practicefinal

practicefinal - Name: Economics 100B Microeconomics Spring...

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Name: Economics 100B Microeconomics Spring 2010 James Rauch PRACTICE FINAL EXAM This exam is worth 240 points. Do all four problems. (50 points) 1. Suppose that the supply curve for gasoline is linear and upward-sloping with a positive intercept, the demand curve for gasoline is linear and downward-sloping with a positive intercept, and the market-clearing price and quantity transacted are positive. a. Now suppose the government wants to lower the price of gasoline, and imposes a price control so that no one is allowed to sell gasoline above a price ceiling that is below the market-clearing price. In a diagram, show the consumer surplus, producer surplus, and deadweight loss to society. b. Next, suppose the government removes the price control but imposes a per-unit tax in the gasoline market that yields the same quantity transacted as in part a. In a separate diagram, show the consumer surplus, producer surplus, and tax revenue. Is the deadweight loss to society greater than, less than, or the same as in part a?
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practicefinal - Name: Economics 100B Microeconomics Spring...

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