MACROECON U2 TEST

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If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

not change, and the price received by sellers will not change.

Refer to Figure 6-1. A binding price ceiling is shown in

panel (b) only.

Refer to Figure 8-1. Suppose the government imposes a tax of P' - P'''. The area measured by L+M+Y represents

producer surplus before the tax.

If a nonbinding price ceiling is imposed on a market, then the

quantity sold in the market will stay the same.

Refer to Figure 6-14. If the horizontal line on the graph represents a price floor, then the price floor is

not binding, and there will be no surplus or shortage of the good.

Suppose the government imposes a tax of P' - P'''. Which area is the deadweight loss?

I+Y

Table 7-5 For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day. First Orange - Second Orange - Third Orange Allison $2.00 $1.50 $0.75 Bob $1.50 $1.00 $0.60 Charisse $0.75 $0.25 $0 Refer to Table 7-5. The market quantity of oranges demanded per day is exactly 7 if the price of an orange, P, satisfies

$0.25 < P < $0.60.

The amount of deadweight loss caused by the tariff equals

$100

Figure 9-22The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. Refer to Figure 9-22. With free trade, total surplus is

$120,000.

Refer to Figure 7-1. The value of the good to consumers minus the cost of the good to consumers amounts to $325 if the price of the good is

$125

Refer to Figure 7-2. If the price of the good is $100, then consumer surplus amounts to

$125

When government impose a tax of $10, the price buyers effective pay is

$16

The amount of revenue collected by the government from the tariff is

$200

A farmer sells $25,000 worth of apples to individuals who take them home to eat, $50,000 worth of apples to a company that uses them all to produce cider, and $75,000 worth of apples to a grocery store that will sell them to households. How much of the farmer's sales will be included as apples in GDP?

$25,000

Table 7-10 The following table represents the costs of five possible sellers. Seller - Cost Abby - $1,600 Bobby - $1,300 Dianne - $1,100 Evaline - $900 Carlos - $800 Refer to Table 7-10. If the market price is $1,000, the producer surplus in the market is

$300

With free trade, consumer surplus is

$320

Figure 8-7The vertical distance between points A and B represents a tax in the market. Refer to Figure 8-7. The deadweight loss associated with this tax amounts to

$80, and this figure represents the surplus that is lost because the tax discourages mutually advantageous trades between buyers and sellers.

Without trade, consumer surplus is

$845

At equilibrium price, producer surplus is

$900

If the government imposes a price ceiling of $90 in this market, then the consumer surplus will be

$900

Refer to Figure 6-4. A government-imposed price of $16 in this market could be an example of a (i)binding price ceiling. (ii)non-binding price ceiling. (iii)binding price floor. (iv)non-binding price floor.

(ii) and (iii) only

Considering the following scenario for market of computer. Before government tax, the equilibrium price for computer was $1,020 and quantity was 200. After tax, buyers pay a new price of $1,340, and sellers receive price of $920. Also the new quantity is reduced to 150. How much is the dead weight loss generated by tax in this market?

10,500

Nominal GDP - Real GDP 2011 - $100 $104 2012 - $130 $130 2013 - $135 $120 Suppose 2012 was the base year. What's the GDP deflator for 2012? (Hint: enter your answer in 2 decimal places)

100

The country of Panem produces only bow and arrow. Quantities and prices of these goods for the last several years are shown below. The base year is 2010. Prices and Quantities Year - Price of Bow - Quantity of Bow - Price of Arrow - Quantity 2010 - $10.00 - 200 - $3.50 - 380 2011 - $10.00 - 220 - $5.00 - 400 2012 - $11.00 - 250 - $5.50 - 400 2013 - $12.00 - 280 - $6.50 - 440 What is the GDP deflator in 2010?

100

Nominal GDP - Real GDP 2011 - $101 $101 2012 - $123 $123 2013 - $132 $130 Suppose 2012 was the base year. What's the GDP deflator for 2013?

101.54

Nominal GDP - Real GDP 2011 - $120 $101 2012 - $125 $125 2013 - $130 $124 Suppose 2012 was the base year. What's the GDP deflator for 2011?

118.81

126.92

Considering the following scenario for market of computer. Before government tax, the equilibrium price for computer was $1,180 and quantity was 215. After tax, buyers pay a new price of $1,460, and sellers receive price of $860. Also the new quantity is reduced to 170. How much is the dead weight loss generated by tax in this market?

13,500

When government impose a tax of $10, what is the tax burden on buyers

1800

Consider the market for computers. The current price of dell computer is $1200.00. Two consumers, Jeff and Peter, are willing to 1,500 and 1,450, for a new computer. Two electronic stores are willing to sell the dell computers for as little as 1,050 and 1,150 each. What's the total producer surplus in this market?

200

Considering the following scenario for market of computer. Before government tax, the equilibrium price for computer was $1,000 and quantity was 225. After tax, buyers pay a new price of $1,380, and sellers receive price of $870. Also the new quantity is reduced to 170. How much is the total tax paid by all sellers in this market?

22,100

Considering the following scenario for market of computer. Before government tax, the equilibrium price for computer was $1,160 and quantity was 225. After tax, buyers pay a new price of $1,320, and sellers receive price of $960. Also the new quantity is reduced to 150. How much is the total tax paid by all buyers in this market?

24,000

3330

Suppose in Canada in 2010, total consumption was $2,100, investment was$950, government spending was $1,000, import was $280 and export was $240. How much was Canada's total GDP in 2010?

4,010

Consider the market for computers. The current price of dell computer is $1200.00. Two consumers, Jeff and Peter, are willing to 1,300 and 1,500, for a new computer. Two electronic stores are willing to sell the dell computers for as little as 1,200 and 1,000 each. What's the total consumer surplus in this market?

400

Considering the following scenario for market of computer. Before government tax, the equilibrium price for computer was $1,040 and quantity was 205. After tax, buyers pay a new price of $1,380, and sellers receive price of $980. Also the new quantity is reduced to 170. How much is the tax for each computer in this market?

400

Considering the following scenario for market of computer. Before government tax, the equilibrium price for computer was $1,160 and quantity was 215. After tax, buyers pay a new price of $1,440, and sellers receive price of $970. Also the new quantity is reduced to 150. How much is the total tax paid by all buyers in this market?

42,000

The country of Panem produces only bow and arrow. Quantities and prices of these goods for the last several years are shown below. The base year is 2010. Year Price of Bow - Quantity of Bow - Price of Arrow - Quantity 2010 - $10.00 - 200 - $3.50 - 380 2011 - $10.00 - 220 - $5.00 - 400 2012 - $11.00 - 250 - $5.50 - 400 2013 - $12.00 - 280 - $6.50 - 440 What is the nominal GDP for 2011?

4200

Considering the following scenario for market of computer. Before government tax, the equilibrium price for computer was $1,200 and quantity was 200. After tax, buyers pay a new price of $1,300, and sellers receive price of $970. Also the new quantity is reduced to 190. How much is the total tax paid by all sellers in this market?

43,700

4340

4950

The country of Academy produces only bow and arrow. Quantities and prices of these goods for the last several years are shown below. The base year is 2010. Prices and Quantities Year - Price of Bow - Quantity of Bow - Price of Arrow - Quantity 2010 - $10 - 200 - $4.50 - 410 2011 - $14 - 250 - $5.50 - 430 2012 - $15 - 270 - $7.50 - 430 2013 - $17 - 300 - $9.00 - 480 What is the nominal GDP in 2011

5,865

Consider the market for computers. The current price of dell computer is $1200.00. Two consumers, Jeff and Peter, are willing to 1,250 and 1,350, for a new computer. Two electronic stores are willing to sell the dell computers for as little as 1,100 and 1,000 each. What's the total surplus in this market?

500

Consider the market for computers. The current price of dell computer is $1200.00. Two consumers, Jeff and Peter, are willing to 1,400 and 1,450, for a new computer. Two electronic stores are willing to sell the dell computers for as little as 1,000 and 900 each. What's the total producer surplus in this market?

500

Market for flat-screen TVs: Demand: Qd=2,600-5P Supply: Qs=-1000 +10P What would be the amount of shortage if a price ceiling is imposed at price of $205?

525

In 2010, US import was $200 and export was $260. How much was US net export?

Consider the market for computers. The current price of dell computer is $1200.00. Two consumers, Jeff and Peter, are willing to 1,500 and 1,500, for a new computer. Two electronic stores are willing to sell the dell computers for as little as 1,150 and 1,150 each. What's the total consumer surplus in this market?

600

Market for flat-screen TVs: Demand: Qd=2,600-5P Supply: Qs=-1000 +10P What would be the amount of surplus if a price floor is imposed at price of $280?

600

Consider the market for computers. The current price of dell computer is $1200.00. Two consumers, Jeff and Peter, are willing to 1,300 and 1,400, for a new computer. Two electronic stores are willing to sell the dell computers for as little as 1,150 and 900 each. What's the total surplus in this market?

650

Considering the following scenario for market of computer. Before government tax, the equilibrium price for computer was $1,180 and quantity was 220. After tax, buyers pay a new price of $1,440, and sellers receive price of $860. Also the new quantity is reduced to 170. How much is the total tax revenue in this market?

98,600

Refer to Figure 9-9. Total surplus in this market before trade is

A+B+C

A seller's willingness to sell is

All of the above are correct.

To say that a price ceiling is binding is to say that the price ceiling

All of the above are correct.

This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. Buyer - Willingness To Pay David - $8.50 Laura - $7.00 Megan - $5.50 Mallory - $4.00 Audrey - $3.50 Which of the following prices will result in the least consumer surplus among these five individuals?

Answer: $8.00

Consumer surplus is represented by the area,

Below the demand curve and above the price line.

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

Figure 9-1The figure illustrates the market for coffee in Guatemala. Refer to Figure 9-1. From the figure it is apparent that

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

Ceteris paribus, import will cause

Consumer surplus to increase

If the world price is lower than domestic price,

Country should engage in import of the good

This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. Buyer - Willingness To Pay David - $8.50 Laura - $7.00 Megan - $5.50 Mallory - $4.00 Audrey - $3.50 If the price of Vanilla coke is $6.00, who will purchase the good?

David and Laura

If tax is imposed on the buyers,

Demand shift left

Which of the following is not a component of Investment in GDP?

Financial

Figure 8-7The vertical distance between points A and B represents a tax in the market. Refer to Figure 8-7. Which of the following statements summarizes the incidence of the tax?

For each unit of the good that is sold, buyers bear one-half of the tax burden, and sellers bear one-half of the tax burden.

Suppose the government imposes a tax of P' - P'''. Which area is the consumer surplus?

Suppose the government imposes a tax of P' - P'''. Which area is the government tax revenue?

K+L

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

L+M+Y.

At equilibrium price, which area is the deadweight loss?

None of the above

Producer surplus equals

Price - Cost

Ceteris Paribus, if the price of the good increases, which of the following statement is correct?

Producer surplus will increase.

Tariff will benefit domestic

Producers

If tax is imposed on the sellers,

Supply shift left

Which one of the following is not a component of GDP?

Tax

Which of the following statement best describe producer surplus?

The difference between the price of the good and the cost of production.

What (who) determine the tax burden between buyers and sellers?

The elasticity between supply and demand.

Which of the following is included in the calculation of GDP?

The purchase of tutoring services from a tutor who holds citizenship outside the country but resides within the country.

Andy is an international student from Germany. He is working as a private tutor in US. Which of the following statement is right?

US GDP will increase, Germany GDP will not increase.

Refer to Figure 6-4. Which of the following statements is not correct?

When the price is $6, there is a surplus of 8 units.

The marginal buyer is the buyer who

Will purchase the good when price is low, will not purchase when price is high

A transfer payment is

a form of government spending that is not made in exchange for a currently produced good or service.

Producer surplus is the

amount a seller is paid minus the cost of production.

Refer to Figure 6-15. Suppose a price ceiling of $2 is imposed on this market. As a result,

buyers' total expenditure on the good falls by $15.

A tax affects

buyers, sellers, and the government.

To say that a price ceiling is binding is to say that the price ceiling

causes quantity demanded to exceed quantity supplied.

To say that a price floor is binding is to say that the price floor

causes quantity supplied to exceed quantity demanded.

The principle of comparative advantage asserts that

countries can become better off by specializing in what they do best.

When the tariff is imposed, domestic consumers

lose by $450.

The loss in total surplus resulting from a tax is called

deadweight loss

A tax levied on the buyers of a good shifts the

demand curve downward (or to the left).

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

effective price received by sellers and lower the equilibrium quantity.

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

either buyers or sellers of gasoline.

Figure 9-1The figure illustrates the market for coffee in Guatemala. Refer to Figure 9-1. With trade, Guatemala will

export 22 units of coffee.

Gasoline is considered a final good if it is sold by a

gasoline station to a motorist in Los Angeles.

A transfer payment is a payment made by

government, but not in exchange for a currently produced good or service.

If the world price of apples is higher than Argentina's domestic price of apples without trade, then Argentina

has a comparative advantage in apples.

To say that a price ceiling is nonbinding is to say that the price ceiling

is set above the equilibrium price.

Consumer surplus

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

A tariff is a

tax on an imported good.

With trade and without a tariff,

the domestic price is equal to the world price.

Several arguments for restricting trade have been advanced. Those arguments do not include

MACROECON U2 TEST

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