Explain, using a diagram, why consumer surplus is a measure of net benefit Why are perfectly competitive markets described as efficient? What is market failure and what are some of the factors that cause market failure? (List at least 2 factors).

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3. Recently, the Obama administration proposed a $1.00 per unit (pack) excise tax on cigarettes (which would be imposed legally or statutorily on cigarettes sellers). Some news reports have suggested that the proposed tax would increase cigarettes prices by $1.00 per pack and be paid by smokers (cigarette buyers). Using (separate) competitive supply and demand diagrams of the cigarettes market carefully show and explain TWO extreme demand and supply conditions under which these news reports would be true?

Table 1: Market for Skis P 0 20 40 60 80 Qd 25 20 15 10 5 100 0 Qs 0 4 8 12 16 20

Consider the information of Firm C on the attached figure and answer the following: Calculate TVC and Ceteris paribus, if the price falls below_________, Firm C will have to shut down and exit the market  Ceteris paribus, Firm C will make a normal profit at the price of________ Firm C achieves an allocative efficient level of output by producing_______ units of output.

14. Suppose a market is currently producing in an allocatively efficient manner. Using the concepts of marginal utility, marginal cost, and price, explain exactly what that market must be doing and why that makes the outcome allocatively efficient or not.

Homework (Ch 06) Back to Assignment Attempts Do No Harm / 1 3. Effects of rent control Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater than the quantity supplied at the regulated price. When cities prevent landlords from charging market rents, which of the following are common long-run outcomes? Check all that apply. O Landlords earn lower profits from renting housing units, but the rent charged has no effect on either the quantity or quality of rental units. O The future supply of rental housing units increases. O Black markets develop. O The quality of rental housing units falls.

higher education as well. 2. If the State of California does not subsidize the University of California (i.e. let it become a private university fully funded by tuition), will the market for higher education produce too much, too little, or just the right amount of higher education? Use a graph to explain.

QUESTION 8 In the above figure, the competitive (i.e. unregulated) market equilibrium quantity is? (Note #1: the x- axis is in thousands, so make sure to write out the entire number, i. e. 10 thousand as "10000") (Note #2: marginal benefit curve (MB) also represents demand)uppose the market demand for a good takes the form: Q subscript D equals 120 minus 1 fourth P and market supply takes the form: Q subscript S equals negative 30 plus 1 half P and production of each unit causes $30 in (external) damage. What is total surplus in this market? (Note: with external damages the overall benefit from a market is often referred to as "social welfare" instead of total surplus. Regardless, to answer this question subtract total external damages from consumer and producer surplus) QUESTION 8 40 40 S-MSC Price (dollars per vaccination) 20 20 30 30 50 60 10 10 MSB MB 0 10 20 30 40 50 60 Quantity (thousands of vaccinations per year) In the above figure, the competitive (i.e. unregulated) market…