Macroeconomics Homework 6 and 7

Refer to Figure 7-8. At the equilibrium price, consumer surplus is A. $1,050. B. $1,225. C. $1,575. D. $2,450.

B. $1,225.

Refer to Figure 9-17. The amount of revenue collected by the government from the tariff is A. $32. B. $288. C. $368. D. $720.

B. $288.

If Martin sells a shirt for $40, and his producer surplus from the sale is $8, his cost must have been A. $48. B. $32. C. $8. D. $40.

B. $32.

Refer to Figure 9-6. The deadweight loss created by the tariff is represented by the area A. B. B. D + F. C. D + E + F. D. B + D + E + F.

B. D + F.

Refer to Figure 9-1. When trade in coffee is allowed, producer surplus in Uganda A. increases by the area B + F. B. increases by the area B + F + H. C. decreases by the area A + D. D. decreases by the area H.

B. increases by the area B + F + H.

Table 7-12The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. Seller Cost Marcia: $200 Jan: $250 Cindy: $350 Greg: $400 Peter: $700 Bobby: $800 Refer to Table 7-12. You wish to purchase 10 piano lessons, so you take bids from each of the sellers. You will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept? A. $351 B. $251 C. $249 D. $199

C. $249

Refer to Figure 7-26. At the equilibrium price, total surplus is A. $600. B. $1,200. C. $1,500. D. $1,800.

D. $1,800.

Refer to Figure 9-17. The deadweight loss caused by the tariff is A. $24. B. $72. C. $96. D. $144.

$96.

Refer to Figure 7-26. If the government imposes a price floor of $90 in this market, then consumer surplus will be A. $225. B. $450. C. $975. D. $1,350

A. $225.

Refer to Figure 7-18. Total surplus amounts to $500 if consumer surplus amounts to A. $290 and if the price of the good is $150. B. $300 and if the price of the good is $130. C. $275 and if the price of the good is $160. D. $400 and if the price of the good is $100.

A. $290 and if the price of the good is $150.

Table 7-9 The only four consumers in a market have the following willingness to pay for a good: Buyer Willingness to Pay Ashleigh: $12 Barb: $15 Carolyn: $19 Danita: $27 Refer to Table 7-9. If the market price for the good is $20, who will purchase the good? A. Danita only B. Carolyn and Danita only C. Ashleigh, Barb, and Carolyn only D. All four buyers would purchase the good.

A. Danita only

Refer to Figure 9-6. Government revenue raised by the tariff is represented by the area A. E. B. B + E. C. D + E + F. D. B + D + E + F.

A. E.

Refer to Figure 9-1. From the figure it is apparent that A. Uganda will export coffee if trade is allowed. B. Uganda will import coffee if trade is allowed. C. Uganda has nothing to gain either by importing or exporting coffee. D. the world price will fall if Uganda begins to allow its citizens to trade with other countries.

A. Uganda will export coffee is trade is allowed.

Refer to Figure 9-1. When trade is allowed, A. Ugandan producers of coffee become better off and Ugandan consumers of coffee become worse off. B. Ugandan consumers of coffee become better off and Ugandan producers of coffee become worse off. C. both Ugandan producers and consumers of coffee become better off. D. both Ugandan producers and consumers of coffee become worse off.

A. Ugandan producers of coffee become better off and Ugandan consumers of coffee become worse off.

Consumer surplus in a market can be represented by the A. area below the demand curve and above the price. B. distance from the demand curve to the horizontal axis. C. distance from the demand curve to the vertical axis. D. area below the demand curve and above the horizontal axis.

A. area below the demand curve and above the price.

Refer to Figure 9-1. With trade, Uganda will A. export 11 units of coffee. B. export 5 units of coffee. C. import 15 units of coffee. D. import 6 units of coffee.

A. export 11 units of coffee.

When the nation of Duxembourg allows trade and becomes an importer of software, A. residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg rises. B. residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg falls. C. residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg rises. D. residents of Duxembourg who produce software become better off; residents of Duxembourg who buy software become worse off; and the economic well-being of Duxembourg falls.

A. residents of Duxembourg who produce software become worse off; residents of Duxembourg who buy software become better off; and the economic well-being of Duxembourg rises.

Refer to Table 7-12. The equilibrium market price for 10 piano lessons is $300. What is the total producer surplus in the market? A. $50 B. $150 C. $1,050 D. $1,500

B. $150

Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by A. $150. B. $325. C. $650. D. $675.

B. $325

Refer to Figure 9-17. Without trade, consumer surplus is A. $400 and producer surplus is $200. B. $400 and producer surplus is $800. C. $1,600 and producer surplus is $200. D. $1,600 and producer surplus is $800.

B. $400 and producer surplus is $800.

Refer to Figure 7-26. At the equilibrium price, producer surplus is A. $600. B. $900. C. $1,200. D. $1,800.

B. $900

Refer to Figure 7-26. At the equilibrium price, consumer surplus is A. $600. B. $900. C. $1,500. D. $1,800.

B. $900.

Refer to Figure 9-1. In the absence of trade, total surplus in Uganda is represented by the area A. C + B + A. B. C + B + A + F + D. C. C + B + A + F + D + H. D. C + B + A + F + D + H + G.

B. C + B + A + F + D.

Refer to Figure 9-6. The tariff A. decreases producer surplus by the area C, decreases consumer surplus by the area C + D + E, and decreases total surplus by the area D + F. B. increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases total surplus by the area D + F. C. creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F. D. increases producer surplus by the area C + G and creates government revenue represented by the area D + E + F.

B. increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases total surplus by the area D + F.

Refer to Figure 7-8. If the government imposes a price ceiling of $80 in this market, then, assuming those with the highest willingness to pay purchase the good, consumer surplus will be A. $900. B. $1,200. C. $1,500. D. $1,600.

C. $1,500

Refer to Figure 9-17. With free trade, consumer surplus is A. $400 and producer surplus is $200. B. $400 and producer surplus is $800. C. $1,600 and producer surplus is $200. D. $1,600 and producer surplus is $800.

C. $1,600 and producer surplus is $200.

Refer to Figure 7-18. If total surplus is $240 and consumer surplus is A. $100, then the price of the good is $130. B. $130, then the price of the good is $120. C. $160, then the price of the good is $100. D. $120, then the price of the good is $90.

C. $160, then the price of the good is $100.

Refer to Table 7-9. If there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the good will sell for A. $12 or slightly less B. $15 or slightly more C. $19 or slightly more D. $27 or slightly less

C. $19 or more

Refer to Table 7-12. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market? A. $0 B. $300 C. $400 D. $700

C. $400

Refer to Figure 9-1. With trade, total surplus in the Ugandan coffee market amounts to A. $90.00. B. $350.00. C. $440.00. D. $412.50.

C. $440.00.

Refer to Figure 7-18. Suppose the willingness to pay of the marginal buyer of the 3rd unit is $125. Then total surplus is maximized if A. 1 unit of the good is produced and sold. B. 2 units of the good are produced and sold. C. 3 units of the good are produced and sold. D. 4 units of the good are produced and sold.

C. 3 units of the good are produced and sold

Refer to Figure 7-29. Which of the following statements is correct? A. The market is in equilibrium at Q1. B. At Q2, the cost to sellers exceeds the value to buyers. C. At Q4, the value to buyers is less than the cost to sellers. D. At Q3, the market is producing too much output.

C. At Q4, the value to buyers is less than cost to sellers.

When a country allows trade and becomes an exporter of silk, which of the following is not a consequence? A. The price paid by domestic consumers of silk increases. B. The price received by domestic producers of silk increases. C. The price paid by domestic consumers of silk decreases. D. The gains of domestic producers of silk exceed the losses of domestic consumers of silk.

C. The price paid by domestic consumers of silk decreases.

Refer to Figure 9-1. From the figure it is apparent that A. Uganda will experience a shortage of coffee if trade is not allowed. B. Uganda will experience a surplus of coffee if trade is not allowed. C. Uganda has a comparative advantage in producing coffee, relative to the rest of the world. D. foreign countries have a comparative advantage in producing coffee, relative to Uganda.

C. Uganda has a comparative advantage in producing coffee, relative to the rest of the world.

Refer to Figure 9-1. When trade in coffee is allowed, consumer surplus in Uganda A. increases by the area B + F. B. increases by the area A + D. C. decreases by the area B + F. D. decreases by the area F + H.

C. decreases by the are B + F.

Refer to Figure 9-17. Relative to the free-trade outcome, the imposition of the tariff A. decreases imports of the good by 16 units and increases domestic production of the good by 8 units. B. decreases imports of the good by 16 units and increases domestic production of the good by 16 units. C. decreases imports of the good by 24 units and increases domestic production of the good by 8 units. D. decreases imports of the good by 24 units and increases domestic production of the good by 24 units.

C. decreases imports of the good by 24 units and increases domestic production of the good by 8 units.

Assume, for Brazil, that the domestic price of apples without international trade is higher than the world price of apples. This suggests that, in the production of apples, A. Brazil has a comparative advantage over other countries and Brazil will import apples. B. Brazil has a comparative advantage over other countries and Brazil will export apples. C. other countries have a comparative advantage over Brazil and Brazil will import apples. D. other countries have a comparative advantage over Brazil and Brazil will export apples.

C. other countries have a comparative advantage over Brazil and Brazil will import apples.

Refer to Figure 9-17. With trade and a tariff, consumer surplus is A. $808 and producer surplus is $200. B. $808 and producer surplus is $392. C. $1,024 and producer surplus is $200. D. $1,024 and producer surplus is $392.

D. $1,024 and producer surplus is $392.

Refer to Table 7-9. If there is only one unit of the good available for purchase, and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be A. $0 or slightly more. B. $3 or slightly less. C. $4 or slightly more. D. $8 or slightly less.

D. $8 or slightly less

A seller's willingness to sell is A. measured by the seller's cost of production. B. related to her supply curve, just as a buyer's willingness to buy is related to his demand curve. C. less than the price received if producer surplus is a positive number. D. All of the above are correct.

D. All of the above are correct.