Microeconomics 153 Chapter 4 Test

$0.60

The figure above represents the demand and supply in the market for gasoline. How much is the government tax on each gallon of gasoline? Question options: $0.20 $0.40 $0.60 $2.80

b. B + E

Figure 4-6 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. What is the area that represents producer surplus after the imposition of the price floor? Question options: a. A + B + E b. B + E c. B + E + F d. B + C + D + E

d. the actual quantity is less than the equilibrium quantity.

If, in a competitive market, marginal benefit is less than marginal cost, Question options: a. the net benefit to consumers from participating in the market is less than the net benefit to producers. b. the government must force producers to raise prices in order to achieve economic efficiency. c. the actual quantity is greater than the equilibrium quantity. d. the actual quantity is less than the equilibrium quantity.

c. landlords have an incentive to rent more apartments than they would without rent control.

In a city with rent-controlled apartments, all of the following are true except Question options: a. apartments usually rent for rates lower than the market rate. b. apartments are often in shorter supply than they would be without rent control. b. it usually takes more time to find an apartment than it would without rent control. c. landlords have an incentive to rent more apartments than they would without rent control.

c. because there is a shortage of apartments, tenants often are willing to pay rents higher than the law allows.

In cities with rent controls, the actual rents paid can be higher than the legal maximum. One explanation for this is Question options: a. rent control laws are so complicated that landlords and tenants may not be aware of what the legal price is. b. landlords are allowed to charge more than the legal maximum on some apartments so long as they charge less on others. c. because there is a shortage of apartments, tenants often are willing to pay rents higher than the law allows. d. the legal penalty landlords face for charging more than the legal maximum rent is less than the revenue earned by charging their tenants more than the maximum rent.

$0.20

The figure above represents the demand and supply in the market for gasoline. What portion of the unit tax is paid by producers? Question options: $0.20 $0.40 $0.60 $2.20

c. Both 10,000 and 30,000 are economically inefficient rates of output.

The figure above represents the market for iced tea. Assume that this is a competitive market. Which of the following is true? Question options: a. If the price of iced tea is $3 the output will be economically efficient but there will be a deadweight loss. b. If the price of iced tea is $3 consumers will purchase more than the economically efficient output. c. Both 10,000 and 30,000 are economically inefficient rates of output. d. If the price of iced tea is $3 producers will sell 30,000 units of iced tea but this output will be economically inefficient.

b. the total net benefit to society is maximized.

When a competitive equilibrium is achieved in a market Question options: a. all individuals are better off than they would be if a price ceiling or price floor was imposed by government. b. the total net benefit to society is maximized. c. the total benefits to consumers are equal to the total benefits to producers. d. economic surplus equals the deadweight loss.

b. an economically efficient level of output is produced.

When the marginal benefit equals the marginal cost of the last unit sold in a competitive market a. the net benefit of consumers is equal to the net benefit of producers. b. an economically efficient level of output is produced. c. producer surplus is equal to consumer surplus. d. total benefit is equal to total cost.

c. Producers have an incentive to offer workers non-wage benefits such as health care benefits and convenient working hours rather than a higher wage.

Which of the following is not a consequence of minimum wage laws? Question options: a. Low skilled workers are hurt because minimum wage reduces the number of jobs providing low skilled workers with training. b. Employers will be reluctant to offer low-skill workers jobs with training. c. Producers have an incentive to offer workers non-wage benefits such as health care benefits and convenient working hours rather than a higher wage. d. Some workers benefit when the minimum wage is increased.

$180

Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchase. How much does Brett value his cell phone? Question options: $180 $100 $80 $20

d. It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right amount of tax revenue is collected.

Economists have shown that the burden of a tax is the same whether the tax is collected from the buyer or the seller. Why, then, are gasoline and cigarette taxes imposed on sellers? Question options: a. Sellers are more honest than buyers. b. The demand for both gasoline and cigarettes is very elastic. c. The Equal Protection Clause of the U.S. Constitution prohibits the government from imposing taxes like these on buyers. d. It is more difficult for buyers to keep track of their purchases, and for the government to verify that the right amount of tax revenue is collected.

$0.50

Figure 4-1 shows Arnold's demand curve for burritos. If the market price is $1.00, what is the consumer surplus of the third burrito? Question options: $0 $0.50 $1.00 $1.50 $4.00

a. $240

Figure 4-3 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18.What is the value of producer surplus at a price of $18?? Question options: a. $240 b. $300 c. $340 d. $720

a. The consumer will bear a smaller share of the tax burden if the demand curve is D0.

Refer to Figure 4-10. Suppose the market is initially in equilibrium at price P0 and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax? Question options: a. The consumer will bear a smaller share of the tax burden if the demand curve is D0. b. The consumer's share of the tax burden is the same whether the demand curve is D0 or D1. c. The consumer will bear a smaller share of the tax burden if the demand curve is D1. d. The consumer will bear the entire burden of the tax if the demand curve is D1 and the producer will bear the entire burden of the tax if the demand curve is D0.

d. The tax will shift the demand curve to the left by $1,500.

Suppose that in Canada the government places a $1,500 tax on the buyers of new snowmobiles. After the purchase of a new snowmobile, a buyer must pay the government $1,500. How would the imposition of the tax on buyers be illustrated in a graph? Question options: a. The tax will shift the supply curve to the left by $1,500. b. The tax will shift the demand curve to the right by $1,500. c. The tax will shift both the demand and supply curve to the right by $1,500. d. The tax will shift the demand curve to the left by $1,500.

b. 570,000

Table 4-3 shows the demand and supply schedules for labor market in the city of Pixley. If a minimum wage of $9.50 an hour is mandated, what is the quantity of labor hired? Question options: a. 40,000 b. 570,000 c. 610,000 d. 1,180,000

d. $2.20

The figure above represents the demand and supply in the market for gasoline. What is the after-tax revenue per gallon received by producers? Question options: a. $0.20 b. $0.40 c. $0.60 d. $2.20

a. 30 billion gallons per year

The figure above represents the demand and supply in the market for gasoline. What is the quantity sold after the imposition of the tax? Question options: a. 30 billion gallons per year b. 32.5 billion gallons per year c. 35 billion gallon per year d. Can not be determinned from the information provided

c. $1.8 billion

The figure above represents the demand and supply in the market for gasoline. What is the total tax revenue collected by the government? Question options: a. $1.2 billion b. $0.6 billion c. $1.8 billion d. $72 billion e. Can not be determined from the information provided

c. $1.5 billion

The figure above represents the demand and supply in the market for gasoline. What is the value of the excess burden of the tax? Question options: a. $0.5 billion b. $1 billion c. $1.5 billion d. $3 billion

$0.40

The figure above represents the demand and supply in the market for gasoline. What portion of the unit tax is paid by consumers? Question options: $0.20 $0.40 $0.60 $2.80

c. demand curve for halogen bulbs is horizontal.

The government proposes a tax on halogen light bulbs. Sellers will bear the entire burden of the tax if the Question options: a. supply curve of halogen bulbs is horizontal. b. demand curve for halogen bulbs is vertical. c. demand curve for halogen bulbs is horizontal. d. demand curve is downward sloping and the supply curve is upward sloping.

b. demand curve for imported champagne is vertical.

The government proposes a tax on imported champagne. Buyers will bear the entire burden of the tax if the Question options: a. supply curve for imported champagne is vertical. b. demand curve for imported champagne is vertical. c. demand curve for imported champagne is horizontal. d. demand curve is downward sloping and the supply curve is upward sloping.

b. A, B+D, C+E

The graph above represents the supply and demand in the market for soy beans. If the equilibrium price is $7.00 and the market price is $9.00 then the consumer surplus is __________, producer surplus is ___________, and deadweight loss is ___________ Question options: a. A+B, D, C+E b. A, B+D, C+E c. A, D+E, B+C d. A+B, D+E, C

d. Producer surplus measures the total benefit received by producers from participating in a market.

Which of the following statements is not true? Question options: a. Consumer surplus measures the difference between the highest price a consumer is willing to pay for a product and the price she actually pays. b. Marginal benefit is the additional benefit to a consumer from consuming one more unit of a product. c. Consumer surplus measures the net benefit to consumer from participating in a market. d. Producer surplus measures the total benefit received by producers from participating in a market.

a price floor

Which term refers to a legally established minimum price that firms may charge? Question options: a price ceiling a subsidy a price floor a tariff

c. the maximum price that a buyer is willing to pay for a good.

Willingness to pay measures Question options: a. the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it. b. the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good. c. the maximum price that a buyer is willing to pay for a good. d. the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept.

Deadweight loss

________ refers to the reduction in economic surplus resulting from not being in competitive equilibrium. Question options: Marginal cost Producer atrophy Deadweight loss Economic shortage