Micro Test Hardest Questions

Suppose the government sets a price floor at $9 in the market. The resulting consumer surplus, producer surplus, and deadweight loss will be which of the following?

Consumer Surplus - A Producer Surplus - BCD Deadweight Loss - EF

Assume that the original supply and demand curves of a commodity are S and D, respectively. Also assume that the government imposes an excise tax (per unit tax) of t dollars on the commodity, which shifts the supply curve to S1 What is Consumer Surplus, Producer Surplus and Deadweight Loss?

Consumer Surplus: A Producer Surplus: G Deadweight Loss: D+E

Assume that a 2 percent increase in the price of bologna causes a 5 percent decrease in the demand for cheese. What is the cross-price elasticity of demand between the two goods, and how are these goods related?

Cross-price elasticity of demand equals −2.5−2.5, and these goods are complements.

Assume that the original supply and demand curves of a commodity are S and D, respectively. Also assume that the government imposes an excise tax (per unit tax) of t dollars on the commodity, which shifts the supply curve to S1. What is the deadweight loss

GKI

Assume that the original supply and demand curves of a commodity are S and D, respectively. Also assume that the government imposes an excise tax (per unit tax) of t dollars on the commodity, which shifts the supply curve to S1. How much money did the government make?

P1 G I P2

Total economic surplus will be maximized at which of the following price and quantity combinations?

P2 and Q2 (which was price equilibrium)

Leather and beef are jointly produced such that an increase in the production of one results in an equal increase in the production of the other. An increase in the demand for leather will most likely cause

a decrease in the price of beef

Which of the following changes in the demand for and the supply of a good will necessarily result in an increase in both the equilibrium price and quantity of the good in a market?

an increase in demand and no shift in supply

The graph above shows the supply and demand curves for a particular brand of computers. In 1988, 10,000 computers were sold for $1,000 each, but in 1989, 9,000 computers were sold for $1,000 each. Which of the following changes in the supply and demand curves could most likely have caused this change?

demand and supply curves both shifting left

The supply curve for automobiles will shift to the left in response to

higher wages in the automobile industry

The graph above shows the supply and demand curves for gasoline. Which of the following will occur if the government establishes a price ceiling of $1.20 per gallon?

neither surplus nor shortage it was above the PEQ

A decrease in raw material prices will change the equilibrium price and quantity in a market in which of the following ways?

price decrease, quantity increase

Which of the following is true in the market for a certain product if producers consistently are willing to sell more at the going price than consumers are willing to buy?t

there is a price floor for the product

Assume that the demand for a certain good is perfectly inelastic and the supply curve of the good is upward sloping. Which of the following occurs in the market for the good if the price of an input used to produce the good increases?

A decrease in the supply and an increase in the equilibrium price

On the basis of the graph above, which of the following statements concerning changes in the demand for and supply of tomatoes is correct?

If the demand increases while the supply decreases, the price of tomatoes will definitely increase.

Assume that the original supply and demand curves of a commodity are S and D, respectively. Also assume that the government imposes an excise tax (per unit tax) of t dollars on the commodity, which shifts the supply curve to S1. Which of the following bears the total tax burden?

both consumers and producers

If a price ceiling is set at P1, which of the following areas represent the resulting consumer surplus, producer surplus, and deadweight loss?

Consumer surplus - fgi Producer surplus - k deadweight loss - hj

After the government imposed a $0.20 per gallon tax on gasoline, the price of a gallon of gasoline increased from $1.00 to $1.15. Which of the following statements is true?

Consumers bear most, but not all, of the tax burden

A change in which of the following will cause a change in the supply of personal computers (PC's) in the short run

Technology

The graph above illustrates the labor market for teenage workers. The current minimum wage for all workers is W1. If Congress introduces a sub-minimum wage, W2 that applies only to teenagers, what is the most likely effect on teenage employment?

Teenage employment will increase because firms will want to hire more teenagers at W2 than at W1

Which of the following would cause the equilibrium price of good X to increase?

The price of an essential input in the production of good X increases.