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UGA / Economics / ECON 2106 / because it takes many years before newly planted orange trees bear fru

because it takes many years before newly planted orange trees bear fru

because it takes many years before newly planted orange trees bear fru

Description

School: University of Georgia
Department: Economics
Course: Principles of Microeconomics
Professor: Meghan esson
Term: Spring 2017
Tags: Microeconomics
Cost: 50
Name: Microeconomics Midterm 2 Study Guide
Description: Covers all four chapters with practice questions, definitions and formulas
Uploaded: 03/17/2017
15 Pages 509 Views 3 Unlocks
Reviews



An externality is an example of what?




- How many goods are purchased?




A factory can continue producing as long as what?



ECON 2106 Midterm Review/Study Guide Test Date: 3/20/17 1. Personal characteristics - can be used in unacceptable ways (such as  discriminating against minorities and gender)  2. Force - could provide an effective way of allocating resource to transfer wealth from the rich to the poor.  3. Lotteries - work well when there is no effective way Don't forget about the age old question of What is the set of reflexes that are invariant and biologically based?
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to distinguish  among potential users of a scarce resource.  4. First-come, First-served - works best when scarce resource can serve  just one person at a time in a sequence.  5. Majority Rule – works well when the decision affects lots of people. -  Majority rule 6. Perfect Competition - 0% concentration ratio 7. Monopoly - 100% concentration ratio 8. A ____ curve is a marginal cost curve, and it is also a ____ curve -  supply, minimum supply price 9. A ____ works well in organizations with clear lines of authority but badly in an entire economy. - command system 10. A ____ works well when the efforts of the players are hard to  monitor and reward directly. - contest 11. a back market for housing exits because of a rent ceiling. the  rent for housing in the black market is - somewhere between the  ceiling rent and the maximum rent tenant is willing to pay 12. A factory can continue producing as long as what? - The private  cost is less than the private value 13. a firm's goal is to - maximize profit 14. a minimum wage - decreased the firms surplus because fewer  workers are hired at the higher wage 15. a minimum wage increases unemployment by - decreasing the  quantity of labor demanded 16. a minimum wage set above the equilibrium wage will ____ the  quantity of labor demanded and ___ the quantity of labor supplied -  decrease; increase 17. a minimum wage that is above the equilibrium wage rate -  creates a deadweight loss 18. A monopoly has the market power to set a ____. - high price 19. A monopoly is a firm that is the ____ in the market. - sole provider 20. A monopoly produces too ____ and ____ results. - little,  underproduction 21. a price ceiling in a market for fuel oil is below the equilibrium  price will - lead to the quantity demanded of fuel oil exceeding the  quantity supplied 22. a price ceiling is - the maximum price than can legally be  charged 23. a price floor - changes the price and quantity if it is set above the equilibrium price24. A price floor creates.... - surplus 25. a price floor is ____ and _____ - inefficient and unfair 26. a price floor is - the lowest legal price at which a good or service  can be traded 27. a price support set above the equilibrium price - decreases  consumer surplus 28. a production process in which the individuals in a group  specialize in mutually supportive tasks is - team production 29. a rent ceiling below the equilibrium rent - increased the quantity  of housing supplied 30. A rent ceiling creates - 1. Housing shortage, Increased search  activity, Black market, inelastic supply and demand 31. a rent ceiling creates a deadweight loss - if it is set below the  equilibrium rent 32. a rent ceiling on housing creates a problem of allocating the  available housing units because - a shortage of apartments occurs 33. a rent ceiling set below the equilibrium rent decreases the  quantity of housing supplied because - landlords of previously barely  profitable apartments refuse to rent them 34. A tax on buyers _______ demand. - decreases 35. A tax on sellers ________ supply - decreases 36. Ability-to-pay Principle - states that people should pay taxes  based on how easily they can bear the burden of the tax 37. -justifies a high income tax for higher earning people 38. Advocates for Minimum Wage - protect workers  39. raise income of working poor  40. make the poor better off 41. Allocation of resources - -how many goods produced 42. -how many goods purchased 43. -who is buying/selling and at what prices 44. Allocation of resources refers to - - How many goods are  produced - How many goods are purchased? - Who are buying and who are selling at what prices 45. an effective price supports ____ producers and ___ deadweight  loss - benefits, creates 46. an efficient allocation of labor occurs when the - a marginal cost  to workers is equal to the marginal benefit to firms 47. An externality is an example of what? - A market failure 48. an institution that hires factors of production and organizes those factors to produce and sell goods and services - firm 49. any method of producing a good or service - technology 50. Are price ceilings fair? - No, they create a shortage and  inefficiently allocate resources. 51. As price drops, Consumer Surplus _________. This is due to.... 52. The opposite is true as price increases. - increases. 53. Due to new buyers entering the market and current buyers  paying a lower price 54. As the wage rate ________, quantity demanded increases. -  decreases 55. As the wage rate _______, quantity supplied increases. - increases 56. Assuming that the long run demand for oranges is the same as  the short run demand, you would expect the effect of a binding price  ceiling on quantity supplied to be SMALLER or LARGER than the short  run effect? - LARGER 57. assuming that the rent ceiling is strictly enforced so that there is  no black market, which of the following statements about a housing  market with a rent ceiling set below the equilibrium rent is correct - the rent ceiling creates a deadweight loss 58. Because it takes many years before newly planted orange trees  bear fruit, the supply curve in the short run is almost vertical. In the  long run, farmers can decide whether to plant oranges on their land, to plant something else or to sell their land altogether 59. Is the long run supply of oranges more price sensitive than the  short run? - Long run is more price sensitive 60. Because the tax burden falls more heavily on buyers than sellers, the tax falls more heavily on what side of the market? - The tax falls  more heavily on the less elastic side of the market 61. Benefits Principle - States that people should pay taxes  proportional to the benefits they receive from the good or service 62. -justifies fairness in taxation of cigarettes, healthcare, etc. 63. black markets can occur when price ceilings are imposed in a  market. which of the following explains why sellers participate in a  black market - sellers are able to sell the product for a higher than  legal price 64. Buyers pay the whole tax if.... - Perfectly elastic supply (sand for  computer chip silicon) 65. Perfectly inelastic demand (insulin) 66. Case Study - Wheat Market - -Production increases 67. -Supply curve shifts right, price drops at new quantity 68. -Because demand for food is inelastic, people don't change how  much they buy of it based on the price -> price drop at new quantity  holds -revenue decreases 69. **Price fluctuates more than quantity produced because demand  is inelastic** 70. Causes of Market Failure - - Price and quantity regulations - Taxes and subsidies - Externalities - Public goods and common resources - Monopoly - High transaction costs 71. CBL - Cost of Breaking the Law72. Command - Resources are allocated by the order (command) of  someone in authority (i.e. a boss at work) 73. Command - works well in organizations with clear lines of  authority, but badly in an entire economy 74. Command and control policy AKA regulation - Attempts to  remedy an externality by legally limiting a specific behavior by a  specific entity 75. Congress is trying to reduce air pollution by reducing its use of  gasoline. They impose a $.50 tax for each gallon of gasoline sold. If the demand for gasoline was more elastic, this tax would be more or less  effective in reducing the quantity of gasoline consumed - More  effective 76. Consumer Surplus - excess benefit received from a good over the amount paid for it 77. marginal benefit- price (WTP - actual price) 78. Consumer Surplus - the amount a buyer is willing to pay minus  the amount the buyer actually pays 79. Consumer surplus does not equal ______ 80. Producer surplus does not equal ______ - expenditure 81. production cost 82. Consumer surplus is not the same as ____ - expenditure 83. Contest - Resources are allocated to a (group of) winner(s) (i.e.  sporting events, Oscars) 84. Contest - works well when the efforts of the contestants are hard  to monitor and reward directly 85. Corrective subsidy - Meant to encourage behavior that has  positive external effects 86. Corrective tax - Meant to discourage behavior that has negative  external effects 87. Corrective Tax - Meant to discourage behavior that has negative  external effects. 88. Cost (seller side) - the value of everything a seller must give up  to produce a good 89. costs that arise from finding someone with whom to do business, of reaching an agreement about the price and other aspects of the  exchange, and of ensuring that the terms of the agreement are fulfilled - transaction costs 90. CS and PS on a Graph - -CS: Area under the demand curve, but  above the price paid and up to the quantity bought 91. -PS: area below the market price, and above supply curve, up to  quantity sold - https://o.quizlet.com/nJSU-EXDnQkcBjB6X31KMQ_m.png 92. deadweight loss - a decrease in TS as a result from an inefficient  level of production 93. Deadweight Loss - scale of inefficiency 94. Decreasing marginal benefit - People receive more benefit than  what they pay95. depends on the relative costs of resources - economic efficiency 96. Different consumers may ___ the same market price but could  ____ the same good differently - pay, value 97. Do economists agree with the idea of rent control? - No 98. Effects of a production quota - -Decrease in supply -rise in price -decrease in marginal cost (use resources with lower marginal cost) -Inefficient underproduction - deadweight loss -Incentive to cheat and overproduce (marginal benefit is increased) 99. Effects of a subsidy - -increase in supply -decrease in price, increase in quantity produced  -increase in marginal cost (use resources that are less ideal)  -inefficient overproduction (increase supply in the rest of the world as  well, production in other countries goes down) 100. Efficiency - maximizing the total surplus received by all members of society 101. Efficient allocation of resources - -goods are consumed by buyers who value them most -goods are produced by producers with the lowest costs 102. Efficient allocation is when the goods are consumed by the  buyers who value them ____. - most 103. Efficient allocation is when the goods are consumed by the  producers with the ____ costs. - lowest 104. Elastic curve - Flat 105. Elasticity of Supply - measures the responsiveness of quantity  supplied to a change in the price of the good 106. Elasticity of Supply and Demand for Labor - supply: low elasticity  107. demand: high elasticity 108. Elasticity of Supply formula - % change Qs / % change price of  good >1 = elastic <1 = inelastic =1-unit elastic 109. Equal Penalties on both buyers and sellers - -Supply and Demand decrease -Price remains constant, but quantity decreases 110. What is an example of a price floor ? Minimum wage law 111. exceeds 60% concentration ratio is a - oligopoly 112. Externality - a cost or benefit that affects someone other than  the seller or the buyer of a good (i.e. air pollution) 113. externality - cost or benefit that effects someone other than the  seller or buyer 114. factors that influence elasticity of supply - -resource substitution  possibilities  115. -time frame for the supply decision116. Fair result - 19th century economists believed efficiency required  equality of incomes 117. -Utilitarianism: no rich, no poor; marginal benefit is greater to the poor than to the rich 118. -Big Tradeoff: taxes are a way to redistribute income, but they  come at a cost and usually the greater the redistribution, the greater  the inefficiency  119. -Make the poorest as well off as possible: John Rawls; solution to  big tradeoff; tax income of rich, after paying cost of taxing, rest of the  money goes to the poor 120. Fair Rules - symmetry principle: people in similar situations are  treated similarly 121. equality of opportunity 122. Nozick's 2 rules of fairness:  1. laws protect private property 2. private property is transferred via voluntary exchange 123. Fairness - 1. Result is fair 3. Rules are fair 124. firms are often more efficient than markets as coordinators of  economic activity because they can achieve - lower transaction costs,  economics of scale, economics of scope, and economics of team  production 125. firms hire labor, capital, and land, and by using a mixture of  command systems and incentive systems organize and coordinate  their activities to produce goods and services - firm coordination 126. First-come, First-served - Resources are allocated to those who  are first in line (i.e. dining at casual restaurants, checking out at  supermarkets) 127. First-come, first-served - works well when scarce resources can  serve only one person at a time in a sequence 128. following a major natural disaster that destroys housing, a rent  ceiling ____ be an effective policy to increase the quantity of more  affordable housing for displaced residents because it would - would  not; discourage rebuilding and result in shortage 129. Force - provides an effective way of allocating resources by  protecting people's personal property and establishing a legal  framework which uses force to back up laws and regulations 130. Force - Resources are allocated by war, theft, legal system 131. Force establishes the ____ in which voluntary exchange can take  place in markets. - legal framework 132. four types of markets - perfect competition, monopolistic  competition, oligopoly, monopoly 133. Full Loss from Rent Ceiling - deadweight loss + loss from search  activity 134. Government charges factories $100 for every ton of carbon  dioxide they emit - Corrective tax135. high concentration ratio indicates a (low/high/absence) degree of competition - absence 136. high transactions costs - cost of a service that brings buyers and  sellers together 137. -if they're high, market may be at underproduction 138. higher elasticities = ___________ deadweight loss - higher 139. How do you calculate social cost? - The sum of the private cost  and the external benefits 140. How do you calculate social value? - The sum of the private value and the external benefits 141. if a minimum wage is introduced that is above the equilibrium  wage rate - job search activity increases 142. if a price ceiling is introduced in the market for milk below the  market equilibrium price, then the producer surplus made by dairy  farmers - will decrease 143. if a price ceiling is set above the equilibrium price then - there  will be neither a shortage nor a surplus of the good 144. If a price control is BINDING - The market equilibrium price is  unreachable  145. Price control is in effect 146. If a price control is NOT binding - If the market forces can move  the economy to the equilibrium naturally  147. Price control is NOT effective 148. if a rent ceiling is below the equilibrium rent, some allocation  scheme must be used. the allocation methods include all of the  following EXCEPT - charging the equilibrium rent 149. if a rent ceiling is set below the equilibrium price, thus creating a  _____, housing may be allocated by increasing search activity or  creating a - shortage; black market 150. If demand is less elastic than supply, than the buyers’ willingness to pay a higher price exceeds seller's willingness to accept a lower  price. - ... 151. If demand is less elastic than supply, the buyers' willingness to  pay a higher price exceeds sellers' willingness to accept a lower price.  So when the tax is instituted, the burden falls more heavily on the  buyers or the sellers? - Buyers. The reverse is true if demand is more  elastic than supply 152. If drugs were legalized and taxed sufficiently enough.... -  government could collect tax revenue, while also achieving the same  decrease in quantity as prohibition 153. If Pc < P* - Binding  154. Price Control DOES affect market price and quantity 155. If Pc > P* - Not Binding  156. Price Control does NOT affect market price and quantity157. If penalties are heavier on one side, the curve shifts _______ to  that side - farther 158. If PF < P* - NOT binding  159. Price control does NOT affect market price and quantity 160. If PF> P* - BINDING  161. Price control does affect market price and quantity   Free market economy pushes price down but the price  floor is set above the equilibrium  162. generates a SURPLUS 163. If seller could receive a market price that is ____ than the  minimum price, seller gains - greater 164. If the government places a $500 tax on luxury cars, the price  paid by consumers will rise by? - Less than $500 165. implicit rental rate has these two components - economic  depressions and forgone interest 166. import restriction in advanced economics deny developing  economies access to the food market of the advanced economies. The  result is ____ price and ______ farm production in the developing  economies - lower, smaller 167. in a competitive labor market, a minimum wage law set above  the equilibrium wage rate - creates a surplus of labor 168. In a market economy, the allocation of resources is ____,  determined by the interactions of many self-interested ____ and ____, -  decentralized, buyers, sellers 169. in a market with a price support set above the equilibrium price - farmers gain 170. In order for majority rule to use resources efficiently, _____ must  be suppressed. - self-interest 171. In order for minimum wage to be binding where does the  equilibrium wage need to be set? - Above the equilibrium wage 172. in order to have an impact, a ___ must be set below the  equilibrium price and when this occurs ____ - a price ceiling; producer  surplus decreases 173. in the market for cotton, suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons. If the government then  imposes a price support of 20 per ton - the market price increases 174. in the market for cotton, suppose the equilibrium price is $10 per ton and the equilibrium quantity is 100 tons. if the government then  impose a price support of 20 per ton - marginal cost exceeds marginal  benefit 175. In this situation, quantity of output produced is less than, greater than, or equal to the efficient quantity - LESS THAN 176. Increased search activity (housing or job) - Opportunity cost =  rent + search time 177. Individual Demand - the relationship between the price of a good and the quantity demanded by one person178. Individual Supply - the relationship between the price of a good  and the quantity supplied by one producer 179. Inefficiency of a minimum wage - -an unregulated labor market is efficient.  180. -surplus of labor 181. -deadweight loss 182. -reduces CS and PS 183. Inefficiency of a Rent Ceiling - -underproduction of housing  services 184. -MSB > MSC 185. -deadweight loss 186. -reduced CS and PS 187. Inelastic curve - Steep 188. inelasticity = ____________ deadweight loss - small 189. information constraints - a firm is constrained by limited  information about the quantity and efforts of its workplace, the current  and future buying plans of its consumers, and the plans of its  competitors 190. iPhone elasticity - Initially Apple misjudged the iPhone's demand  elasticity and charged too high a price. They had to bring the price  down to avoid failing sales expectations 191. is minimum wage fair? - no because workers who lose their jobs  are made worse off 192. Is minimum wage fair? - No 1. Result: unfair - only people with jobs benefit 2. Rules: unfair - impedes voluntary exchange 193. large number of firms compete by making similar but slightly  different products. no entry restrictions - monopolistic competition 194. less than 60% concentration ratio is a - indication of a  competitive market; monopolistic competitive 195. Long run effects of Rent Control? - -Elastic Supply  196. -Elastic Demand  197. -Large Shortage  198. **Reduces the quality of housing** 199. Long Run Supply - relatively elastic 200. Lottery - Resources are allocated to those with the winning  number/cards, or who come up lucky on some other gaming system  "by luck" (i.e. state lotteries and casinos) 201. lottery - works well when there is no effective way to distinguish  among potential users of a scarce resource 202. low concentration ratio indicates a (low/high/absence) degree of  competition - high 203. Majority Rule - Resources are allocated to  204. by the decisions made by majority of voters (i.e. societies and  big decisions- tax rates)205. Majority rule - works well when decisions need to be made for a  large group of people, but self-interest needs to be suppressed to use  resources efficiently 206. making a product slightly different from the product of a  competing firm is called - product differentiation 207. many firms selling identical product, many buyers, no entry  restrictions - perfect competition 208. many goods are sold in a national market, but some are sold in a  regional or global market - geographical scope of the market 209. Marginal Benefit - the value of one more unit of a good or service to a buyer 210. Marginal cost - the minimum price seller must receive to induce  them to offer one more of that good 211. Marginal Cost - the minimum price that a producer must receive  to induce them to offer one more of that good 212. market constraints - the quantity each firm can sell and the price it can obtain are constrained by its customers' willingness to pay and  by the prices and marketing efforts of other firms 213. Market Demand - the relationship between the price of a good  and the quantity demanded by all buyers in the market 214. Market Demand Curve - relationship between the price of a good  and the quantity demanded by all buyers in the market  215. Marginal Social Benefit (MSB) 216. Market Distortion - market is NOT at the equilibrium 217. Market Efficiency - a competitive market is efficient where  MSB=MSC at the equilibrium point on the graph 218. total surplus is maximized - well-being of everyone in society is  maximized 219. Market failure - occurs when the market is inefficient  220. results in either overproduction or underproduction 221. decrease TS 222. Market Failure - when the market is inefficient 223. Market Price - Resources are allocated to those who are willing to pay the market 224. Market price - works well with most goods and services 225. Market Supply - the relationship between the price of a good and  the quantity supplied by all producers in the market 226. market supply curve - relationship between the price of the good  and the quantity supplied by producers 227. Marginal Social Cost (MSC) 228. markets are often narrower than industries - market and industry correspondence 229. markets coordinate production by adjusting prices and making  the decisions of buyers and sellers of factors of production and  components consistent - market coordination230. max black market rent - Quantity on the demand curve above  the price ceiling 231. Minimum Wage - Price Floor 232. Minimum wage creates a _________ of labor - surplus  233. (which is the difference at the wage rate b/w supply and  demand) 234. Minimum wage is an example of what? - A price floor 235. monopoly - under produces and charges a high price 236. most extreme form of competition - perfect competition 237. Most of the scarce resources that you supply get allocated by  ____. - market price 238. Non-excludable - No one can be prevented from using a good 239. Non-rival - One person's benefit from the good does not reduce  the benefit available to other people 240. occurs when the firm produces a given output at the least cost -  economic efficiency 241. occurs when the firm produces a given output by using the least  amount of inputs - technological efficiency 242. one firm that produces a product with no close substitutes,  protected by a barrier preventing the entry of new firms - monopoly 243. one result of the minimum wage is - a black market for labor that pays less than the minimum wage 244. Overproduction - quantity produced is greater than the  equilibrium quantity 245. overproduction - results in deadweight loss to the right of the  equilibrium point 246. Penalties on Buyers (illegal market) - Value of good -CBL = max  price WTP 247. shifts demand curve left 248. Penalties on sellers (illegal market) - CBL + min. price = price of  good 249. shifts supply curve left 250. people who benefit from a rent ceiling include - tenants who  have a rent controlled apartment 251. Perfectly Elastic Supply - Elasticity=infinity 252. Producers supply any quantity at a set price 253. Perfectly Inelastic Supply - Elasticity=0  254. People pay any price for a set quantity 255. Personal characteristics - a resource allocation method that can  cause discrimination 256. Personal Characteristics - Resources are allocated to those with  the "right" characteristics (i.e. marriage partners) 257. Positive Externality - With this type of externality in the absence  of government interaction, the market quantity produced will be LESS  than the socially optimal quantity 258. price - what a buyer pays (CS)259. what a producer receives / is willing to sell their good/service for  (PS) 260. Price (buyer side) - What the buyer pays 261. Price (seller side) - what seller receives in a market transaction 262. Price Ceiling - Government imposes a legal maximum of the price so it will benefit at least some of the consumers 263. Price Ceiling - It is illegal to charge a price higher than the set  one 264. creates a shortage 265. Price Ceiling - No seller can sell goods at a price higher than the  legislated Price Ceiling 266. Price Ceiling - Shortage - I am too SHORT to reach the CEILING 267. Price Controls for buyers. What does the government do? -  Buyers want a LOWER market price so they pay less  268. Government imposes a Price Ceiling 269. Price controls for Sellers. What does the government do? - Sellers want a HIGHER market price so they gain more.  270. Government imposes a Price Floor 271. Price Elasticity of Demand = 1.22  272. Price Elasticity of Supply = 1.74  273. Which is more elastic? - The supply is more elastic than the  demand 274. Price Floor - A legal minimum of the price that will benefit the  producers or at least some of the producers 275. Price Floor - No buyer can buy goods at a price lower than the  legislated Price Floor 276. Price Floor - no buyers can buy goods or services at a price below the legislated ________ _________. 277. Price FLOOR --> Surplus - There is a SURPLUS of dirt on the  FLOOR 278. Price regulations put a block on ____ and lead to ____. - price  adjustments, underproduction 279. Price taker (buyer side) - Consumers just pay the price label as it  is 280. Price taker (seller side) - Producers sell their goods at the market  price 281. Price/Quantity Regulations - Both price caps/floors and limits on  quantity production result in underproduction 282. Producer surplus - excess price received over the cost of  producing a good (seller's marginal cost) 283. Producer Surplus - the amount a seller received for a good minus  the seller's marginal cost284. Production quota - an upper limit to the quantity of a good that  may be produced in a specific period 285. Public Good - Nontrivial AND no excludable 286. Public goods and common resources benefit ____ and ___ can be  excluded from its benefits. - everyone, no one 287. Public goods and common resources lead to ____, because if you  can get it for free, you won't pay for it. - underproduction 288. Public goods and resources - everyone uses it and no one can be  excluded from the benefits  underproduction 289. Quantity regulations limit the amount that a firm is allowed to  ____ and lead to ____. - produce, underproduction 290. rationing in a Binding Price Ceiling Market - Inefficiently and  unfairly  291. -Some buyers get goods at a lower price but some can't get any  at all  - Sellers may discriminate buyers and buyers may bribe sellers  - Creates Black Markets 292. Rationing in the free market - Market Clear  293. No Surplus  294. No Shortage 295. rent ceilings - increase search activity 296. Rent Control - Government aims to help poor afford housing but  it is sometimes inefficient 297. Rent Control - Price Ceiling 298. rent controls - create deadweight loss and benefit people who  live in rent controlled apartments 299. Rent Stabilization does what? - Forces landlords to rent the  apartments at rents 59% below the market rate 300. Essentially government illegally has taken their property by  giving the tenants lifetime tenure with succession rights 301. Resource Allocation Methods - -Market price 302. -command  303. -majority rule  304. -contest 305. -1st come 1st served  306. -lottery  307. -personal characteristics 308. -force 309. Resource Allocation Methods (8 terms) - 1. Market price 3. Command 4. Majority Rule 5. Contest 6. First-come, First-served 7. Lottery8. Personal Characteristics 310. 8.Force 311. Resource substitution possibilities - If resources used are  rare/unique, they have a low elasticity of supply. 312. If resources used are common, they have a high elasticity of  supply.  313. Ex: A Van Gogh painting has a 0 elasticity of supply (vertical line) 314. Wheat has an infinite elasticity of supply (horizontal line) 315. Resources are used efficiently when ____ = ____ - marginal social  benefit, marginal social cost 316. Sellers pay the whole tax if.... - Perfectly inelastic supply (stream  water) 317. Perfectly elastic demand (pink pens) 318. setting a price support in the market for sugar beets above  equilibrium price ___ the quantity produced and _____ the quantity  bought by customers - increases; decreases 319. Short run effects of rent control - -Inelastic Supply  320. -Inelastic Demand  321. -Small Shortage  322. **Reducing rent significantly** 323. Short Run Supply - relatively inelastic 324. small number of firms compete, produce almost identical or  differentiated products, high barriers to entry limit entry into market -  oligopoly 325. some markets are highly concentrated but entry is easy and the  turnover of firms is large - barriers to entry and firm turnover 326. Some markets are just too ___ to operate. - costly 327. Sources of Market Failure - -price/quantity regulations 328. -taxes and subsidies 329. -externality 330. -public goods and resources 331. -monopoly 332. -high transactions costs 333. Subsidies ____ the prices paid by buyers and ____ the prices  received by sellers. - decrease, increase 334. Subsidies ____ the quantity produced and lead to ____. - increase, overproduction 335. Subsidy - a payment made by the government to a producer 336. Supply of electricity - elastic until capacity is reached 337. suppose the city of Chicago imposes a rent control program that  fixes rents at 400 below the equilibrium rent. With this plan - the  quantity of apartments demanded will increase 338. suppose the current equilibrium wage rate for housekeepers is  8.60 per hour. An increase in the minimum wage to 7.50 per hour leads to - no change in the market for housekeepers339. suppose the current equilibrium wage rate for landscapers is  6.65 in Little rock, 7.50 in St. Louis and 9.05 in Raleigh. An increase in  the minimum wage to 7.50 per hour results in unemployment of  landscapers in - only little rock 340. suppose the current equilibrium wage rate for lifeguards in  Houston is 7.85 an hour. a minimum wage law that creates a price floor of 8.50 an hour leads to - a surplus of lifeguards in Houston 341. suppose the equilibrium price of a gallon of milk is 4 dollars. if  the government imposes a price floor of $5 per gallon of milk - the  quantity supplied of milk exceeds the quantity demand 342. suppose the equilibrium rent in Boston is 1500. A rent ceiling of  1600 per month leads to - no change in the Boston apartment market 343. suppose the equilibrium rent in Denver is 1050. a rent ceiling of  755 per month leads to - a shortage of apartments in Denver 344. suppose the equilibrium wage rate for apricot pickers is 7.00 per  hour ad t that wage rate the equilibrium quantity of apricot pickers  employed is 14000. if the minimum wage is set at 7.50 per hours, then the - quantity of apricot pickers employed decreases 345. suppose the equilibrium wage rate for apricot pickers is 9.00 per  hour in California and at that wage rate the equilibrium quantity of  apricot pickers is 14,000 if the minimum wage is set at 7.50 per hour -  quantity of apricot pickers employed does not change 346. Tax Incidence - division of the burden of a tax between buyers  and sellers 347. Tax incidence depends on - Price elasticity, and the burden falls  more heavily on the side that is less elastic 348. Tax Incidence on a Graph - - https://o.quizlet.com/hq0arlmQT pQbuo4P1UI4w_m.png 349. Tax on Buyers - Shifts demand 350. Tax on Sellers - Shifts supply 351. Taxes ____ the prices paid by buyers and ____ the prices received  by sellers. - increase, decrease 352. Taxes ____ the quantity produced and lead to ____. - decrease,  underproduction 353. Taxes and Subsidies - taxes -> underproduction 354. subsidies -> overproduction 355. Taxes discourage market activities because equilibrium quantity  _______ - falls 356. Taxes result in .... - underproduction and deadweight loss 357. technological efficiency depends on _ while economic efficiency  depends on _ - quantity of inputs; cost of inputs 358. technology constraints - a firm's profit is limited by technology 359. the fair results view of fairness says that a minimum wage law  set above the equilibrium wage rate is unfair because the minimum  wage - benefits only those who

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