UNIT 1 & 2 OF ECON
to calculate tax what do you do
# of tax/ income
demand shifts so that the equilibrium price of the good increases. this change is consistent with A) increase subsidies for buyers of the good B) increased taxes for buyers of the good C) increased taxes for sellers of the good D) decreased taxes for sellers of the good
A
demand shifts so that the equilibrium quantity of the good decreases. this change is consistent with? A) an increase in the price of a complement good B) an increase in the price of a substitute good C) an increase in the price of the good itself D) an decrease in the price of the good itself
A
megan has a 1-hour gap in her course load for the fall semester. there are two courses available for her to take at the time; reading piano sheet music and beginning rock climbing. in the end, she decides to enroll in the rock-climbing course. identify which activity exhibits a potential trade off with enrolling in the rock climbing. A) learning rock climbing skills B) learning to read piano sheet music C) overcoming her fear of heights D) none
B
alice, amber, and andi make and sell pottery. alice is willing to sell a 5-inch pot for $20. amber is willing to sell a 5-inch pot for $22 and andi is willing to sell a 5-inch pot for $46. if each of the ladies is able to sell one 5-inch pot for $50 what is their combined producer surplus? A) $69 B) $55 C) $62
C
excess supply
The situation that exists when supply is greater than demand.
a recent study found that in the long run the price elasticity of demand for gasoline is -0.58. if massachusetts were to double its gasoline tax, its revenue from the tax would a) rise but not double b) fall by 58% c) fall by 100% d) more than double
a
an economic theory seeks to explain and predict real-world outcomes often within the context of a formalized mathematical model. which statement is a major reason why such a theory maynot be successful in this pursuit a) the model assumptions are unrealistic and do not adequately describe how agents behave in the real world b) the economy is far too complex to be accurately described by a simplified theory
a
consider two markets; the market for coffee and the market for hot cocoa. the initial equilibrium for both market is the same, P= $4.50 and Q= 33 units. when the price is $8.75, the quantity supplied for coffee is 71 units and the quantity supplied for hot cocoa is 107 units. for simplicity of analysis, the demand for both goods are the same. using the midpoint formula calculate the elasticity of supply for hot cocoa and coffee a) hot coco: 1.65 and coffee: 1.14 b) hot coco: 1.93 and coffee: 1.00
a
price floor... leads to deadweight loss a) reduces the quantity demanded below the market equilibrium quantity b) causes surpluses due to rise in quantity supplied
a
quincy decides to eat less ice cream and more pretzels as a result a) marginal utility for ice cream increase and marginal utility of pretzels decreases b) marginal utility for ice cream decreases and marginal utility of pretzels increses
a
what is true concerning the elasticity of supply in the short run and in the long run a) supply is less elastic in the short run and more elastic in the long run bc producers have more flexibility in the long run and more time for adjustment process b) supply is less elastic in the short run and more elastic in the long run bc producers have less flexibility in the long run and less time for adjustment pricess
a
which describes the fairness-efficiency trade-off? a) actions intended to make economics outcome fairer can cause efficiency to decrease b) government intervention can increase efficiency in a market c) there is always a more equitable outcome that is also more efficient d) the least efficient economic outcome is the fairest outcome
a
which is the best definition of efficiency? a) when nobody can be made better off without making someone worse off b) when everybody is as well off as possible c) when somebody can be made better off without making someone worse off
a
government that are interested in minimizing the efficiency costs of taxation should only tax good where a) demand/supply or both are relatively elastic b) demand/supply or both are relatively inelastic c) demand/supply but not both are relatively elastic d) demand/supply but not both are relatively inelastic
b
madeline spends all of her spare money on widgets, which cost $2 each and gizmos which cost $6 each. what is her opportunity cost if madeline buys 12 widgets a) 3 widgets b) 4 gizmos c) 8 gizmos d) 8 widgets
b
suppose the government issues every family earning less than $25,000 a year a voucher, worth $500 a month that can be applied to any unit of housing. a) shortages of housing will occur b) the amount of available housing will increase c) the use of blat will increase significantly among locals d) there will be surpluses in the markets for other goods and services
b
tina tax payer makes $75,000 a year. what is her average tax rate is she is required to pay a lump sum tax of $10,000 a) 18.29% b) 13.33% c) 12.33% d) 28.91%
b
utility is the measure of a) the satisfaction all consumers should receive from consuming good or service b) the satisfaction a good or service gives to the consumer
b
when laurens salary decreases from $34,000 to $30,000 she decides to reduce the number of outfits she purchases each year from 20 to 19 the new outfits are? a) normal goods with income elastic demand b) normal goods with income-inelastic demand c) inferior goods with income inelastic demand
b
when the price elasticity of demand is low. and the price elasticity of supply is high, the burden of a tax falls mainly on producers a) true b) false
b
each state imposes its own excise tax on gasoline. suppose that the state of massachusetts imposes a state gasoline tax of $0.26 per gallon. furthermore an average of 1,022,00 gallons of gasoline per day were sold in massachussetts in 2010. massachusetts total revenue from the gasoline tax in 2010 was? a) $86 million b) 111 million c) $97 million d) 232 million
c
think about scarcity in terms of the economics way of thinking, why does scarcity exist? a) exist because people have limited incomes b) and poverty are the same thing, they are both unavoidable because poverty is relative c) exist because people have unlimited wants d) exist because people virtually have unlimited wants and because the earth has a limited supply of lands, labor, capital, and entrepreneurial ability
d
what will happen to equilibrium price and quantity when the decrease in demand is relatively larger than the increase in supply? a)both equilibrium quantity and price increases b) equilibrium price is ambiguous and equilibrium quantity rises c) equilibrium price falls and equilibrium quantity is ambiguous d)both equilibrium quantity and price falls
d
which is not an example of a resource a) land b)machinery c) human capital d) labor e) firms
e
international trade should be limited because it can cause some workers to loss their job
normative analysis
the U.S. should impose import quota in the market for consumer electronics to help domestic workers
normative analysis
higher tariffs on imported automobiles would decrease the demand for foreign made cars
positive analysis
international trade makes some people better off and some people worse off
positive analysis
the sugar quota in the U.S costs consumers $6.08 billion a year
positive analysis
marginal tax
the percentage paid on the next dollar earned