Econ ch 7-11

A buyer is willing to buy a product at a price greater than or equal to his willingness to pay, but would refuse to buy a product at a price less than his willingness to pay

False

When Monique drives to work every morning, she drives on a congested highway l. What Monique does not realize is that when she enters the highway each morning she increases the travel time of all other drivers on the highway. In this case, the external cost of Monique's highway trip

Increases the social cost above the private cost

If I policymaker wants to raise revenue by texting goods while minimizing the dead weight loss is, he should look for goods with elasticity of demand and elasticity of supply.

Small,small

Which of the following is a disadvantage of government provision of a public good?

The government lacks information about the value people place on the good

Suppose there are three identical vases available to be purchased. Buyer one is willing to pay $30 for one, buyer to is willing to pay $25 for one, and buy your three is willing to pay $20 for one. If the price is $25, how many vases will be sold and what is the value of consumer surplus in this market?

Two vases will be sold, and consumer surplus is $5

Total surplus with trade exceeds total surplus without trade by

$1,280

How large with a collective tax need to be to move this market from the equilibrium outcome to the socially optimal outcome?

$2

Suppose a tax of $5 per unit is imposed on a good, and the tax causes the equilibrium quantity of the good to decrease from 200 units to 100 units. The tax decreases consumer surplus by $450 and decreases producer surplus by $300. The deadweight loss from the tax is

$250

At Nick's bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling 10 danishes, Nick experience as a producer surplus in the amount of $20. Nick must be selling his danishes for

$3.50 each

The occupational safety and health administration has determined that the probability of a worker dying from exposure to hazardous chemical used in the production of fertilizer is 0.008. The cost of imposing a regulation that would be on the chemical is $32 million. If the value of human life is equal to $10 million, how many people master policy affect in order for the benefits to exceed the cost?

401

The socially optimal quantity of output is

420 units, since the value to society of the 420th unit is equal to the cost incurred by the seller of the 420th unit

Producer surplus plus consumer surplus in this market before trade is

A+B+C

Emma's use of good x does not affect anyone else's use of good x. Neither Emma nor anyone else can be prevented from using the good. Good x is an example of the type of food that belongs in

Box D, which represents public goods

The distinction between efficiency and equality can be described as follows

Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society

Government intervention in the economy with the goal of promoting technology-producing industries is known as patent policy

False

From the figure it is apparent that

Guatemala will export coffee if trade is allowed

Adam Smith's invisible hand concepts suggest that a competitive market outcome

Maximizes total surplus

A result of this country allowing international trade in crude oil is as follows:

The well-being of domestic crude-oil producers is now higher in that they now sell more crude oil at a higher price per barrel

Private goods and club goods have in common that they are excludable, but are different in that private food are rival while club food are not rival in consumption

True

The more elastic the supply, the larger the dead weight loss from a tax, all else equal.

True

Suppose the supply of diamonds is relatively inelastic. A tax on diamonds would generate a

small deadweight loss and the burden of the tax would fall on the seller of diamonds

If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

zero