econ test 2

An externality is the uncompensated impact of

One persons actions on the well-being on a bystander

if the government levies a $1000 tax per boat on sellers of boats, then the price paid by buyers of Boats would

increase by less than $1000

When an externality is present, the market equilibrium is

inefficient, and the equilibrium does not maximize the total benefit to society as a whole.

the deadweight loss from a tax per unit of good will be smallest in a market with

inelastic supply and inelastic demand

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

price floor

reasons for taxes

public projects(roads) market failure (pollution) equity (fairness)

if a non-binding price floor is impose on a market then the

quantity sold in the market will stay same

moving production from a high cost producer to a low cost producer will..

raise total surplus

which of the following events would increase producer surplus

sellers costs stay the same in the price of good increases

free rider

someone who benefits from something they didn't help pay for

in which of the following cases is the class theorem most likely to solve the externality

Ed is allergic to his roommates cat

Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

The effective price received by sellers is $0.40 per bottle less than it was before the tax.

which of the following is an example of a positive externality

The mayor of a small town plants flowers in the city park.

producer surplus directly measures

The well-being of sellers

which of the following statements about a well-maintained yard best conveys the general nature of the externality?

a well maintained yard, conveys a positive externality, because it increases the value of adjacent property in the neighborhood

If an allocation of resources is efficient then

all potential gains from trade among buyers and sellers are being realized

false

corrective taxes at the maximum quantity of pollution, whereas tradable pollution permits, fix the price of pollution

externality

cost or benefit to someone who isn't part of the transaction

a shortage results when a

binding price ceiling is imposed on a market

suppose there is an early freeze in California that reduces the size of the lemon crop as a price of lemons rises what happens to the consumer surplus in the market for lemons

consumer surplus decreases

The decrease in total surplus that results from the market distortion,such as tax, is called

deadweight loss

if the government removes a tax on a good then the price paid by buyers will

decrease, and the price received by sellers will increase

consumer surplus

difference between what u r willing to pay and price

permits

firms get revenue

taxes

government gets revenue

rival

if my using it means there's less for you

The government benefit from attacks can be measured by

tax revenue

producer surplus

the difference between what it costs you to provide a good and the price

tax incidence refers to

the distribution of the tax burden between buyers and sellers

willingness to pay

the maximum price at which a consumer will buy a good

The coase theorem

the person that's creating the externality and then the person that's being affected by the externality can bargain

welfare

total utility (happiness)

excludable

when i can prevent u from using it if u didn't buy it

efficient outcome

where the way we allocate our resources maximizes total surplus