Econ - Exam 2

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is

$150

with free trade, total surplus is

$450

total surplus with trade exceeds total surplus without trade by

$75

if the market price is 1,100 the combined total cost of all participating sellers is

2,250

if max has taxable income of 227,000, his marginal tax rate is

34%

without trade, consumer surplus amounts to

367.50

At the equilibrium price, consumer surplus is

480

when tax is imposed in this market, sellers effectively pay what amount of the 10 tax

6

Which area represents the increase in consumer surplus when the price falls from p1 to p2?

BCDG

which of the following can not explain why the private solution to externality based on coase theorem is usually hard to reach

case theorem is fundamentally wrong

as a result of the tariff, there is a deadweight loss that amounts to

d+f

if this market is currently producing at q3, then total economic well-being would be maximized if output

decreased to q2

when the country moves from free trade to trade and a tariff, consumer surplus

decreases by $144 and producer surplus increases by $48

when a country allows trade and becomes an importer of a good

domestic producers become worse off and domestic consumers become better off

the amount of government revenue created by the tariff is

e

after the tax is levied, producer surplus is represented by area

f

national defense is provided by the government because

free-rider problem make it difficult for private markets to supply the socially optimal quantity of public goods

which of the following statements is correct

government should tax goods with negative externalities and subsidize goods with positive externatilities

with trade, this country

imports 50 wagons

the deadweight loss from a $2 tax will be smallest in a market with

inelastic demand and inelastic supply

a positive externality will cause a private market to produce

less than is socially desirable

a negative externality will cause a private market to produce

more than is socially desirable

with the tariff, the domestic price and domestic quantity demanded are

p2 and q3

Externalities are

side effects passed on to a party other than the buyers and sellers in the market

if the government wanted to ensure that the market reaches the socially optimal equilibrium in the presence of a technology spillover, it should

subsidize producers by an amount equal to the value of the technology spillover

When the price is p1, area b+c represents

total surplus

if trade in tomatoes is allowed, the

total well-being of the US is enhanced relative to the no-trade situation

within a country, the domestic price of a product will equal the world price if

trade restrictions are imposed on the product

this market

would benefit from a tax on the product