Welfare and Efficiency - End of Chapter Problem a. When the forces of supply and demand lead to an inefficient outcome economists call this a deadweight loss. it is a signal that the government needs to take ownership of that market including all the resources involved. economists call this a market failure. the economic surplus is maximized. 000 b. Classify each scenario as to whether it is likely to result in an efficient or inefficient market outcome.

Welfare and Efficiency - End of Chapter Problem a. When the forces of supply and demand lead to an inefficient outcome economists call this a deadweight loss. it is a signal that the government needs to take ownership of that market including all the resources involved. economists call this a market failure. the economic surplus is maximized. 000 b. Classify each scenario as to whether it is likely to result in an efficient or inefficient market outcome.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

a. When the forces of supply and demand lead to an inefficient outcome it is a signal that the government needs to take ownership of that market including all the resources involved. economists call this a deadweight loss. economists call this a market failure. the economic surplus is maximized. ». Classify each scenario as to whether it is likely to result in an efficient or inefficient market outcome. Efficient a market transaction in which one party has information not available to the other party a market in which government regulation creates distortions Answer Bank a market dominated by a few powerful businesses Inefficient a market transaction in which buyers or sellers behave irrationally a market in which economic surplus is maximized
Which of the following is not a reason why the market outcomes maximizes total surplus? a. The market outcome assures that the producers that supply the good are the lowest cost producers At the market outcome every unit that has a marginal benefit to consumers that is at least as large as the marginal cost of production b. is produced. c. The market outcome maximizes the average consumer surplus. d. The market outcome assures that the good is allocated to the consumers with the highest willingness to pay
(a) Show the market for housing in equilibrium on a diagram, where demand is less elastic than supply, andlabel the respective consumer and producer surpluses. Discuss whether this market is Pareto efficient. (b) Assume that the State Government imposes a per-unit tax on the sellers of houses. A new diagram,shows the imposition of this tax on the market for housing. Does the imposition of this tax cause a Paretoimprovement to the market, explain? (c) Is the tax imposed in part (b) effective for the collection of Government revenue? Justify your answer withreference to your diagram in part (b).
2) Name two types of market failure. Explain why each may cause market outcomes to be inefficient.
10. 3 The schedule below represents the willingness of a typical consumer to pay for wine in a year. Suppose there are 1000 identical consumers in the community. Price per Bottle of Wine $ 50 $ 40 $ 30 $ 20 $ 10 a. b. Refer to the table above. If the market price was $30, the total consumers' surplus for the community equals; $0. C. d. e. Bottles of Wine Consumed per Year I $ 500,000. $ 600,000. $ 200,000. $ 300,000. 2345
What is producer surplus, and how is it measured? What is the relationship between the cost to sellers and the supply curve? 2. Why do flounder populations face the threat of extinction while goidfish populations are in no such danger The government often intervenes when private markets fail to provide an optimal level of certain goods and services. For example, the goverment imposes an excise tax on gasoline to account for the negative extemality that deivers impose on one another. Why might the private market not reach the socially optimal level of traffie on the road without the help of goverament? A key difference berween accountants and economists is their ditferent treatment of the cost of capital Does this cause an secouutants estumate of total costs to be higher or lower than an economist's estimate? Explain
What is the term used to describe the situation where resources are allocated in a way that maximizes total surplus? A. Pareto efficiency B. Market equilibrium C. Social welfare D. Deadweight loss
1.1 (Select any/all that apply) In the absence of market failures, the market equilib- rium will maximize a) the price at which producers can sell some amount of the good b) producer profit from that market c) total benefit to society d) the distributional equity of goods and services in that market e) the sum of producer and consumer surplus 1.2 (Select any/all that apply) The term market failure refers to a) an unexpected event which reduces supply abruptly b) aggressive competition among firms c) a firm that is forced out of business because of an economic crisis d) whenever producers are made better off than consumers e) a market that fails to allocate resources in an economically efficient way
Suppose that the government imposes a tax on cigarettes, use the diagram below to answer the questions. D is the demand curve before tax, S is the supply curve before tax and ST is the supply curve after the tax. For the market without the tax. Indicate (iv) buyer's reservation price (v) sellers reservation price (b) Calculate the consumer surplus before the tax. (c) calculate the producer surplus before the tax.
1. Define social surplus and deadweight loss. Provide examples and explain your answer.
The market supply and demand for a product are shown in the diagram below. Now supose the government imposes a per-unit tax of $1 on producers. (i) What happens to total revenue received by producers after they pay the tax to the government? Explain. (ii) Will producer surplus increase, decrease, or stay the same? (iii) Will total surplus increase, decrease, or stay the same? Explain.
The table shows the demand and supply schedules for hay before and during a major drought. During the drought, suppose the government gave all farmers an equal quantity of hay. Resale of hay is not permitted. Suppose the government buys the equilibrium quantity of hay determined by demand and supply during the drought. and the price of a bale Total surplus is pre-drought price. ... OA. maximized; rises OB. maximized; falls OC. less than the maximum possible; falls OD. less than the maximum possible; rises OE. maximized; does not change Suppose the government buys more than the equilibrium quantity of hay and pays the supply price for this quantity. Total surplus purchased, and the price of a bale compared to the compared to the total surplus when the equilibrium quantity is compared to the equilibrium price. OA. increases; falls OB. decreases: falls M OOO = Quantity demanded Price during Quantity (dollars per before drought drought supplied bale) (thousands of bales) 0 70 1.00 2.00…