MICROECONOMICS TEST 2

ray buys a new tractor for $118000. he receives consumer surplus of $13000 in his purchase. rays willingness to pay is..

$131000

pat bought a new car for $15500 but was willing to pay $24000. the consumer surplus is..

$8500.

if a 6% decrease in price for a good results in a 2% increase in quantity demanded, the price elasticity of demand is..

.33.

if a 40% change in price results in a 25% change in quantity supplied, then the price elasticity of supply is about..

.63 and supply is inelastic.

suppose there is a 6 percent increase in the price of a good X and a resulting 6 percent decrease in the quantity of X demanded price elasticity of demand for X is..

1

using the midpoint method, the price elasticity of demand for a good is computed to be .75. which of the following events is consistent with a 10 percent decrease in the quantity of the good demanded?

13.33 percent increase in the price of that good.

at a price of $1.00, a local coffee shop is willing to supply 100 cinnamon rolls per day. at a price of $1.20, the coffee shop would be willing to supply 150 cinnamon rolls per day. using the midpoint method, the price elasticity of supply is about..

2.20

a t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18 each. at a price of $20. the t-shirt maker would be willing to supply 100 t-shirts. using the midpoint method, the price elasticity of supply is about..

2.71 and supply is elastic

consumer surplus is..

a concept that makes normative statements about the disirability of market outcomes. represented on a graph by the area below the demand curve and above the price. a good measurement of economic welfare if buyers preference are the primary concern.

the minimum wage was instituted to ensure workers..

a minimally adequate standard of living.

if a binding price floor is imposed on the market for ebooks, then..

a surplus of ebooks will develop.

the benefit that government receives from a tax is measured by..

a tax revenue.

suppose a tax of $1 per unit is imposed on a good. the more elastic the supply of the good, other things equal, the..

all of the above are correct.

a shortage results when?

binding price ceilings are imposed on a market.

a surplus results when a..

binding price floor is imposed on a market.

dawns bridal boutique is having a sale on evening dresses. the increase in consumer surplus comes form the benefit of the lower prices to..

both existing costumers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices.

if a tax is levied on the sellers flour the..

buyers and sellers will share the burden of the tax.

demand is said to price elastic if..

buyers respond substantially when income or the expected future price of the good changes.

a binding price floor.

causes a surplus. and is set at a price above the equilibrium price.

what is the fundamental basis for trade among nations?

comparative advantage.

if the cross price elasticity of two goods are negative, then the two goods are..q

complements.

when a country allows trade and becomes an exporter of a good..

consumer surplus and producer surplus both decrease.

when a country allows trade and becomes an exporter of a good,

consumer surplus decreases and producer surplus increases.

when a country allows trade and becomes an exporter of that good..

consumer surplus decreases and producer surplus increases.

when a country abandons a no trade policy, adopts a free trade policy, and becomes an importer of a particular good..

consumer surplus increases and total surplus increases in the market for that good.

the benefit to buyers participating in a market is measured by..

consumer surplus.

which of the following is likely to have the most price inelastic demand? a. mint flavored toothpaste b. colgate mint toothpaste. c. a generic mint toothpaste. d. toothpaste

d. toothpaste

the price paid by buyers in a market will decrease if the government..

decreases a binding price floor in that market.

a tax on buyers will shift the..

demand curve and downward by the amount of the tax.

suppose there is currently a tax of $50 per ticket on airline ticket. buyers of airline tickets are required to pay the tax to the government. if the tax is reduced from $50 per ticket to $20 per ticket, then the..

demand curve will shift upward by $30, and the price paid by buyers will decrease by less than $30.

the discovery of a new hybrid wheat would increase the supply of wheat. as a result, wheat farms would realize an increase in total revenue if the..

demand for wheat is elastic.

tax incidence

depends on the elasticities of supply and demand.

a $2 tax per gallon of paint placed on the buyers of pain will shift the demand curve..

downward by exactly $2.

a tax imposed on the sellers of a good will lower the..

effective price received by sellers and lower the equilibrium quantity.

holding all other factors constant, if decreasing the price of a good leads to an increase in total revenue, then the demand for the good must be..

elastic

the deadweight loss from a $3 tax will big largest in a market with..

elastic supply and elastic demand.

when the government places a tax on a product, the cost of the tax to buyers and sellers..

exceeds the revenue raised form the tax by the government.

suppose the cross- price elasticity of demand between hot dogs and mustard is -2.00. this implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to..

fall by 40 percent.

which of the following statements is true?

free trade benefits a country when it exports but harms it when it imports.

milk has an inelastic demand, and beef has an elastic demand. suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.

greater in the milk market than in the beef market.

suppose consumer income increases. if grass seed is a normal good, the equilibrium price of grass seed will..

increase, and producer surplus in the industry will increase.

if the cost of producing sofas decreases, then consumer surplus in the sofa market will..

increase.

holding all other factors constant, if increasing the price of a good leads to an increase in total revenue, the demand for the good must be..

inelastic.

a tax burden falls more heavily on the side of the market that..

is more inelastic.

the price elasticity of demand changes as we move along a..

linear, downward- sloping demand curve.

suppose researchers at the university of wisconsin discover a new vitamin that increases the milk production of dairy cows, if the demand for milk is relatively inelastic, the discovery will..

lower both the price and total revenues.

a country has a comparative advantage in a product if the world price is..

lower than the countries domestic price without trade.

suppose the government imposes a 25 cent tax on the buyers of incandscent light bulbs, which of the following is not correct?

lower the equilibrium price by 25 cents.

suppose televisions are a normal good and buyers of television experience a decrease in income, as a result, consumer surplus in the television market..

may increase, decrease, or remain unchanged.

in analyzing the gains and losses from international trade, to say that moldova is a small country is to say that.

moldova is a price taker.

when a tax is placed on the buyers of a product, a result is that buyers effectively pay

more than before the tax, and sellers effectively receive less than before the tax.

if a tax is levied on buyers of a product, then there will be an..

movement down and to the left along the supply curve.

when a tax is imposed on a good for which both demand and supply are very elastic..

none of the above is correct further information would be needed to determine how the burden of the tax is distributed between buyers and sellers.

economists compute the price elasticity of demand as the..

percent change in quantity demanded divided by the percentage change in price.

in a competitive market free of government regulations..

price adjusts until quantity demanded equals quantity supplied.

a legal minimum on the price at which a good can be sold is called a..

price floor.

when a country that imports a particular good imposes a tariff on that good..

producer surplus increases and the total surplus decreases in the market for that good.

the benefit to sellers of participating in a market is measured by the..

producer surplus.

zelzar has decided to end its policy of not trading with the rest of the world. when it ends it trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. which groups in zelzar are better off as a result of the new free-trade policy?

producers of steel and comsumers of incense.

for a good that is taxed, the area on the relevant supply and demand graph that represents governments tax revenue is a..

rectangle.

which of the following events would increase producer surplus?

sellers costs stay the same and the price of the good increases.

when a binding price ceiling is imposed on a market to benefit buyers..

some buyers benefit, and some buyers are harmed.

a major difference between tariffs and import quotas is that..

tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import.

assume the nation of teeveeland does not trade with the rest of the world. by comparing the world price of televisions to the price of televisions in teeveeland, we can determine whether..

teeveeland has a comparative advantage in producing televisions.

ABC company incurs a cost of 50 cents to produce a dozen of eggs, while XYZ company incurs a cost of 70 cents to produce a dozen eggs. which of the following price increases would cause both companies to experience an increase in producer surplus?

the price of a dozen eggs increases from 55 cents to 75 cents.

suppose france imposes a tariff on wine of 3 euros per bottle. if government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by french wine producers, with the tariff, in 8 million bottles per year, then we can conclude that?

the quantity of wine demanded by france, with the tariff, is 18 millions bottles per year

which of the following was not a result of the luxury tax imposed by congress in 1990?

the tax was never repealed or even modified.

jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of the apps, jeromes demand for apps is?

unit elastic.

if a tax is levied on the sellers of a product, then there will be an

upward shift of the supply curve.

a sellers opportunity cost measures the..

value of everything she must give up to produce a good.

consumer surplus is equal to the..

value to buyers- amount paid by buyers.

at the equilibrium price of a good, the good will be sold by those sellers..

whose cost is less than price.