Econ Final

In a market with first degree price discrimination consumer surplus is

zero

Refer to the supply and demand diagram below. If an output (excise) tax of $5 per unit is introduced in this market, the price that consumers pay will equal ________ and the price that producers receive net of the tax will equal ________.

$8; $3.

If a $6 per unit tax is introduced in this market, then the price that consumers pay will equal ________ and the price that producers receive net of the tax will equal ________.

$9; $3.

Which of the following events would contribute to economies of scale?

A: Large supermarkets being able to drive down the cost of purchasing milk as it increases its scale of business. C:A merger of two firms leading to savings on the costs of HR, IT, and legal departments. D: The higher the number of users of Windows 10, the more likely it is that Microsoft will be able to achieve a higher sale of its operating system.

When the firm is producing 40 units, their marginal cost is less than their average cost. Which of the following is true about this firm?

The firm is experiencing increasing returns to scale, since it is on a portion of the average cost curve that is downward sloping.

Suppose that the marginal cost of producing a pound of cereal is $2, irrespective of the level of output, but there are also some fixed costs of production. Which of the following statements is correct?

The marginal cost curve is a horizontal straight line.

The following diagram shows the market demand curve of Apple Cinnamon Cheerios, the isoprofit curves of the producer firm, and the firm's profit function curve. Based on the graph, which of the following statements are correct?

The profit-maximizing choice for the firm is where the highest attainable isoprofit curve is tangent to the demand curve.

The following information is the data on a survey of demand elasticity for low calorie fruit and vegetables. The total expenditure of the consumer is $80 per week. Suppose now that the price of low calorie fruit and vegetables increases by 10%. Based on this information, we can conclude that:

The quantity the consumer consumes after the price change is approximately 876g per week.

If we have a demand curve represented by the following equation, how much would be sold if the price is 95? Q = 30 - 1/3P

0.0

Which of the following correctly describes the equilibrium effects of a per-unit tax, in a market with NO externalities?

Consumer surplus, producer surplus, and social surplus all decrease.

In which of the following cases will the deadweight loss from taxation be zero?

If demand is perfectly inelastic.

If a $6 per unit tax is introduced in this market, then the new equilibrium quantity will be:

20 units

If we have a demand curve represented by the following equation, how much would be sold if the price is 12? Q = 30 - 1/3P

26.0

If we have a demand curve represented by the following equation, how much would be sold if the price is 6? Q = 30 - 1/3P

28.0

What is the marginal cost of the 40th unit (going from 30 to 40 units)?

4.5

According to the table, what is the average cost of producing 40 units?

7.75

Which of the following statements about tax incidence and relative elasticities is TRUE? I. If demand is relatively inelastic and supply is relatively elastic, then consumers bear more of the burden of a tax. II. If supply is perfectly inelastic, then producers bear none of the burden of a tax, no matter what the value of own-price elasticity of demand. III. If the relative elasticities of demand and supply are the same, the tax burden is shared equally across consumers and producers.

I and III only.

Which of the following statements about the deadweight loss of taxation is TRUE? (Assume no externalities.)

If there is no deadweight loss, then revenue raised by the government is exactly equal to the losses to consumers and producers.

Suppose that the price of a good increases. The increase in produce surplus will be:

Larger if supply is relatively elastic than if supply is relatively inelastic.

Consider the introduction of a $20 per unit tax in this market. Which areas represent the loss to consumer AND producer surplus as a result of this tax?

k + f + j + g.

Consider the supply and demand diagram below. Assume that: (i) there are no externalities; and (ii) in the absence of government regulation the market supply curve is the one labeled S1. If a $5 per unit tax is introduced in this market, which area represents the deadweight loss?

b+c

Consider the introduction of a $20 per unit tax in this market. Which areas represent the gain in government revenue as a result of this tax?

k+j

Consider the introduction of a $20 per unit tax in this market. Which areas represent the deadweight loss associated with this tax?

f+g