econ clicker questions chapters 5-8

Suppose your sister inherits an antique doll from your Great Aunt Sadie. The doll has a sentimental value of $500 to you. If your sister sells you the doll for $200, your consumer surplus is

$300

Suppose you inherit an antique doll from your Great Aunt Sadie. The doll has a sentimental value of $100 to you. Jane is a collector who is willing to pay $800 for your doll. If you sell the doll to Jane for $600, your producer surplus is ___ and Jane's consumer surplus is _____, respectively:

$500, $200

if the price elasticity of demand for beef is 1.6, then a 10% increase in the price of beed would be expected to result in a

16% decrease in quantity demanded

Suppose the price of a Snickers bar is reduced from $1.65 to $1.35, and as a result the quantity demanded increases from 1,400 to 1,600. Using the midpoint method, the price elasticity of demand for Snickers in the given price range is

2/3

Which of the following statements is correct? A. the demand for hamburgers is more elastic than the demand for Kobe beef. B. the demand for ice cream is more elastic than the demand for chocolate ice cream. C. the demand for Coca-Cola is more elastic than the demand for soda. D. the demand for gasoline is more elastic in the short-run than in the long-run.

C. the demand for Coca-Cola is more elastic than the demand for soda

(T/F) A policymaker that wants to raise tax revenue while minimizing the deadweight loss should tax goods with inelastic supply and demand rather than goods with elastic supply and demand.

True

which of the following goods would have the least elastic demand? a. milk b. 2% milk c. chocolate milk d. Because each example describes milk, the price elasticity of demand will be the same for each good

a. milk

"If the federal minimum wage is raised gradually to $15-per-hour by 2020, the employment rate for low-wage U.S. workers will be substantially lower than it would be under the status quo." expert opinion

agree

Which of the following would not be a result of a binding price ceiling on child care? a. a quantity of child care demanded greater than quantity supplied b. a decrease in quality of care c. an increase in the quantity of child care supplied d. a lower price of childcare.

c. an increase in the quantity of child care supplied

In 2015, the minimum wage according to federal law was $7.25 per hour. Increasing minimum wage to $8 per hour (approximately a 10% increase) will probably lead to: a. higher income for the working poor b. 1-3% increase in teenage unemployment c. more teenagers dropping out of school and preventing some unskilled workers from getting the on-the-job training they need d. All of the above

d. All of the above

The market of chocolate cupcakes is in equilibrium at a price of $4 and a quantity of 300 chocolate cupcakes. The government levies a $1 per unit tax, which decreases the quantity bought and sold to 250. Which of the following statements is incorrect? a.the market experiences $25 in deadweight loss. b.buyers have to pay more than $4 for one chocolate cupcake. c. sellers receive less than $4 for one chocolate cupcake sold. d. the tax revenue collected as a result of the new tax is $300.

d. the tax revenue collected as a result of the new tax is $300.

The market for gluten-free bread is characterized by an inelastic demand and an elastic supply. What would happen to the deadweight loss of a tax, if the supply would also be inelastic?

decrease

Suppose that the City of Bloomington imposes a $1 per-tire recycling fee on buyers whenever they purchase a new tire. We can illustrate the tax on a graph by shifting the demand curve

down by $1; the price paid by buyers would rise by less than $1.

The equilibrium price in the market for gluten-free muffins is $5, and at this price, 300 gluten-free muffins are bought and sold. At a quantity of 200 gluten-free muffins, the market is not efficient because: a.the value to buyers exceeds the cost to sellers. b. the sum of consumer and producer surplus is not maximized. c. consumers would gain additional consumer surplus if they would purchase 100 more gluten-free muffins. d. producers would gain additional producer surplus if they would produce and sell 100 more gluten-free muffins. e. All of the above are correct.

e. All of the above are correct

(T/F) As the size of a tax increases, the size of the deadweight loss first increases, then decreases.

false

(T/F) Consumer surplus increases when the price increases.

false

(T/F) Producer surplus is the difference between willingness to pay and price paid for a good.

false

(T/F) When the government imposes a binding price ceiling, it causes a surplus of the good.

false

(T/F) a demand curve with price elasticity of 0 is a horizontal line

false

(T/F) if farmers become more productive in growing wheat, total revenue of wheat farmers will rise

false

Last year Ashley bought 6 pairs of shoes when her income was $40,000. This year her income is $50,000, and she purchased 10 pairs of shoes. Ashley's

income elasticity of shoes is positive.

The athletic director of State U suggests that the university should reduce ticket prices to its football games in order to increase both attendance and revenue from ticket sales. Economic theory predicts that, for a price elastic demand, this price reduction would

increase attendance and increase revenue

if the price of yachts were to decrease by 10%, we would expect the number of yachts purchased to

increase by more than 10%

The cross-price elasticity of demand between golf balls and golf clubs is

negative

A combination of great weather and beneficial scientific discoveries lead to a doubling of the per acre yield in cotton fields. Assume the demand for cotton is inelastic. Will the cotton farmers be better off?

no

The deadweight loss from a tax

reflects the inefficiency in resource allocation because the tax distorts incentives.

rent controls cause

shortages of apartments which are larger in the long run than in the short run.

The deadweight loss from a tax is likely to be smallest when

supply is inelastic and demand is inelastic.

The price elasticity of demand for gasoline has been estimated to be 0.2 for a 3-month time period. During that time period, how will an increase in the supply of gasoline affect the total revenues of sellers of gasoline?

total revenues will fall

(T/F) A $2 tax levied on the producers of a good has the same effect on buyers and sellers as a $2 tax levied on the consumers of the good.

true

(T/F) Taxes create market inefficiencies that can be measured as deadweight loss.

true

(T/F) The market equilibrium maximizes the sum of the producer and consumer surplus.

true

(T/F) the price elasticity of supply measures how much the quantity supplied of good X responds to changes in the price of good X`

true