Econ Exam Chapter II
. If Roberta sells a shirt for $30, and her producer surplus from the sale is $21, her cost must have been $51
False
. The term tax incidence refers to the Boston Tea Party
False
A consumer's willingness to pay measures the cost of a good to the buyer
False
A supply curve can be used to measure producer surplus because it reflects the actions of sellers
False
A tax imposed on a market with an inelastic demand and an elastic supply will cause sellers to pay the majority of the tax
False
A tax levied on the buyers of a product shifts the supply curve upward (or to the left)
False
A tax on the buyers of popcorn increases the size of the popcorn market
False
A tax placed on a product causes the price the buyer pays and the price the seller receives to be higher
False
Amy buys a new dog for $150. She receives consumer surplus of $100 on her purchase. Her willingness to pay is $50
False
At Nick's Bakery, the cost to make his homemade chocolate cake is $3 per cake. He sells three and receives a total of $21 worth of producer surplus. Nick must be selling his cakes for $2 each
False
Cost refers to a seller's producer surplus
False
Denea produces cookies. Her production cost is $3 per dozen. She sells the cookies for $8 per dozen. Her producer surplus is $3 per dozen
False
Donald produces nails at a cost of $200 per ton. If he sells the nails for $500 per ton, his producer surplus is $200 per ton
False
If a tax is imposed on a market with elastic demand and inelastic supply, buyers will bear most of the burden of the tax
False
If buyers are required to pay a $0.10 tax per bag on Hershey's kisses, the demand for kisses will shift up by $0.10 per bag
False
If demand decreases, the price of a product, as well as producer surplus, increases
False
If you pay a price exactly equal to your willingness to pay, then your consumer surplus is negative
False
Janine would be willing to pay $50 to see Les Misérables, but buys a ticket for only $30. Janine values the performance at $20
False
Out-of-pocket expenses plus the value of the seller's own resources used in production are considered to be the seller's total revenue
False
Producer surplus equals Value to buyers - Amount paid by buyers
False
Producer surplus is the area under the supply curve to the left of the amount sold
False
Shannon buys a new CD player for her car for $135. She receives consumer surplus of $25 on her purchase. Her willingness to pay is $25
False
Suppose a tax is imposed on the buyers of a product. The burden of the tax will fall entirely on the buyers
False
Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will decrease, and producer surplus in the industry will decrease
False
Suppose that a tax is placed on DVDs. If the seller ends up paying the majority of the tax we know that the demand curve is more inelastic than the supply curve
False
Suppose that a tax is placed on books. If the buyer pays the majority of the tax we know that the supply curve is more inelastic than the demand curve
False
The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium market price of chocolate increases, and producer surplus increases
False
The area below a demand curve and above the price measures producer surplus
False
The benefit received by buyers in the market is measured by the demand curve
False
The benefit received by sellers in a market is measured by the supply curve
False
The benefit received by the government from a tax is measured by deadweight loss
False
The initial effect of a tax on the buyers of a good is on the supply of that good
False
The marginal seller is the seller who cannot compete with the other sellers in the market
False
To analyze economic wellbeing in an economy it is necessary to use demand and supply
False
Total surplus in a market is represented by the total area under the demand curve and above the price
False
Total surplus in a market is the total costs to sellers of providing the goods less the total value to buyers of the goods
False
Total tax revenue received by government can be expressed as T/Q
False
We can say that the allocation of resources is efficient if producer surplus is maximized
False
Welfare economics is the study of the well-being of less fortunate people
False
When a tax is levied on a good only the quantity of the good sold will change
False
Willingness to pay measures the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
False
With respect to welfare economics, the equilibrium price of a product is considered to be the best price because it maximizes total revenue to firms and total utility to buyers
False
. In a market, total surplus is equal to producer surplus plus consumer surplus
True
.Economic analysis uses consumer and producer surplus to judge the effect of taxes on economic welfare
True
A demand curve measures a buyer's willingness to pay
True
A tax imposed on gasoline, will have buyers and sellers sharing the burden of the tax
True
A tax levied on the supplier of a product shifts the supply curve upward (or to the left)
True
A tax on a good raises the price buyers pay and lowers the price sellers receive
True
A tax on the sellers of cell phones will reduce the size of the cell phone market
True
A tax placed on the seller of a good raises the price buyers pay and lowers the price sellers receive
True
A tax placed on the seller of a product will raise equilibrium price and lower equilibrium quantity
True
A tax placed on the sellers of blueberries increases costs, lowers profit and shifts supply to the left (upward)
True
According to the graph shown, B + C represents total surplus in the market when the price is P1
True
Belva is willing to pay $65.00 for a pair of shoes for a formal dance. She finds a pair at her favorite outlet shoe store for $48.00. Belva's consumer surplus is $17
True
Buyers of a product will pay the majority of a tax placed on a product when supply is more elastic than demand
True
Consumer surplus equals the Value to buyers - Amount paid by buyers
True
Consumer surplus is a buyer's willingness to pay minus the price
True
Cost is a measure of the seller's willingness to sell
True
Deadweight loss measures the loss in a market to buyers and sellers that is not offset by an increase in government revenue
True
For the most part, a tax burden falls most heavily on the side of the market that is more inelastic
True
For the most part, all governments, federal, state, and local, rely on taxes to raise revenue for public purposes
True
For the most part, buyers and sellers share the burden of the tax
True
If a consumer is willing and able to pay $20.00 for a particular good but only has to pay $14.00, the consumer surplus is $6.00
True
If a market is allowed to move freely to its equilibrium price and quantity, then an increase in supply will increase consumer surplus
True
If a tax is imposed on a market with inelastic demand and elastic supply, buyers will bear most of the burden of the tax
True
If a tax is levied on the seller of a product the demand curve will not change
True
If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus of that purchase would be zero
True
If the price of a good increases, consumer surplus decreases
True
In most markets, consumer surplus reflects economic well-being
True
In the end, tax incidence depends on the legislated burden
True
Suppose the demand for nachos increases. Producer surplus in the market for nachos will increase
True
Suppose there is an early freeze in California that ruins the lemon crop. Consumer surplus in the market for lemons decreases
True
The benefit from a tax is measured by the benefit received by those people who gain from government's expenditure of the tax revenue
True
The burden of a tax placed on a product depends on the supply and demand of that product
True
Total surplus = value to sellers - costs of sellers is NOT correct
True
When a good is taxed both buyers and sellers are worse off
True
When a tax is placed on the buyers of milk, the size of the milk market is reduced
True
When a tax is placed on the buyers of orange juice, the size of the orange juice market is reduced
True
When a tax is placed on the sellers of a product the size of the market is reduced
True
When analyzing the economic effects of government policies, supply and demand are useful tools of analysis
True
When technology improves in the ice cream industry, consumer surplus will increase
True