ECON

suppose the government imposes a tariff of $10 per unit. The amount of revenue collected by the government from the tariff is

$100

The amount of the tax per unit is

$14.

Consumer surplus in Nicaragua without trade is

$2,250

The per-unit burden of the tax on sellers is

$6

A nonbinding price ceiling (i)causes a surplus. (ii)causes a shortage. (iii)is set at a price above the equilibrium price. (iv)is set at a price below the equilibrium price.

(iii) only above

A nonbinding price floor (i)causes a surplus. (ii)causes a shortage. (iii)is set at a price above the equilibrium price. (iv) is set at a price below the equilibrium price.

(iv) below only

Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting shortage is

0 units.

Vietnam's gains from trade in rice amount to

1,500

The socially optimal quantity of output is

120 units, since the value to the buyer of the 120th unit is equal to the cost incurred by society of the 120th unit.

Which of the following statements about a well-maintained yard best conveys the general nature of the externality?

A well-maintained yard conveys a positive externality because it increases the value of adjacent properties in the neighborhood.

Producer surplus with the tariff is

C + G

A positive externality occurs when

Jack receives a benefit from John's consumption of a certain good.

A result of the tariff is that, relative to the free-trade situation, the quantity of saddles imported decreases by

Q4 - Q3 + Q2 - Q1.

University researchers create a positive externality because what they discover in their research labs can easily be learned by others who haven't contributed to the research costs. If there are no subsidies, what is the relationship between the equilibrium quantity of university research and the optimal quantity of university research produced?

The equilibrium quantity is less than the socially optimal quantity.

Which of the following statements is not correct?

When the price is $6, there is a surplus of 8 units

Which of the following is a difference between corrective taxes and tradable pollution permits?

With a corrective tax the government sets the price of pollution; with tradable pollution permits, demand and supply set the price of pollution.

When a country moves away from a free trade position and imposes a tariff on imports, it causes

a decrease in total surplus in the market.

Which of the following is not a short-run effect of rent control on the housing market?

a large shortage

Which of the following would not interfere with market equilibria?

a non-binding price floor

Which of the following would shift a market labor supply curve to the right?

an increase in immigration

Which of the following would shift a market labor supply curve to the left?

an increase in the wage paid to workers in a competing market

Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 25 hours per week, but now she decides to work 20 hours per week in order to spend more time studying economics. For this price range, her labor supply curve is

backward sloping

A price ceiling is binding when it is set

below the equilibrium price, causing a shortage.

Suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by

between $1 and $2

Suppose that the demand for digital cameras is elastic, and the supply of digital cameras is inelastic. A tax of $20 per camera levied on digital cameras will decrease the effective price received by sellers of digital cameras by

between $10 and $20.

The price received by sellers in a market will increase if the government decreases a

binding price ceiling in that market.

A government-imposed price of $12 in this market is an example of a

binding price floor that creates a surplus.

A tax on the buyers of personal computer external hard drives encourages

buyers to demand a smaller quantity at every price

If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that

consumer surplus decreases and producer surplus increases.

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. We can conclude that Aquilonia's new free-trade policy has

decreased consumer surplus in the steel market and increased total surplus in the incense market.

Typically, as a firm hires additional workers, the marginal product of labor

decreases, and the value of the marginal product of labor decreases.

Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the

demand is more inelastic than the supply.

A free-rider problem exists for any good that is not

excludable

Countries that restrict foreign trade are likely to

have more firms with domestic market power.

With trade, Nicaragua

imports 250 calculators.

If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would

increase by less than $1,000.

The quantity sold in a market will decrease if the government

increases a tax on the good sold in that market

Economists generally believe that rent control is

inefficient but the best available means of solving a serious social problem.

When a policy succeeds in giving buyers and sellers in a market an incentive to take into account the external effects of their actions, the policy is said to

internalize the externality.

Altering incentives so that people take account of the external effects of their actions

is called internalizing the externality can be done by imposing a corrective tax is the role of government in markets with externalities.

The value of the marginal product of any input is equal to the marginal product of that input multiplied by the

market price of the output.

When a tax is placed on the sellers of a product, buyers end up paying

more, and sellers receive less than they did before the tax.

A cost imposed on someone who is neither the consumer nor the producer is called a

negative externality

When externalities exist, buyers and sellers

neglect the external effects of their actions, and the market equilibrium is not efficient.

If the government imposes a price ceiling of $8 on this market, then there will be

no shortage

In this market, a minimum wage of $2.75 is

nonbinding and creates neither a labor shortage nor unemployment.

Assume, for England, that the domestic price of wine without international trade is higher than the world price of wine. This suggests that, in the production of wine,

other countries have a comparative advantage over England and England will import wine.

The marginal product of labor is defined as the change in

output per additional unit of labor

A good is excludable if

people can be prevented from using it.

When a binding price floor is imposed on a market,

price no longer serves as a rationing device. the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor. only some sellers benefit

The imposition of a binding price ceiling on a market causes

quantity demanded to be greater than quantity supplied.

Positive externalities

result in smaller than efficient equilibrium quantity.

Value of marginal product (or "marginal revenue product") is defined as the additional

revenue earned from hiring one more factor of production.

Which of the following policies is the government most inclined to use when faced with a positive externality?

subsidies

Which of the following events would bring about a change in the value of the marginal product of labor?

technological progress that alters the amount a worker can produce a change in the marginal product of labor a change in the price of the product that the firm sells

Factor markets are different from product markets in an important way because

the demand for a factor of production is a derived demand.

If a sawmill creates too much noise for local residents,

the government can raise economic well-being through noise-control regulations.

In which market will the majority of the tax burden fall on buyers?

the market shown in panel (b).

When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans,

this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade. this is an indication that the nation has a comparative advantage in producing soybeans. the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off.

A worker's contribution to a firm's revenue is measured directly by the worker's

value of marginal product.

Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because

with shortages and waiting lists, they have no incentive to maintain and improve their property.

An upward-sloping labor-supply curve implies that an increase in the wage induces

workers to increase the quantity of labor they supply.