ECO 102- practice questions exam 2
refer to figure 7-16. if the price of the good is $600, then
$1,000
refer to figure 7-8. at the equilibrium price, consumer surplus is
$1,575
when the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the quantity demanded is 80 units per month. using the midpoint method, the price elasticity of demand is about
0.22
When the price of a bracelet was $28 each, the jewelry shop sold 128 per month. When it raised the price to $32 each, it sold 112 per month. Using the midpoint method, the price elasticity of demand for bracelets is
1
at nick's bakery, the cost to make homemade chocolate cake is $4 per cake. as a result of selling five cakes, nick experiences a producer surplus in the amount of $17.50. nick must be selling his cakes for
7.50 each
refer to figure 7-3. when the price is P1, consumer surplus is
???
which of the following statements about the effects of rent control is correct? A. The effects of rent control are very noticeable to the public in the short run because the primary effects of rent control occur very quickly. B. In the long run, rent control leads to a shortage of apartments and an improvement in the quality of available apartments. C. The short-run effect of rent control is a surplus of apartments, and the long-run effect of rent control is a shortage of apartments. D. The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments.
The short-run effect of rent control is a relatively small shortage of apartments, and the long-run effect of rent control is a larger shortage of apartments.
when demand is unit elastic
a decrease in price will result in no change in total revenue
rent-control laws dictate
a maximum rent that landlords may charge tenants.
which of the following would not interfere with market equilibria?
a non-binding price floor
refer to figure 6-13. if the government imposes a price ceiling of $4 on this market, then there will be
a shortage of 10 units
refer to figure 6-12. when the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2
a shortage will occur at the new market of P2
refer to figure 6-12. when the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2.
a shortage will occur at the new market price of P2
Refer to Table 6-2. A price ceiling set at $5 will
be binding and will result in a shortage of 250 units.
refer to figure 6-4. a government-imposed price of $6 in this market could be an example of a
binding price ceiling and non-binding price floor
At present, the maximum legal price for a human kidney is $0. The price of $0 maximizes
consumer surplus but not producer surplus
The quantity sold in a market will increase if the government
decreases a binding price floor in that market
If the government removes a binding price ceiling from a market, then the producer surplus in that market will increase. t or f?
false decrease
Holding all other forces constant, if decreasing the price of a good leads to a decrease in total revenue, then the demand for the good must be
inelastic
Suppose that the market price for pizzas increases. The increase in producer surplus comes from the benefit of the higher prices to
only existing sellers who now receive higher prices on the pizza they were already selling
a tax imposed on the buyers of a good will raise the
price paid by buyers and lower the equilibrium quantity
if a change in the price of a good results in no change in total revenue, then
the demand for the good must be unit elastic
refer to figure 7-28. at the quantity Q3,
the marginal value to buyers is less than the marginal cost to sellers.
refer to figure 6-30. in which market will the majority of the tax burden fall on sellers?
the market shown in panel (a)
willingness to pay
the maximum amount that a buyer will pay for a good minus the amount the buyer actually pays for it
For a particular good, a 10 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
the relevant time horizon is short
which of the following is likely to have the most price inelastic demand? mint-flavored toothpaste toothpaste Colgate mint-flavored toothpaste a generic mint-flavored toothpaste
toothpaste
A tax of $1 on buyers always decreases the equilibrium price by $1.
true
when demand is perfectly inelastic, the demand curve will be
vertical, because buyers purchase the same amount as before whenever the price rises or falls
refer to figure 7-18 if total surplus is $240 and consumer surplus is
$130, then the price of the good is $120.
Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is
$131,000
refer to figure 6-24. the per-unit burden of the tax on buyers of the good is
$2
David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is
$30
refer to figure 6-21. in the after-tax equilibrium, how much revenue does the government collect from the tax on this good?
$420
refer to figure 7-22. the efficient price is
$70, and the efficient quantity is 100.
refer to figure 7-9. if the price of the good is $9.50, then producer surplus is
$8.50
Tom tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $155 per tuning. One particular week, Tom is willing to tune the first piano for $120, the second piano for $125, the third piano for $140, and the fourth piano for $160. Assume Tom is rational in deciding how many pianos to tune. His producer surplus is
$80
refer to figure 7-26. at the equilibrium price, consumer surplus is
$900
refer to figure 5-5. using the midpoint method, between the prices of $20 and $30, price elasticity of demand is about
0.33
if the price elasticity of demand for a good is 0.2, then a 3 percent decrease in price results in a
0.6 percent increase in the quantity demanded
which of the following could be the price elasticity of demand for a good for which an increase in price would increase revenue?
0.65
If a 20% change in price results in a 15% change in quantity supplied, then the price elasticity of supply is about
0.75 and supply is inelastic
Refer to Figure 5-5. Using the midpoint method, between prices of $50 and $60, price elasticityof demand is about
1.22
Refer to Figure 5-5. Using the midpoint method, between prices of $70 and $80, price elasticityof demand is
3
if the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the result of
??
refer to figure 5-9. using the midpoint method, the price elasticity of demand between point A and point B is
??
consumer surplus measures the benefit to buyers of participating in a market. t or f?
true
if the price elasticity of demand is equal to 1, then demand is unit elastic t or f
true
one common example of a price ceiling is rent control. true or false?
true
true or false, in general, demand curves for luxuries tend to be price elastic
true
if a tax is levied on the sellers of a product, then there will be a(n)
upward shift of the demand curve
A binding price floor will reduce a firm's total revenue
when demand is elastic
refer to figure 7-24. at equilibrium, consumer surplus is measured by the area
ABD
which of the following is the most likely explanation for the imposition of a price floor on the market for corn?
Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor.
a shortage is eliminated when
a binding price ceiling is removed
when demand is inelastic
a decrease in price increases total revenue
after a binding price floor becomes effective, a
a smaller quantity of the good is bought and sold
which of the following observations would be consistent with the imposition of a binding price ceiling on a market? after the price ceiling becomes effective,
a smaller quantity of the good is bought and sold
which of the following will cause an increase in consumer surplus?
a technological improvement in the production of the good
if a binding price floor is imposed on the video game market, then A. All of the following answer choices are correct. B. the quantity of computers supplied will decrease C. a shortage of computers will develop D. the quantity of computers demanded will increase
all of the following answer choices are correct
producer surplus is the
amount the seller is paid minus the cost of production.
when demand is unit elastic
an increase in price will result in an increase in total revenue
price ceilings and price floors that are binding
cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price
the price elasticity of demand for a good measures the willingness of
consumers to buy less of the good as price rises
Denise values a stainless steel dishwasher for her new house at $500. The actual price of the dishwasher is $650. Denise
does not buy the dishwasher because her willingness to pay is less than the price
Holding all other forces constant, if decreasing the price of a good leads to a increase in total revenue, then the demand for the good must be
elastic
suppose that quantity demanded falls by 30% as a result of a 5% increase in price. the price elasticity of demand for this good is inelastic and equal to 6 elastic and equal to 6 inelastic and equal to 0.17 elastic and equal to 0.17
elastic and equal to 6
refer to figure 5-4. the section of the demand curve from A to B represents the
elastic section of the demand curve
which of the following is correct? a tax burden
falls more heavily on the side of the market that is less elastic
Efficiency refers to whether a market outcome is fair, while equity refers to whether the maximum amount of output was produced from a given number of inputs.
false
If producing a soccer ball costs Jake $5, and he sells it for $40, his producer surplus is $45
false
The flatter the demand curve that passes through a given point, the more elastic the demand. t or f?
false
the OPEC oil cartel has difficult maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run. T or F?
false
Producing a soccer ball costs Jake $5. He sells it to Darby for $35. Darby values the soccer ball at $50. For this transaction, the total surplus in the market is $40. true or false
false, producer surplus is $45
the surgeon general announces that eating apples promotes healthy teeth. as a result, the equilibrium price of apples
increases, and producer surplus increases
which of the following is likely to have the most price elastic demand? lattes doctors visits eggs natural gas
lattes
a key determinant of the price elasticity of supply is the
length of the time period
which of the following is likely to have the most price inelastic demand? tablet computers leather boots lightbulbs optional textbooks
lightbulbs
The particular price that results in quantity supplied being equal to quantity demanded is the best price because it
maximizes the combined welfare of buyers and sellers
inefficiency exists in a market when a good is
not being consumed by buyers who value it most highly.
refer to figure 6-1. a binding price ceiling is shown in
panel b only
for which of the following goods is the price elasticity of demand most inelastic pizza large pizza large pepperoni pizza domino's large pepperoni pizza
pizza
total surplus in a market will increase when the government
removes a binding price ceiling from that market
which of the following is correct?
rent control is an example of a price ceiling, and the minimum wage is an example of the price floor
refer to table 5-11. which scenario describes the market for oil in the short run?
scenario D describes the short run, whereas scenario A describes the long run
the price elasticity of supply measures how responsive
sellers are to a change in price
suppose the government imposes a 20-cent tax on the sellers of artificially-sweetened beverages. the tax would shift
supply, raising the equilibrium price and lowering the equilibrium quantity in the market for artificially-sweetened beverages.
For a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
the good is a necessity
for a particular good, a 12 percent increase in price causes a 3 percent decrease in quantity demanded. which of the following statements is most likely applicable to this good?
the good is a necessity
or a particular good, a 5 percent increase in price causes a 2 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
the market for the good is broadly defined
refer to figure 6-25. suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the sellers of the good, rather than the buyers, are required to pay the tax to the government. After the sellers are required to pay the tax, relative to the case depicted in the graph, the burden on buyers will be
the same, and the burden on sellers will be the same.
If the current allocation of resources in the market for hammers is inefficient, then it must be the case that
the sum of consumer surplus and producer surplus could be increased by moving to a different allocation of resources
if the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell, then
the supply curve for mopeds shifts downward by $200
producer surplus directly measures
the well-being of sellers
for a particular good, a 5 percent increase in price causes a 15 percent decrease in quantity demanded. which of the following statements is most likely applicable to this good?
there are many substitutes for this good
if a price floor is not binding, then
there will be no effect on the market price or quantity sold.
Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?
this tax causes the supply curve for liquor to shift upward by $5.00 at each quantity of liquor.
If the government removes a binding price ceiling from a market, then the producer surplus in that market will increase. true or false?
true
