Microeconomics Chapters 7-10 Test 2

suppose Stephanie sells a compact disc to Kevin for $5 although he would willingly have paid up to $14 if Stephanie would have accepted as little as $2

Kevin experiences a consumer surplus of $9

which of the following will cause the deadweight loss of Taxation to be larger

a bigger tax

what is an externality

a consequence from someone else's actions or Market transaction of an uninvolved third party

the decline in total Surplus in a market resulting from a

a deadweight loss

a negative externality generates

a social cost curve that is above the supply curve for a good

a positive externality generates

a social value curve that is above the demand curve for a good

which of the following statements about tariffs is true

a tariff increases producer Surplus, decreases consumer surplus, increases Revenue to the government, and reduces total Surplus

producer Surplus can be represented graphically as the area

above the supply curve and below the price of a good

consumer surplus can be shown graphically as the area

below demand curve and above the price

with a tariff, producer Surplus is

bigger

to discourage transactions are activities involving negative externalities the

command and control policies such as regulate Behavior or imposed tax

at the domestic price for a particular good is less than the world price the country should export a good because it has the _________ ___________, because it has a lower opportunity cost of making the good

comparative advantage

what happens to domestic consumer surplus after a country starts to export a good (and they weren't trading before)?

consumer surplus get smaller

Definition of consumer surplus

consumer surplus is the difference between what the consumer is willing to pay and what they actually pay

all else equal a price decrease will cause producer surplus

decrease

all else equal, a price increase will cause consumer surplus to

decrease

when a tax is imposed, the quantity traded in a market will ________ and the total Surplus will ________.

decrease; decrease. when I taxes and post, the quantity traded in a market will decrease in the total Surplus will decrease due to the deadweight loss

when a country allows trade and exports a good:

domestic producers are better off domestic consumers are worse off and the nation is better off because the gains of the winners exceed the losses of the losers

a negative externality that has been internalized causes the

equilibrium quantity to exceed the optimal quantity

true or false: ceteris paribus a price decrease will cause producer Surplus to

false

true or false. negative externalities lead to an efficiency in the markets but positive externalities do not

false both Lita and efficiencies

true or false: positive externalities occur when a good benefits those who consume it

false it benefits a third party

which of the following statements about import quotas is true

for every tariff, there is an import quota that could have generated a similar result

which of the following is not employed as an argument in support of trade restrictions

free trade harms both domestic producers and consumers in there for reduces total Surplus

welfare economics is the study of

how the allocation of resources affect economic well-being

to encourage transactions activities involving positive externalities the government could

immunizations, subsidized student loans.

If the domestic price for a particular good is greater than the world price, the country should ________ the good, ceteris paribus

import

all else equal a price increase will cause producer Surplus to

increase

the before trade domestic price of peaches in the United States is $40 per bushel. The world price of peaches is $52 per bushel. The US is a price taker in the market for peaches. if trade-in peaches is allowed the price of peaches in the United States will

increase in this will cause consumer surplus to decrease

when politicians argued that Outsourcing or offshoring of technical support to India by Dell computer Corporation is harmful to the US economy they are employing which of the following arguments for

jobs argument

according to the Laffer Curve, if the government wants to increase its revenue from taxes, it could do this:

lower the size of the tax

A negative externality will cause a private market to produce _______ than the socially desirable amount of a particular good or service.

more

what causes the deadweight loss to be larger

more elastic Supply or demand

when externalities cause markets to be in efficient is a government action always needed and why

no private Solutions can be developed to solve the problem what theorem does this refer to what are possible problems. market-based solutions can be developed such as pollution permits

a positive externality that has not been internalized causes

optimal quantity to exceed the equilibrium quantity

What happens to a producer surplus after a country starts to export a good (and they weren't trading before)?

producer Surplus gets larger

With a tariff, consumer surplus is ______

smaller

to internalize a negative externality inappropriate public policy response would be to

tax the good

which of the following statements is true about tariffs

tears reduce the welfare of importing countries

What happens to consumer surplus after a country starts to import a good ( and they weren't trading before)?

the area of consumer surplus gets larger it increases

if I country allows trade and, for a certain good, the domestic price without trade is higher than the world

the country will be an importer of the good

where does the deadweight loss come from

the tax causes the market to trade fewer than the optimal number of units so all of the surplus of the units that would have been bought if their price for lower is lost

externality

the uncompensated impact of one person's actions on the well-being of a bystander

what are the arguments for restricting trade

the unfair competition argument, the protection as a bargaining chip argument, the infant industry argument, the jobs argument, the National Security argument

private solutions to externalities are not always possible because

there are sometimes too many people involved for them to be able to reach a negotiated solution

true or false: trade raises the economic well-being of a Nation because the games of the winners exceed the

true