econ exam 2

Refer to Figure 8-9. The total surplus with the tax is

$15,000.

Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The per-unit burden of the tax on buyers is

$2

Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $425. Billie Jo's willingness to pay for the dishwasher is

$500.

Refer to Table 11-2. Suppose the cost to install each streetlight is $360 and the families have agreed to split the cost of installing the streetlights equally. To maximize their own surplus, how many streetlights would the Greene's like the town to install?

3 streetlights

Refer to Figure 8-6. Total surplus with the tax in place is

4500

Refer to Figure 8-3. The per-unit burden of the tax on sellers is

P2 - P1.

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.

Which of the following is not a necessary condition for the Coase theorem?

The government intervenes to internalize the externality.

Suppose that Company A's railroad cars pass through Farmer B's corn fields. The railroad causes an externality to the farmer because the railroad cars emit sparks that cause $1,500 in damage to the farmer's crops. There is a special soy-based grease that the railroad could purchase that would eliminate the damaging sparks. The grease costs $1,200. Suppose that the farmer has the right to compensation for any damage that his crops suffer. Assume that there are no transaction costs. Which of the following characterizes the efficient outcome?

The railroad will purchase the grease for $1,200 and pay the farmer nothing because no crop damage will occur.

When technology spillover occurs,

a firm's research yields technological knowledge that can then be used by society as a whole.

Consumer surplus is the

amount a consumer is willing to pay minus the amount the consumer actually pays

The before-trade price of fish in Denmark is $10.00 per pound. The world price of fish is $6.00 per pound. Denmark is a price-taker in the fish market. If Denmark begins to allow trade in fish, its consumers of fish will become

better off, its producers of fish will become worse off, and on balance the citizens of Denmark will become better off.

The price elasticities of supply and demand affect

both the size of the deadweight loss from a tax and the tax incidence

A tax on the buyers of cameras encourages

buyers to demand a smaller quantity at every price

Using a toll to reduce traffic when congestion is greatest is an example of a

corrective tax.

Refer to Figure 10-13. Each unit of plastics that is produced results in an external

cost of $8

Imagine a 2,000-acre park with picnic benches, trees, and a pond. Suppose it is publicly owned, and people are invited to enjoy its beauty. When the weather is nice, it is difficult to find parking, and the trash cans overflow with food wrappers on summer afternoons. Otherwise, it is a great place. The park is a common resource because

if too many people use it, one person's use diminishes other peoples' use

A negative externality

is an adverse impact on a bystander

A congested side street in your neighborhood is

not excludable and rival in consumption.

A free rider is a person who

receives the benefit of a good but avoids paying for it

When a tax is imposed on a good for which the demand is relatively elastic and the supply is relatively inelastic,

sellers of the good will bear most of the burden of the tax

A tax on an imported good is called a

tariff

Suppose that elementary education creates a positive externality. If the government subsidizes education by an amount equal to the per-unit externality it creates, then

the equilibrium quantity of education will equal the socially optimal quantity of education.

A free rider problem arises when

there are many beneficiaries and exclusion of any one of them is impossible.