EC 110
A tax imposed on the buyers of a good will raise the a.price paid by buyers and lower the equilibrium quantity. b.price paid by buyers and raise the equilibrium quantity. c.effective price received by sellers and lower the equilibrium quantity. d.effective price received by sellers and raise the equilibrium quantity.
A
If the demand for donuts is elastic, then a decrease in the price of donuts will a.increase total revenue of donut sellers. b.decrease total revenue of donut sellers. c.not change total revenue of donut sellers. d.There is not enough information to answer this question.
A
When small changes in price lead to infinite changes in quantity demanded, demand is perfectly a.elastic, and the demand curve will be horizontal. b.inelastic, and the demand curve will be horizontal. c.elastic, and the demand curve will be vertical. d.inelastic, and the demand curve will be vertical.
A
Refer to Figure 7-18. If 40 units of the good are being bought and sold, then a.the marginal cost to sellers is equal to the marginal value to buyers. b.the marginal value to buyers is greater than the marginal cost to sellers. c.the marginal cost to sellers is greater than the marginal value to buyers. d.producer surplus would be greater than consumer surplus.
B
Refer to Figure 8-4. The amount of tax revenue received by the government is equal to a.$350. b.$490. c.$700. d.$840.
B
The price elasticity of supply measures how much a.the quantity supplied responds to changes in input prices. b.the quantity supplied responds to changes in the price of the good. c.the price of the good responds to changes in supply. d.sellers respond to changes in technology
B
Total surplus is equal to a.value to buyers - profit to sellers. b.value to buyers - cost to sellers. c.consumer surplus x producer surplus. d.(consumer surplus + producer surplus) x equilibrium quantity.
B
When the price of a bracelet was $25 each, the jewelry shop sold 20 per month. When it raised the price to $35 each, it sold 14 per month. Using the midpoint method, the price elasticity of demand for bracelets is about a.1.66. b.1.06. c.0.94. d.0.60
B
A price ceiling is binding when it is set a.above the equilibrium price, causing a shortage. b.above the equilibrium price, causing a surplus. c.below the equilibrium price, causing a shortage. d.below the equilibrium price, causing a surplus.
C
Buyers of a product will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the a.tax is placed on the sellers of the product. b.tax is placed on the buyers of the product. c.supply of the product is more elastic than the demand for the product. d.demand for the product is more elastic than the supply of the product.
C
Get Smart University is contemplating an increase in tuition to enhance revenue. If GSU feels that raising tuition would enhance revenue, it is a.ignoring the law of demand. b.assuming that the demand for university education is elastic. c.assuming that the demand for university education is inelastic. d.assuming that the supply of university education is elastic.
C
Refer to Figure 7-18. The efficient price is a.$22, and the efficient quantity is 40. b.$22, and the efficient quantity is 110. c.$16, and the efficient quantity is 80. d.$8, and the efficient quantity is 40.
C
Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1? a.A is root beer, and B is carbonated beverages. b.A is bicycles, and B is mopeds. c.A is airline tickets in the short run, and B is airline tickets in the long run. d.A is gourmet coffee, and B is dentist's visits.
C
Suppose the tax on liquor is increased so that the tax goes from being a "medium" tax to being a "large" tax. As a result, it is likely that a.tax revenue increases, and the deadweight loss increases. b.tax revenue increases, and the deadweight loss decreases. c.tax revenue decreases, and the deadweight loss increases. d.tax revenue decreases, and the deadweight loss decreases.
C
Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1? a.A is a luxury, and B is a necessity. b.A is a good several years after a price increase, and B is that same good several days after the price increase. c.A is a Kit Kat bar, and B is candy. d.A has fewer substitutes than B.
D
Suppose the government has imposed a price ceiling on cellular phones. Which of the following events could transform the price ceiling from one that is binding to one that is not binding? a.Cellular phones become more popular. b.Traditional land line phones become more expensive. c.The components used to produce cellular phones become more expensive. d.A technological advance makes cellular phone production less expensive.
D
The amount of deadweight loss from a tax depends upon the a.price elasticity of demand. b.price elasticity of supply. c.amount of the tax per unit. d.All of the above are correct.
D
When a tax is levied on a good, a.government collects revenues which might justify the loss in total welfare. b.there is a decrease in the quantity of the good bought and sold in the market. c.a wedge is placed between the price buyers pay and the price sellers effectively receive. d.All of the above are correct
D
The price elasticity of demand for a good measures the willingness of... a.consumers to buy less of the good as price rises. b.consumers to avoid monopolistic markets in favor of competitive markets. c.firms to produce more of a good as price rises. d.firms to respond to the tastes of consumers.
consumers to buy less of the good as price rises
A decrease in the size of a tax is most likely to increase tax revenue in a market with a.elastic demand and elastic supply. b.elastic demand and inelastic supply. c.inelastic demand and elastic supply. d.inelastic demand and inelastic supply.
A
