market efficiency
Refer to the graph to calculate the amount of producer surplus generated in the market after the imposition of the $3 tax. Producer surplus is $
100
Referring to the graph, what is the value of the economic surplus generated in this market?
27,000
According to the graph, if a $3 tax is imposed in the market, what percentage of this $3 tax is borne by the consumers?
66.7% - 100
To estimate how efficient a tax is at raising revenue ______ the deadweight loss by the total tax revenue generated.
divide
Referring to the graph, identify the consumer surplus (CS) if a binding price floor of P4P4 was imposed in the market.
CS = Area A
Refer to the graph to calculate the amount of consumer surplus generated in the market after the imposition of the $3 tax. Consumer surplus is $
$200
Suppose the government imposes a tax on suppliers of energy drinks equal to $1 per 16 oz. can. Before the tax, 10,000 cans were sold. After the tax, 8,000 cans are sold. The tax revenue is equal to $
8000
When calculating producer surplus for the market:
calculate the area above the supply curve and below the equilibrium price from zero to the quantity traded.
Consumer surplus:
can increase or decrease as a result of a price ceiling.
Consumers may gain a little but society as a whole will be worse off with a price _____ because of the deadweight losses
ceiling
______ surplus will always be less with a binding price ceiling than without.
consumer
_____surplus will always be less with a binding price floor than without.
consumer
with a binding price floor _____ always lose
consumers
A person will purchase a good or service so long as the person's marginal _______ is greater than the marginal ______
cost benefit
The difference between economic surplus when the market is at its competitive equilibrium and economic surplus when the market is not in equilibrium is the:
deadweight loss.
Marginal benefit is measured by the ______ curve
demand
Producer surplus is the:
difference between the price producers receive for a good or a service and the minimum price they are willing and able to accept.
When marginal benefit equals marginal cost the market is allocatively________ and is therefore maximizing economic surplus.
effiecient
When the price of a good is exactly equal to the willingness to pay there is negative surplus from the purchase.
false
When markets are taxed at ____ rates it generates a large amount of deadweight loss in each of the markets.
high
Producer surplus can increase or decrease as a result of a price floor depending on how much the price is forced to:
increase and how much the quantity supplied rises.
Consumer surplus is the difference between the:
maximum price consumers are willing and able to pay for a good or a service and the price they actually pay.
A tax on suppliers shifts the:
supply curve up vertically.
When marginal benefit equals marginal cost economic _______ is maximized in that market
surplus
deadweight loss represents _____ that was never created
trade
Deadweight loss is the:
value of the economic surplus that is forgone when a market is not allowed to adjust to its competitive equilibrium.
According to the graph, if a $3 tax is imposed in the market, what percentage of this $3 tax is borne by the producers?
33.3%
Assuming supply and demand are not perfectly elastic if an excise tax doubles the deadweight loss increases by a factor of
4
Which of the following is true?
Allocative inefficiency means there is deadweight loss.
If a binding price floor of $4 is imposed on the market for tomatoes, producer surplus is represented by what area?
Area B + C + D
Producing the goods and services that consumers most want in such a way that the marginal benefit equals the marginal cost is:
allocative efficiency.
When there is a binding price ceiling producer surplus will:
always be less so producers always lose.
Referring to the graph, identify the consumer surplus (CS) if a binding price floor of P4P4 was imposed in the market.
area A
The market is allocatively efficient and is maximizing economic surplus in market equilibrium where marginal _______ equals marginal _____
benefit revenue
All else equal as the price of a good decreases consumer surplus ______
increases
a tax
increases the cost of goods produced and shifts the supply curve up.
An economy is productively efficient when:
it is producing on the production possibilites frontier.
If the rectangular area representing the tax revenue collected by the government is ______ and the deadweight loss area is ______ the tax is relatively efficient at raising revenue
large small
Points that are productively efficient would be located where on the production possibilities frontier (PPF)?
on the PPF
Gains from trade in the market are maximized when the equilibrium _____ is such that the quantity demanded equals the quantity supplied.
price
A maximum legal price at which a good a service or a resource can be sold is a
price ceiling
The difference between the price producers receive for a good or a service and the minimum price they are willing and able to accept is _______ surplus
producer
_____ surplus can be the thought of as the wealth that trade creates for producers in a market
producer
Referring to the graph, identify the consumer surplus (CS) and producer surplus (PS) if a binding price ceiling of $40 was imposed in the market.
CS = Areas A + B; + C PS = Area D
price floor
a minimum legal price at which a good a service or a resource can be sold.
efficiency is producing the goods and services that consumers most want in such a way that the marginal benefit equals the marginal cost.
allocative
Suppose the price of sunglasses falls to $40. What would happen to consumer surplus?
consumer surplus would increase - as price decreases, additional surplus is gained from both the price decrease and the increase in quantity
When calculating tax revenue calculate the area between the total price paid by _____ and the net price received by ____ from zero to the quantity traded
consumers suppliers
graphically consumer surplus is the area below the _____ curve and above the equilibrium _____ from _______ to the quantity traded
demand price zero
The market is electively efficient and is maximizing economic surplus when:
demand equals supply
When a market is not allowed to adjust to the equilibrium price and quantity traded some ______ surplus will be lost
economic
Economic surplus is the:
gains associated with both consumers and producers in the market.
Consumer surplus exists when the price that people are willing to pay is ______ (lower/higher) than what they actually pay.
higher
High prices are good for producers:
if they occur naturally in a market.
deadweight
losses occur when too much or too little output gets produced.
It is more efficient to tax several different markets at _________ rates than to tax fewer markets at ______ rates
low bigger
all else equal _____ surplus is higher at higher prices
producer
With a binding price ceiling:
producers always lose.
Producing output at the lowest possible total cost of production per unit is ______ effiency
productive
When marginal benefit equals marginal cost the market is allocatively efficient and is therefore maximizing economic
surplus
When collecting taxes if we are concerned with efficiency:
the deadweight loss should be as small as possible relative to the amount of revenue collected.
If low prices are the result of government intervention, some consumers will be worse off because:
the price ceiling creates a shortage in the market.
The quantity traded times the tax equals:
the tax revenue from a tax.
The revenue collected from a tax equals:
the tax times the quantity traded.
A branch of economics that focuses on measuring the welfare of market participants and how changes in the market change their well-being is known as:
welfare economics
A person will purchase a good or service so long as the person's:
willingness to pay (marginal benefit) is greater than the marginal cost.
Graphically producer surplus is the area above the supply curve and below the equilibrium price from ________ to the quantity traded
zero