MICRO ECON Exam 2

Ceteris paribus, when supply shifts to the left, there is:

an increase in price and a decrease in consumer surplus.

According to the Coase Theorem, an efficient outcome can be achieved without any need for active government involvement as long as:

property rights are clearly defined and transaction costs are sufficiently low.

Goods that are both nonrival and nonexcludable are:

pure public goods

After a price floor is established above the equilibrium price in the market for strawberries:

the quantity of strawberries actually bought and sold decreases.

The Tragedy of the Commons refers to:

the tendency to use common resources more than is desirable from society's point of view.

Based on the information in the graph below, the tax generates tax revenue of _________ and a deadweight loss of _________.

$128; $16

Based on the information in the graph below, if there is a price ceiling of $5, then consumer surplus is equal to _______ and producer surplus is equal to ______.

$250; $50

Based on the information in the graph below, in free market equilibrium, total consumer and producer surplus is equal to _______.

$400

Which of the following is an example of a positive externality?

A lower crime rate in a neighborhood patrolled by a security company

Which of the following is not an example of government response to a market failure?

A privately-owned business that does not allow smoking

All of the following are examples of public goods except:

a bagel with cream cheese.

The economic burden of a tax:

is partially shifted to consumers through higher prices in most cases.

The purpose of setting a price ceiling below the equilibrium price is to:

maintain a low price for buyers in the market.

A demand curve can be interpreted as:

marginal benefit curve

An efficient level of an output exists when:

marginal benefit is equal to marginal cost.

Consumer surplus is the difference between ________ and product price and producer surplus is the difference between ________ and product price.

marginal benefit; marginal cost

Products that generate negative externalities tend to be:

overproduced by private markets.

A tax levied on gasoline is predicted to:

reduce production and consumption, leading to less pollution.

The Truth in Lending Act of 1968 protects consumers by:

requiring clear disclosure of the costs of credit.

The "free-rider" problem refers to a situation in which:

the benefits associated with public goods cannot be denied to users, whether or not they are willing to pay for them.