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Suppose the market is in equilibrium. Then the government imposes a per unit tax in the market. Consumers bear a smaller burden of the tax if the demand curve is 100 Pe Qe D2 120 9,0 What is the amount of the tax? $ What is total surplus before the tax? $ Total surplus V by$ as a result of the tax. 0 20 4O 60 80 100 120 Consider the following market for apartments in Jacksonville. Market demand is Qd = 400 5P. Market supply is 05 = 20P - 25. Equilibrium P = $ and equilibrium Q = D. A binding price ceiling can take a value . A non-binding price ceiling can take a value V . The diagram to the right illustrates the market for outdoor concert tickets in a park in the middle of a residential area in a particular town. Ticket prices are measured in dollars (the grid is drawn for $2.50 increments) and ticket quantities are measured in thousands. The locals are not happy about the increased trafc congestion and noise that accompany each concert. What is the socially optimal number and price of concert tickets? The socially optimal equilibrium occurs at a quantity of ticket(s) and price of $ $50 $45 $40 9,0 I\"? $35 $30--$ . 0 t $25 $20 5339......\" $1 $15 j $10 ' $5 l l $01 in in 10 15 Q 0 Tickets (Thousands) 20 25 Which of the following is an example of the free rider problem? (it A. Your neighbour agrees to split the cost of putting up a fence that divides your properties. When the fence is up, your neighbour refuses to contribute to the cost. {'3- B. You have a points card that allows you to earn and spend $20 for every 20,000 points collected. (7:- C. Your local superstore is having a promotion, "buy one get one free". {:3 D. You allow your neighbour to park on your driveway when you are away on a vacation. The diagram to the right illustrates the market for outdoor concert tickets in a park in the middle ofa residential area in a particular town. Ticket prices are measured in dollars (the grid is drawn for $2.50 increments) and ticket quantities are measured in thousands. The locals are not happy about the increased traffic congestion and noise that accompany each concert. Note that supply curve 31 represents the marginal private cost of the concerts and the market equilibrium (Q, P) is (9000, $20.00). What is the value of consumer surplus at market equilibrium? The value of consumer surplus at market equilibrium is 58 (Round to the nearest dollar as needed.) (6 $01 5 10 15 Q of Tickets (Thousands) 20 ,0 IL" Mary has several trees in her back yard. She enjoys them very much as they make her back yard very appealing and most importantly they provide her home with shade which results in lower utility bills. Mary saves $300 a year from not having to turn on her air conditioning as often. Mary's neighbour, Rachel is fed up with the trees. Come autumn, leaves fall into Rachel's back yard costing Rachel $100 to clean up the mess. What does the Coase Theorem suggest could be a possible solution to this problem? O A. Rachel pays Mary any value between $100 and $300 O B. Rachel pays Mary $301 to take care of the leaves O C. Mary pays $301 for the cleanup O D. Mary pays Rachel any value between $100 and $300Which of the following accurately defines marginal social costs? Marginal social costs = private costs A B. Marginal social costs = amount of the tax imposed C Marginal social costs = external costs + private costs D Marginal social costs = external costs The diagram to the right depicts the market for cough medicine in a small town. The quantity of cough medicine is measured in bottles sold per week; price is measured in dollars. The townspeople are happier and healthier because people who have colds and us buy and take the medicine and reduce the spread of infection. Note that demand curve D1 represents the marginal private benefit of cough medicine, market equilibrium occurs at (16, $10), the cost of the externality per bottle is $7, and the socially optimal equilibrium occurs at (24, $12). What is the deadweight loss due to the externality? The value of the deadweight loss due to the externality is 35 (Round to the nearest dollar as needed.) $28 $24 $20 $16 miim $8 $4 / $0 M 50 9,9 When comparing positive and negative externalities, which of the following are true? :: A3 A. With positive externalities, the market outcome leads to overproduction, whereas with negative externalities, the market outcome leads to underproduction. I] B. With both positive and negative externalities, the market outcome leads to overproduction. . With both positive and negative externalities, the market outcome leads to underproduction. 1:3 D. With positive externalities, the market outcome leads to underproduction, whereas with negative externalities, the market outcome leads to overproduction