Econ Test 2

Erin will continue to hire Ernesto to clean her house, but her consumer surplus will decline

1. Erin would be willing to pay as much as $100 per week to have her house cleaned. Ernesto's opportunity cost of cleaning Erin's house is $70 per week. Assume Erin is required to pay a tax of $40 when she hires someone to clean her house for a week. Which of the following is correct?(ch8)

Decreases by $0.75

1. For each of the three potential buyers of apples, the table displays the willingness to pay for Bob, Sasha, and Ava, who are the only three buyers of apples. If the market price of an apple increases from $0.80 to $1.05, then consumer surplus(ch7)

$40

1. You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?(ch7)

lower than most European countries.

The U.S. tax burden is (ch12)

Look at the figure above. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?(ch6)

60 units

receives the benefit of a good but avoids paying for it

A free rider is a person who(ch11)

not rival in consumption

A public television broadcast is an example of a good that is(ch11)

2 acres

Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The following table shows each resident's willingness to pay for each acre of the park. Suppose the cost to build the park is $24 per acre and that the residents have agreed to split the cost of building the park equally. If the residents vote to determine the size of park to build, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus), what is the largest park size for which the majority of residents would vote "yes?"(ch11)

Suppose there is currently a tax of $80 per ticket on airline tickets. Sellers of airline tickets are required to pay the tax to the government. If the tax is reduced from $80 per ticket to $64 per ticket, then the(ch6)

Demand curve will shift upward by $16, and the price paid by buyers will decrease by less than $16

both public goods and common resources.

Governments can improve market outcomes for(ch11)

Calvin, Sam, Andrew

If the price of the product is $110, then who would be willing to purchase the product? (ch7)

$2500

If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus?(ch7)

deadweight losses and administrative burdens.

In addition to tax payments, the two other primary costs that a tax system inevitably imposes on taxpayers are:(ch12)

Carlos is worse off, and his loss of welfare is part of the deadweight loss of the tax

In the absence of taxes, Carlos would prefer to purchase a large fishing boat with a 75 hp motor. The government has recently decided to place a tax on boats with 75 hp motors or higher. If Carlos decides to purchase a smaller boat with a 50 hp motor as a result of the tax, which of the following statements is correct?(ch12)

decrease by $3

In the figure above, the vertical distance between points E and F represents a tax in the market. The imposition of the tax causes the price paid by buyers to(ch8)

$20 and tax revenues increase by $20, so there is no deadweight loss.

Leonard, Sheldon, Raj, and Penny each like to attend comic-book conventions. The price of a ticket to a convention is $50. Leonard values a ticket at $70, Sheldon at $65, Raj at $60, and Penny at $55. Suppose that if the government taxes tickets at $5 each, the price will rise to $55. A consequence of the tax is that consumer surplus shrinks by(ch12)

1. When a tax is placed on the sellers of a product, buyers pay(ch6)

More, and sellers receive less than they did before the tax

it would be more efficient if the electric company raised its rates for electricity at peak times

On hot summer days, electricity-generating capacity is sometimes stretched to the limit. At these times, electric companies may ask people to voluntarily cut back on their use of electricity. An economist would suggest that(ch11)

raises the same amount of revenue at a higher cost to taxpayers

One tax system is less efficient than another if it(ch12)

Suppose the government imposes a 20-cent tax on the sellers of artificially sweetened beverages. The tax would shift(ch6)

Supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially sweetened beverages

$250

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 (ch8)

sellers will bear a greater burden of the tax than the buyers.

Suppose that in a particular market, the supply curve is highly inelastic and the demand curve is highly elastic. If a tax is imposed in this market, then the(ch6)

Tax Revenue

Suppose the government imposes a tax of (P'-P'''). The area measured by K+L represents(ch8)

485

The Occupational Safety and Health Administration (OSHA) has determined that the probability of a worker dying from exposure to a hazardous chemical used in the production of fertilizer is 0.008. The cost of imposing a regulation that would ban the chemical is $31 million. If the value of a human life is equal to $8 million, how many people must the policy affect in order for the benefits to exceed the costs?(ch11)

Private good

The Pennsylvania Turnpike is a tolled freeway running through the state of Pennsylvania. Motorists must pay tolls at various points along the Turnpike based on the distance they traveled on the freeway. Suppose that despite the tolls, many motorists in the urban areas use the Turnpike causing traffic to slow during peak times. What type of good would the Turnpike be classified as in this case?(ch11)

willingness to pay

The maximum price that a buyer will pay for a good is called(ch7)

Total surplus decreases

What happens to the total surplus in a market when the government imposes a tax?(ch8)

Decreases by an amount equal to A+B

When the price falls from P2 to P1, producer surplus(ch7)

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

Which of the following is a disadvantage of government provision of a public good?(ch11)

Turning the common resource into a club good

Which of the following is not a typical solution to the "Tragedy of the Commons?"(ch11)

People do not have to pay an explicit fee to enjoy these goods

Which of the following is usually true about government-provided goods?(ch11)

Both equity and efficiency are important goals of the tax system

Which of the following statements is correct?(ch12)

The imposition of a binding price floor in the market

Which of the following will cause a decrease in consumer surplus?(ch7)