Microeconomics: Chapters 6, 21, 7

a tax on the buyers of cereal will increase the price of cereal paid by buyers a. decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal b. decrease the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal c. increase the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal d. increase the effective price of cereal received by sellers, and increase the equilibrium quantity of cereal

a

after a binding price floor becomes effects, a. a smaller quantity of the good is bought and sold b. a larger quantity of the good is demanded c. a smaller quantity of the good is supplied d. all of the above are correct

a

at the equilibrium price of a good, the good will be purchased by those buyers who a. value the good more than price b. value the good less than price c. have the money to buy the good d. consider the good a necessary

a

consumer surplus is equal to a. value to buyers-amount paid by buyers b. amount paid by buyers-cost of sellers c. value to buyers-cost of sellers d. value to buyers-willingness to pay of buyers

a

if the government levies a $500 tax per car on seller of cars, then the price receive by sellers of cars would a. decrease by less than $500 b. decrease by exactly $500 c. decrease by more than $500 d. increase by an indeterminate amount

a

welfare economics is the study of how a. the allocation of resources affects economic well-being b. a price ceiling compares to a price floor c. the government helps poor people d. a consumer's optimal choice affects her demand curve

a

when there is a technological advance in the pork industry, consumer surplus in that market will a. increase b. decrease c. not change, since technology affects producers and not consumers d. not change, since consumers' willingness to pay is unaffected by the technological advance

a

a seller is willing to sell a product only if the seller receives a price that is at least as great as the a. seller's producer surplus b. seller's cost of production c. seller's profit d. average willingness to pay of buyers of the product

b

a tax on the sellers of coffee mugs a. increases the size of the coffee mug market b. decreases the size of the coffee mug market c. has no effect on the size of the coffee mug market d. may increase, decrease, or have no effect on the size of the coffee mug market

b

the substitution effect from an increase in wages is evident in a. decrease in labor demand b. desire to consumer less leisure c. desire to consume more leisure d. backward-bending labor supply curve

b

the limit on the consumption bundles that a consumer can afford

budget constraint

a consumer's willingness to pay directly measures a. the extent to which advertising and other external forces have influences the consumer's preferences b. the cost of a good to the buyer c. how much a buyer values a good d. consumer surplus

c

an indifference curve illustrates a. a firm's profits b. a consumer's budget c. a consumer's preference d. the prices of two goods

c

the burden of a luxury tax falls a. more on the rich than on the middle class b. more on the poor than on the rich c. more on the middle class than on the rich d. equally on the rich, the middle class, and the poor

c

In a competitive market free of government regulation: a. price adjusts until quantity demanded is greater than quantity supplied b. price adjusts until quantity demanded is less that quantity supplied c. price adjusts until quantity demanded equals quantity supplied d. supply adjusts to meet demand at every price

c.

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

consumer surplus

the value of everything a seller must give up to produce a good

cost

the incidence of a tax falls more heavily on a. consumers than producers if demand is more inelastic than supply b. producers than consumers if supply is more inelastic than demand c. consumers than producers if supply is more elastic than demand d. all of the above are correct

d

the surgeon general announces that eating chocolate increases tooth decay. As a result, the equilibrium price a. increases, and producer surplus increase b. increases, and producer surplus decreases c. decreases, and producer surplus increases d. decreases, and producer surplus decreases

d

total surplus a. can be used to measure a market's efficiency b. is the sum of consumer and producer surplus c. is the value to buyers minus the cost to sellers d. all of the above are correct

d

when a tax is placed on the buyers of lemonade the a. sellers bear the entire burden of the tax b. buyers bear the entire burden of the tax c. burden of the tax will always be equally divided between the buyers and the sellers d. burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal

d

if a price ceiling is not binding then, a. there will be a surplus in the market b. there will be a shortage in the market c. the market will be less efficient than it would be without the price ceiling d. there will be no effect on the market price or quantity sold

d.

the property of a resource allocation of maximizing the total surplus received by all members of society

efficiency

the property of distributing economic prosperity uniformly among the members of society

equality

the change in consumption that results when a price change moves the consumer to a higher or lower indifference curve

income effect

a curve that shows consumption bundles that give the consumer the same level of satisfaction

indifference curve

a good for which an increase in income reduces the quantity demanded

inferior good

the rate at which a consumer is willing to trade one good for another

marginal rate of substitution

a good for which an increase in income raises the quantity demanded

normal good

two goods with right-angle indifference curves

perfect complements

two goods with straight line indifference curves

perfect subsitutes

a legal maximum on the price at which a good can be sold

price ceiling

a legal minimum on the price at which a good can be sold

price floor

the amount a seller is paid for a good minus the seller's cost of providing it

producer surplus

the change in consumption that results when a price change moves the consumer along a given indifference curve to a point with a new marginal rate of substitute

substitution effect

the manner in which the burden of a tax is shared among participants in a market

tax incidence

the study of how the allocation of resources affects economic well-being

welfare economics

the maximum amount that a buyer will pay for a good

willingness to pay