Microeconomics Test #2

If the government removes a binding price floor from a market, then the price received by sellers will

decrease, and the quantity sold in the market will increase.

A tax placed on buyers of tuxedoes shifts the

demand curve for tuxedoes downward, decreasing the price received by sellers of tuxedoes and causing the quantity of tuxedoes to decrease

Other things equal, the deadweight loss of a tax

increases as the size of the tax increases, and the increase in the deadweight loss is more rapid than the increase in the size of the tax.

Consumer surplus

is measured using the demand curve for a product.

Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the

less elastic is the demand for the good. less elastic is the supply of the good. smaller is the amount of the tax.

When a tax is levied on buyers, the

tax creates a wedge between the price buyers effectively pay and the price sellers receive.

Denise values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $350. Denise's consumer surplus is

$150

David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is

$30

Sellers of a product will bear the larger part of the tax burden, and buyers will bear a smaller part of the tax burden, when the

Demand of the product is more elastic than the supply for the product

What happens to the total surplus in a market when the government imposes a tax?

Total surplus decreases

Price controls

can generate inequities of their own

The demand for chicken wings is more elastic than the demand for razor blades. Suppose the government levies an equivalent tax on chicken wings and razor blades. The deadweight loss would be larger in the market for

chicken wings than in the market for razor blades because the quantity of chicken wings would fall by more than the quantity of razor blades.

A tax imposed on the sellers of a good will raise the

price paid by buyers and lower the equilibrium quantity

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell, then

the supply curve for mopeds shifts downward by $200. sellers of mopeds receive $200 less per moped than they were receiving before the tax. buyers of mopeds are unaffected by the tax. None of the above is correct.

If a tax is levied on the sellers of a product, then there will be a(n

upward shift of the supply curve.