Micro Exam 2

The amount of deadweight loss caused by tariff equals (figure 14)

$100

For widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. A tax of $15 per unit is imposed on widgets. The tax reduces the equilibrium quantity in the market by 200 units. The deadweight loss from the tax is

$1500

Suppose the government places a $4 tax per unit on this good. How much tax revenue is collected after the tax is imposed?(Refer to figure 3)

$240

If the government imposes a price ceiling of $55 in this market, then total surplus will be

$250

the increase in total surplus resulting from trade is (Refer to 9.2)

$3,840 since the consumer surplus increases by $10,560 and producer surplus falls by $6,720

With trade, the price of tricycles in this country is (figure 2)

$33 with 200 tricycles produced in this country and another 320 imported

Suppose the government places a $4 tax per unit on this good. How much is total surplus after tax is imposed?(Refer to figure 3)

$420

Suppose the government places a $4 tax per unit on this good. What price will consumers pay for the good after the tax is imposed? How many units of this good will be bought and sold after the tax is imposed? (Refer to figure 3)

$7, 60 units

compute the elasticity of demand between points B and C

.75

What would be the total amount of deadweight loss due to the tariff?

11

Suppose the price of a bag of frozen chicken nuggets decreases from $6.60 to $6.50 and, as a result, the quantity of bags demanded increases from 600 to 620. Using the midpoint method, the price elasticity of demand for frozen chicken nuggets in the given price range is

2.15

Compute the elasticity of demand between points A and B

2.3

What would be the amount of total surplus after the tariff?

374

What is the quantity of hammers imported after the tariff?

44

What would the amount of government rev because of the tariff?

44

Suppose the government places a $4 tax per unit on this good. How much producer surplus after the tax is imposed?(Refer to figure 3)

90

For which of the two goods would you expect the demand to be more price elastic?Food in general or breakfast cereal?

Breakfast cereal has more substities

How much is total consumer surplus and producer surplus in this market at the equilibrium price?

CS= 18 PS= 36

Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total consumer surplus in this market at the new equilibrium price?

CS= 36

A tax on the sellers of coffee will increase the price of coffee paid by buyers

DECREASE the effective price of coffee received by sellers, INCREASE the equilibrium quantity of coffee

The demand for energy drink is more elastic than demand for milk. Would a tax on energy drinks or on milk have larger deadweight loss?

Energy drinks because it is a luxury, higher elasticity larger deadweight loss

For which of the two goods would you expect the demand to be more price elastic?Gasoline over a week or gasoline over a year?

Over the course of the year, long term would be more price elastic because you go more frequently

Assume Roland is required to Pay a tax of $3 each time he mows a lawn, which of the following is most likely (Scenario 13)

Roland and Karla still can engage in a mutually-agreeable trade

Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total surplus in this market at the new equilibrium price?

TS= 180

How much is total surplus in this market at equilibrium price?

TS= 54

You are in charge of the local city owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. the mayor advises you to increase the price of the day pass.The city manager recommends reducing the price of the day pass. You realize that

The mayor thinks demand is inelastic, and the city manager thinks demand is elastic

Suppose the government imposes a tax of p1 - p11, the area I + Y represents (Figure 4)

deadweight loss due to tax

The imposition of a tariff on roses (figure 14)

decreases the number of roses imported by 200

The price ceiling causes quantity (Refer to figure 7)

demanded to exceed quantity supplied by 90 units

Is demand along points A and B of the curve elastic or inelastic

elastic

Import quotas and tariffs produce some common results. Which of the following is not one of those common results?

equal revenue is always raised for the domestic government

When the price falls from P2 to P1 consumer surplus (Refer to figure 11)

increases by an amount equal to B + C

B and C

inelastic

For which of the two goods would you expect the demand to be more price elastic? insulin or nasal spray?

nasal spray because it has more substities

If the government set a floor price at $55, would there be a shortage or surplus? (refer to figure 2)

no effect on market

When the nation of Duxembourg allows trade and becomes and importer of software

residents of Duxembourg who produce software become worse off, better off, rises

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

sellers will bear a greater burden of the tax than the buyers

If the government set a price ceiling at $50, would there be a shortage or surplus ?(refer to figure 2)

shortage of 10

If the government set a price ceiling at $40, would there be a shortage or surplus? (refer to figure 2)

shortage of 20

If the government set a floor price at $70, would there be a shortage or surplus? (refer to figure 2)

surplus of 10

cross price elasticity of demand measures how

the quantity demanded of one good changes in response to a change in the price of another good