ECON 102 Retake

With free trade, total surplus is

$1,000

Suppose demand shifts such that consumers wish to purchase 12 fewer units at every price. How much is total consumer surplus in this market at the new equilibrium price?

$144.00

Refer to Figure 8-6. When the tax is imposed in this market, buyers effectively pay what amount of the $10 tax?

$6

Buyers of a good bear the larger share of a tax burden when the

(i) only (supply is more elastic than the demand for the product)

A government-imposed price of $16 in this market could be an example of a

(ii) and (iii) only (non-binding price ceiling/ binding price floor)

The following table contains a demand schedule for a good. If the law of demand applies to this good, then A could be

400

The following table shows the supply and demand schedules in a market. At a price of $8, how large of a surplus will there be in this market?

50 Units or $400

Refer to figure 9-15. Consumer surplus with the tariff is

A+B

If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos falls?

Both the equilibrium price and quantity would decrease.

Refer to Figure 9-11. Producer surplus in this market after trade is

C

Refer to Figure 8-22. Suppose the government initially imposes a $3 per-unit tax on this good. Now suppose the government is deciding whether to lower the tax to $1.50 or raise it to $4.50. Which of the following statements is not correct?

Compared to the original tax, the larger tax will decrease tax revenue.

How much are consumer surplus, producer surplus, and total surplus at the market equilibrium price?

Con. Surplus: $312.50 Pro. Surplus: $312.50 Total Surplus: $625.00

Which of the following statements is not correct about a market in equilibrium?

Consumer surplus will be equal to producer surplus

Refer to Figure 6-34. If the government imposes a tax of $6 per unit in this market, what price will buyers pay per unit after the tax is imposed?

Cost to buyers = $12.00

Which of the following demonstrates the law of demand?

Dave buys more donuts at $.25 a donut than at $.50 per donut, other things equal

The following table represents the costs of five possible sellers. Who is a marginal seller when the price is $1,000?

Dianne

The distinction between efficiency and equality can be described as follows:

Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.

The figure illustrates the market for coffee in Guatemala. From the figure it is apparent that

Guatemala has a comparative advantage in producing coffee, relative to the rest of the world

Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for convertible automobiles of an increase in the price of steel?

Point C to Point D

Suppose the government places a $3 tax per unit on this good. What price will consumers pay for the good after the tax is imposed?

Price to consumers = $6

Which of the following is true when the price of a good or service rises?

Some buyers exit the market

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*Q

Which of the following ideas is the most plausible?

Tax revenue is more likely to increase when a low tax rate is increased than when a high tax rate is increased

Which of the following statements correctly describes the relationship between the size of the deadweight loss and the amount of tax revenue as the size of a tax increases from a small tax to a medium tax and finally a large tax?

The size of the deadweight loss increases, but the tax revenue first increases, then decreases.

Refer to Figure 8-25. Suppose the government places a $4 tax per unit on this good. How much is total surplus after the tax is imposed?

Total Surplus = $420

Which of the following would cause the demand curve to shift from Demand B to Demand A in the market for oranges in the United States?

a decrease in the price of apples

Refer to Figure 6-7. Which of the following price controls would cause a shortage of 20 units of the good?

a price ceiling set at $6

The graph that represents the amount of deadweight loss (measured on the vertical axis) as a function of the size of the tax ( measured on the horizontal axis) looks like

an upward-sloping curve

Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of pistachios decreases to equal the world price of pistachios, then

at the world price, the quantity of pistachios demanded in that country exceeds the quantity of pistachios supplied in that country

Rever to Figure 6-2. The price ceiling

causes a shortage of 85 units

Refer to Figure 7-1. If the price of the good is $200, then

consumer surplus is $150

A leftward shift of a demand curve is called a

decrease in demand

Refer to Figure 4-10. The movement from Point A to Point B represents a

decrease in the quantity supplied

A decrease in the size of a tax is most likely to increase tax revenue in a market with

elastic demand and elastic supply

The decisions of buyers and sellers that affect people who are not participants in the market create

externalities

A minimum wage that is set below a market's equilibrium wage will

have no impact on employment

Refer to Figure 9-13. With trade, the country

imports 600 units of the good

If the supply curves that are drawn represent supply curves that are drawn represent supply curves for single-family residential houses, then the movement from S to S' could be caused by an

increase in the price of apartments which are a substitute for single-family houses for many people looking for a place to live

A decrease in the price of a good would

increase the quantity demanded of the good

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy.

producer surplus decreases and total surplus decreases in the market for that good

Suppose there is currently a tax of $50 per ticket on airline tickets. Buyers of airline tickets are required to pay the tax to the government. If the tax is reduced from $50 per tickets to $30 per ticket, then the

supply curve will shift downward by $20, and the price paid by buyers will decrease by less than $20

Refer to Figure 7-22. If 110 units of the good are bought and sold, then

the marginal value to buyers is greater than the marginal costs to sellers

A movement along the demand curve might be caused by a change in

the price of the good or service that is being demanded

A movement along the supply curve might be caused by a change in

the price of the good or service that is being supplied

Refer to Figure 6-23. For every unit of the good that is sold, sellers are required to send

three dollars to the government, and buyers are required to send nothing to the government

If the supply of a product decreases, then we would expect equilibrium price

to increase and equilibrium quantity to decrease