Microeconomics Quiz 10 (Ch. 8 and Info.)

Refer to Figure 8-2. The amount of deadweight loss as a result of the tax is: a. $2.50 b. $5 c. $7.50 d. $10

a. $2.50

Refer to Figure 8-2. The imposition of the tax causes the quantity sold to: a. increase by 1 unit b. decrease by 1 unit c. increase by 2 units d. decrease by 2 units

b. decrease by 1 unit

Refer to Figure 8-2. The imposition of the tax causes the price paid by buyers to: a. decrease by $2 b. increase by $3 c. decrease by $4 d. increase by $5

b. increase by $3

If you think the probability of a painting being real is 35%, what will you offer to pay for a painting? a. $1,000 b. $1,050 c. $1,350 d. $1,600

c. $1,350

Total surplus with a tax is equal to: a. consumer surplus plus producer surplus b. consumer surplus minus producer surplus c. consumer surplus plus producer surplus minus tax revenue d. consumer surplus plus producer surplus plus tax revenue

d. consumer surplus plus producer surplus plus tax revenue

Producer surplus without the tax is: a. $4, and producer surplus with the tax is $1 b. $4, and producer surplus with the tax is $3 c. $10, and producer surplus with the tax is $1 d. $10, and producer surplus with the tax is $3

a. $4, and producer surplus with the tax is $1

A tax on a good: a. raises the price that buyers effectively pay and raises the price that sellers effectively receive b. raises the price that buyers effectively pay and lowers the price that sellers effectively receive c. lowers the price that buyers effectively pay and lowers the price that sellers effectively receive d. lowers the price that buyers effectively pay and lowers the price that sellers effectively receive

b. raises the price that buyers effectively pay and lowers the price that sellers effectively receive

A pay-as-you-drive insurance plan would allow insurance companies to obtain better information about the relative risk of insuring different drivers and should therefore: a. increase the amount of asymmetric information in the market b. reduce the problem of adverse selection c. elevate the moral hazard problem d. significantly reduce the winner's curse in the insurance market

b. reduce the problem of adverse selection

Suppose you see a 2006 Scion xB Sport Wagon advertised in the local newspaper. If you knew the car was reliable, you would be willing to pay $10,000 for it. If you knew the car was unreliable, you would only be willing to pay $5,500 for it. If you believe there is a 60% change that the car is reliable, what is the highest price would you be willing to pay? a. $5,500 b. $7,300 c. $8,200 d. $10,000

c. $8,200

The government's benefit from a tax can be measured by: a. Consumer surplus b. Producer surplus c. Tax Revenue d. All of the above are correct

c. Tax Revenue

If T represents the size of the tax on a good and Q represents the quantity of the good that is sold, total tax revenue received by government can be expressed as: a. T/Q b. T+Q c. TxQ d. (TxQ)/Q

c. TxQ

Use your answer from the last question. Suppose that sellers in the 2006 Scion xB Sport Wagon market value a reliable car at $9500 and value an unreliable car at $6000. At the price you calculated in number 5 what type of cars would be available for sale in this market? a. both reliable and unreliable cars b. only reliable cars c. only unreliable cars d. neither cars will be available for sale

c. only unreliable cars

What are the only type of paintings that will be available at this price? a. He will sell both fake and real paintings b. He will not sell either fake or real paintings c. He will sell only real paintings d. He will sell only fake paintings

d. He will sell only fake paintings

When a tax is levied on a good, the buyers and sellers of the good share the burden, a. provided the tax is levied on the sellers b. provided the tax is levied on the buyers c. provided a portion of the tax is levied on the buyers, with the remaining portion levied on the sellers d. regardless of how the tax is levied

d. regardless of how the tax is levied

Refer to Figure 8-2. The amount of the tax on each unit of the good is: a. $1 b. $4 c. $5 d. $9

c. $5

Refer to Figure 8-2. Consumer surplus without the tax is: a. $6, and consumer surplus with the tax is $1.50 b. $6, and consumer surplus with the tax is $4.50 c. $10, and consumer surplus with the tax is $1.50 d. $10, and consumer surplus with the tax is $4.50

a. $6, and consumer surplus with the tax is $1.50

Refer to Figure 8-2. The imposition of the tax causes the price received by sellers to: a. decrease by $2 b. increase by $3 c. decrease by $4 d. increase by $5

a. decrease by $2

A tax levied on the sellers of a good shifts the: a. supply curve upward (or to the left). b. supply curve downward (or to the right). c. demand curve upward (or to the right). d. demand curve downward (or to the left).

a. supply curve upward (or to the left).

A tax placed on a good: a. causes the effective price to sellers to increase b. affects the welfare of buyers of the good but not the welfare of sellers c. causes the equilibrium quantity of the good to decrease d. creates a burden that is usually borne entirely by the sellers of the good

c. causes the equilibrium quantity of the good to decrease

A tax levied on the buyers of a good shifts the: a. supply curve upward (or to the left). b. supply curve downward (or to the right). c. demand curve downward (or to the left). d. demand curve upward (or to the right).

c. demand curve downward (or to the left).