Market efficiency

What is the value of producer surplus in the table above?

$12

If the output level is Q1, then the sum of the consumer and producer surplus is

0abe.

What is the amount of consumer surplus after the government imposes the excise tax on the market?

$32

By how much does Producer Surplus decrease after the tax is imposed?

$38

What is the amount of deadweight loss after the government imposes the excise tax on the market?

$4

At equilibrium, producer surplus is

150. (bottom tringle)

At what level of output is productive efficiency achieved?

3

At what level of output is allocative efficiency achieved?

4

If output is at 3 units, then the market ____ allocative efficiency and _____ productive efficiency.

does not achieve, does not achieve

Deadweight losses occur when the quantity of an output produced is

less than or greater than the competitive equilibrium quantity

If a price ceiling in this market is set at P2, then

no deadweight loss occurs.

What area represents consumer surplus after the government imposes the excise tax on the market?

triangle $21a$13

What is the value of consumer surplus?

$6

What is the value of economic surplus in the table above?

$24

Why does consumer surplus decrease when price increases?

Consumers buy less of the good at a higher price.

The intention of a price ceiling is to help consumers by forcing a price that is below the equilibrium price. What is one unintended consequence of this policy?

Consumers face a shortage of the good.

At equilibrium, economic surplus is represented by the area

a + b.

If a price ceiling in this market is set at P1, then producer surplus equals area

c.

Amanda buys a ruby for $330 for which she was willing to pay $340. The minimum acceptable price to the seller, Tony, was $140. Tony experiences a

producer surplus of $190 and Amanda experiences a consumer surplus of $10.

Consumer surplus arises in a market because

the market price is below what some consumers are willing to pay for the product.