Eco test 2

At price of $1.30 per pound, a local apple orchard is willing to supply 150 pounds of apples per day. At a price of $1.50 per pound, the orchard is willing to supply 170 pounds of apples per day. Using the midpoint method, the price of elasticity of supply is about

$0.875

Refer to table 7-10. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplies is exactly 2 if the price is

$1050

Refer to figure 6-26. The per unit burden of the tax is

$2 for buyers and $6 for sellers

Refer to figure 7-22. At the equilibrium price, producer surplus is

$2,500

Refer to figure 4-20. In this market, equilibrium price and quantity, respectively, are

$20 and 600 units

At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for

$3.50 each

Refer to figure 6-6. Which of the following price ceilings would be binding in this market?

$6

Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor. On a particular day, he is willing to tutor the first hour for $10, the second hour for $18, the third hour for $28, and the fourth hour for $40. Assume Allen is rational in deciding how many hours to tutor. His producer surplus is

$64

Refer to table 4-8. Of these are the only three sellers in the market, then and increase in the market price from $6 to $12 will increase quantity supplied by

24 units

Michael values a stainless steel refrigerator for his new house at $3,500, but he succeeds in buying one for $3,000. Michael's willingness to pay is

3500

Which of the following would not shift the supply curve for a good or service?

A change in the price of the good or service

Refer to figure 6-3. In panel (b), there will be

A surplus

Which of the following statements about a well-maintained yard best conveys the general nature of the externality

A well-maintained yard conveys a positive externality because it increases the value of adjacent properties in the neighborhood.

Refer to figure 7-24. If the government imposes a price floor at $18, then consumer surplus is

AGH

Refer to figure 6-4. A government-imposed price of $6 in the market could be an example of a

Binding price ceiling and non-binding price floor (i and iv only)

When a tax is placed on energy drinks, the

Burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal

Refer to figure 7-21. Which area represents producer surplus when the price is P1?

C

What is the difference between command-and-control policies and market-based policies toward externalities?

Command-and-control policies regulate behavior directly, whereas market-based policies provide incentives for private decisionmakers to change their behavior.

The cross-price elasticity of demand can tell us wether goods are

Compliments or substitutes

Which of the following is most likely to have the most price elastic demand?

Music downloads

If the demand for a good falls when income falls, then the good is called a

Normal good

demand schedule is a table that shows the relationship between

Price and quantity demandes

Refer to figure 10-6. Which quantity represents the socially-optimal quantity of output in this market?

Q'

Refer to figure 10-9, Panel (b) and Panel (c). The overuse of antibiotics leads to the development of antibiotic-resistant diseases. Therefore, the socially optimal quantity of antibiotics is represented by point

Q2

Refer to figure 10-7. Which quantity represents the social optimum for this market?

Q3

Matthew bakes an apple pie that he sells at the local farmers market. If the price of apples increases, the

Supply curve for Matthews pies will decrease

Which of the following is not correct?

Taxes levied on sellers and taxes levied on buyers are not equivalent.

The proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own, is called

The Coase theorem

Wally owns a dog whose barking annoys Wally's neighbor, Corrine. Suppose that the benefit of owning the dog is worth $700 to Wally and that Corrine bears a cost of $500 from the barking. Assuming Wally has the legal right to keep the dog, a possible private solution to this problem is that

The current situation is efficient

The value of the price elasticity I'd demand for a good will be relatively large when

The good is a luxury rather than a necessity

The demand for Godiva mint chocolates is likely quite elastic because

There are many close substitutes , This particular type of chocolate is viewed as a luxury by many chocolate lovers , and the market is narrowly defined.

Why can't private individuals always internalize an externality without help of government

Transaction costs may be too high

Dog owners do not bear the full cost of the noise their barking dogs create and often take too few precautions to prevent their dogs from barking. Local governments address this problem by

a. making it illegal to "disturb the peace."

On a graph, consumer surplus is represented by the area

below the demand curve and above the price

A shortage results when a

binding price ceiling is imposed on a market

total surplus

can be used to measure a markets efficiency, is the sum of consumer and producer surplus, is the value to buyers minus the cost to sellers

If the cross-price elasticity of two goods is negative, then the two goods are

complements

Refer to figure 7-21. When the price is P1, area B represents

consumer surplus

Which of the following events must cause equilibrium quantity to rise?

demand and supply both increase

A tax imposed on the sellers of a good will lower the

effective price received by sellers and lower the equilibrium quantity.

Which of the following is correct? A tax burden

falls more heavily on the side of the market that is less elastic

The midpoint method is used to compute elasticity because it

gives the same answer regardless of the direction of change

An increase in the price of a good will

increase in quantity supplied

Demand is inelastic if the price elasticity of demand is

less than 1

Suppose researchers at the University of Wisconsin discover a new vitamin that increases the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery will

lower both price and total revenues.

An externality is the impact of

one person's actions on the well-being of a bystander

When consumers face rising gasoline prices, they typically

reduce their quantity demanded more in the long run than in the short run

If a price floor is not binding, then

the equilibrium price is above the price floor

Which of the following is not a determinant of demand?

the price of a resource that is used to produce the good