium price of P1? A + B + C A + B + C + D + E A D + E

A + B + C

Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2. Refer to Figure 4-6. What area represents producer surplus at P2? B + D B + D + G B + C + D + E A + B + D

B + D

Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2. Refer to Figure 4-6. What area represents producer surplus at the equilibrium price of P1? D + E + G + H A + B + C + D + E D + E A + B + D

D + E

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 quantity of apartments demanded at the new price? Q0 Q* 0 Q1

Q1

Figure 9-4 shows the U.S. demand and supply for leather footwear. Refer to Figure 9-4. Under autarky, the consumer surplus is area R. S + V. R + S + V. S.

R.

Figure 4-6 shows the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2. Refer to Figure 4-6. What area represents the deadweight loss at the equilibrium price of P1? C + E + H G + H C + E There is no deadweight loss at the price of P1.

There is no deadweight loss at the price of P1.

A quota is a tax imposed by a government on goods imported into a country. a health and safety restriction imposed on an imported product. a limit placed on the quantity of goods that can be imported into a country. a subsidy granted to importers of a vital input.

a limit placed on the quantity of goods that can be imported into a country.

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called the income effect. producer surplus. the substitution effect. consumer surplus.

consumer surplus.

In New York City, about 1 million apartments are subject to rent control by the local government. Rent control puts a legal limit on the rent that landlords can charge for an apartment. only applies to those apartments which are owned and rented out by the local government. is a government policy which limits apartment rental to those people whose incomes are less than $50,000 per year. is a price floor which sets a minimum rent for apartments.

puts a legal limit on the rent that landlords can charge for an apartment.

Suppliers will be willing to supply a product in all of the following situations except when the price received is equal to the additional cost of producing the product. the price received is at least equal to the additional cost of producing the product. the price received is less than the additional cost of producing the product. the price received is greater than the additional cost of producing the product.

the price received is less than the additional cost of producing the product.

Deadweight loss refers to the opportunity cost to firms from producing the equilibrium quantity in a competitive market. the reduction in economic surplus resulting from not being in competitive equilibrium. the loss of economic surplus when the marginal benefit equals the marginal cost of the last unit produced. the sum of consumer and producer surplus.

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