EC202 Midterm 1
suppose you inherit an antique doll from your great aunt sadie. the doll has a sentimental value of $100 to you. jane is a collector who is willing to pay $800 for your doll. if you sell the doll to have for $600 your producer surplus is _______ & jane's consumer surplus is ________
$500, $200
the market for gluten-free breakfast cereal is shown in the graph. the after-tax price paid by buyers & price received by sellers are, respectively,
$6.00, $4.00
the market for gluten-free bread is represented in the graph. when the market is in equilibrium, consumer surplus is
$80
refer to the figure. if there is no tax placed on the good in the market, total surplus is the area
A + B + C + D + E + F
refer to the figure. if the per-unit tax is placed on the good in the market, the tax revenue is the area
B + C
refer to the figure. if the per-unit tax is placed on the good in the market, the deadweight loss is the area
E + F
(refer to table 7-3) if the market price for the good is $20, who will purchase the good
Quilana, Wilbur, & Ming-La only
in 1971 a pocket calculator cost more than $75. in 2015 a calculator of the same quality cost less than $10. which of the following explanations is most consistent with these facts
a change in technology
which of the following would shift the supply curve of iPhones to the right
a decrease in wages paid to workers making the iPhones
refer to the graph. if the price falls from P2 to P1, area B represents the
additional consumer surplus to initial consumers
assuming apricots & nectarines are substitutes for peaches. which of the following would shift the demand curve for peaches to the right
an increase in the price of apricots
which of the following would not be a result of a binding price ceiling on child care
an increase in the quantity of child care supplied
refer to the graph. which of the following is correct
at P3 producer surplus is smaller than at P1
(refer to figure 6-19) suppose a tax of $2 per unit is imposed on this market. how much will sellers receive per unit after the tax is imposed
between $3 & $5
(refer to figure 6-19) suppose a tax of $2 per unit is imposed on this market. how much will buyers pay per unit after the tax is imposed
between $5 & $7
(refer to figure 6-19) suppose a tax of $2 per unit is imposed on this market. what will be the new equilibrium in this market
between 50 units & 100 units
suppose that cold temperatures cause a decrease in the supply of tea. what should happen in the market for coffee, assuming tea & coffee are substitutes
both the equilibrium price & quantity will increase
the market for gluten-free breakfast cereal is shown in the graph above. suppose the government enacts a $2 tax per unit, imposed on the sellers. the policy will cause
buyers & sellers to each bear a $1 burden of the tax
the market for gluten-free bread is characterized by an inelastic demand & an elastic supply. what would happen to the deadweight loss of a tax, if the supply would also be inelastic
decrease
suppose that the city of bloomington imposes a $1 per-tire recycling fee on buyers whenever they purchase a new tire. we can illustrate the tax on a graph by shifting the demand curve
down by $1; the price paid by buyers would rise by less than $1
a movement along the downward-sloping demand curve for frozen margaritas can be caused by a change in weather
false
as the size of a tax increases, the size of the deadweight loss first increases, then decreases
false
changes in the price of chocolate cake cause the demand curve for chocolate cake to shift, whereas changes in income cause a movement along the demand curve for chocolate cake
false
consumer surplus increases when the price increases
false
producer surplus is the difference between willingness to pay & price paid for a good
false
when the government imposes a binding price ceiling, it causes a surplus of the good
false
a market is a
group of buyers & sellers of a particular good or service
in 2015, the minimum wage according to federal law was $7.25 per hours. increasing minimum wage to $8 per hour (approximately a 10% increase) will probably lead to
higher income for the working poor, 1-3% increase in teenage unemployment, more teenagers dropping out of school & preventing some unskilled workers from getting the on-the-job training they need
welfare economics is the study of
how the allocation of resources affects economic well-being
(refer to figure 6-19) suppose a tax of $2 per unit is imposed on this market. which of the following is correct
one-half of the burden of the tax will fall on buyers, & one-half of the burden will fall on sellers
this graph illustrates the market for wine. if the current price is $50 per bottle, we expect the
price to decrease due to the surplus of wine
this graph illustrates the market for gluten free chocolate cake. if the current price is $30 per cake, we expect the
price to increase due to the shortage of cake
the deadweight loss from a tax
reflects the inefficiency in recourse allocation because the tax distorts incentives
assuming the graph is drawn to scale, which of the following is true regarding the burden of the tax in market above
sellers pay a larger share of the tax because supply is more inelastic than demand
rent controls cause
shortages of apartments which are larger in the long run than in the short run
an advance in technology would shift the
supply curve to the right
suppose there is currently a tax of $50 per ticket on airline tickets. sellers of airline tickets are required to pay the tax to the government. if the tax is reduced from $50 per ticket to $30 per ticket, then the
supply curve will shift downward by $20, & the price paid by buyers will decrease by less than $20
the deadweight loss from a tax is likely to be smallest when
supply is inelastic & demand is inelastic
the market of chocolate cupcakes in equilibrium at a price of $4 & a quantity of 300 chocolate cupcakes. the government levies a $1 per unit tax, which decreases the quantity bought & sold to 250. which of the following statements is correct
the tax revenue collected as a result of the new tax is $300
the equilibrium price in the market for gluten-free muffins is $5, & at this price, 300 gluten-free muffins are bought & sold. at a quantity of 200 gluten-free muffins, the market is not efficient because
the value to buyers exceeds the cost to sellers, the sum of consumer & producer surplus is not maximized, consumers would gain additional consumer surplus if they would purchase 100 more gluten-free muffins, producers would gain additional surplus if they would produce & sell 100 more gluten-free muffins
suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy. further, suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle. which of the following statements is correct
this tax causes the demand curve for vodka to shift downward by $5.00 at each quantity of vodka, the price paid by buyers if $2.00 per bottle more than it was before the tax, sixty percent of the burden of the tax falls on sellers
a $2 tax levied on the producers of a good has the same effect on buyers & sellers as a $2 tax levied on the consumers of the good
true
a policymaker that wants to raise tax revenue while minimizing the deadweight loss should tax goods with inelastic supply & demand rather than goods with elastic supply & demand
true
changes in the price of cheese cause a movement along the supple of cheese, whereas changes in input prices cause the supply of cheese to shift
true
if demand decreases, both the equilibrium price & quantity decrease
true
taxes create market inefficiencies that can be measured as deadweight loss
true
the market equilibrium maximizes the sun of the producer & consumer surplus
true
refer to the labor market graph. the imposition of an $8 minimum wage would cause
unemployment of 35 labor hours
which of the following is an example of the law of demand
when tuition at State U rises, fewer students enroll in courses at State U
