econ 102 midterm

Refer to Figure 9-3. The size of the tariff on roses is

$1.

Refer to Figure 9-1. With trade, total surplus in the Guatemalan coffee market amounts to

1,870.

Refer to Figure 10-3. What is the socially optimal quantity of output in this market?

10 units

A price ceiling is

A legal maximum on the price at which a good can be sold

Refer to Figure 7-9. At equilibrium, total surplus is represented by the area

A+B+C+D+H+F.

Refer to Figure 7-4. Which area represents the increase in producer surplus when the price rises from P1 to P2?

AHGB

Refer to Figure 9-4. Producer surplus in this market after trade is

B + C + D.

Refer to Figure 7-1. When the price rises from P1 to P2, consumer surplus

decreases by an amount equal to B+C.

Refer to Figure 8-1. Suppose the government imposes a tax of P'-P'''. Total surplus after the tax is measured by the area

J + K + L + M.

If T represents the size of the tax on a good and Q represents the quantity of the good that is sold, total tax revenue received by government can be expressed as

T x Q

What happens to the total surplus in a market when the government imposes a tax?

Total surplus decreases.

Refer to Figure 8-5. Graph (a) and Graph (b) each illustrate a $4 tax placed on a market. In comparison to Graph (a), Graph (b) illustrates which of the following statements?

When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic.

Which of the following statements is not correct?

Without government intervention, the market will tend to undersupply products that produce negative externalities.

Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling is established,

a smaller quantity of the good is bought and sold

Refer to Figure 7-6. Suppose producer surplus is larger than C but smaller than A+B+C. The price of the good must be

between P1 and P2.

When a tax is placed on the buyers of lemonade, 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 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by I + Y represents the

deadweight loss due to the tax.

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

downward by exactly $1.50.

Refer to Figure 9-1. With trade, Guatemala will

export 22 units of coffee.

Refer to Figure 9-2. With trade, this country

imports 320 tricycles.

If the government removes a binding price ceiling from a market, then the price paid by buyers will

increase, and the quantity sold in the market will increase.

Josiah installed a metal sculpture in his front yard. A positive externality arises if the sculpture

increases the value of other properties in the neighborhood.

Refer to Figure 10-3. If the government wanted to tax or subsidize this good to achieve the socially optimal level of output, it would

introduce a subsidy of $4 per unit.

Refer to Figure 10-1. The industry creates

negative externalities.

An externality is the uncompensated impact of

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

A tax on an imported good is called a

tariff

The government's benefit from a tax can be measured by

tex revenue

If a price floor is not binding, then

the equilibrium price is above the price floor.