microeconomics test 2

a subsidy is a

a government payment designed to encourage particular purchases or productive activities.

the economic burden of a tax is the:

the burden created by the change in after-tax prices faced by buyers and sellers

the marginal benefit minus the marginal cost equals

the economic surplus

When the absolute value of the price elasticity of demand is greater than 1, demand is

elastic

When the absolute value of the price elasticity of demand is infinite, demand is:

perfectly elastic

a measure of how responsive buyers are to price changes is the

price elasticity of demand

the producer surplus on a unit sold equals:

price minus marginal cost

use the market graph for pairs of socks to answer the question. The stock market is at equilibrium. How much economic surplus is being generated in the stock market?

$45

Use the bath towel market graph to answer the question. The bath towel market is at equilibrium. How large is the economic surplus, producer surplus?

$60, $30

the price of a carton of eggs is 2 and 100 cartons are sold. The consumer surplus is 80 and total economic surplus equals 150. What is the producer surplus?

$70

A tax on sellers causes which of the following?(i) a leftward shift of the supply curve(ii) a decrease in quantity sold(iii) an increase in the price buyers pay

(I),(II), and (III)

The price of product A is cut by 30%. As a result, the quantity demanded of product B rises by 40%. The cross-price elasticity of demand between product A and product B is _____, and they are _____.

-1.33; complements

The price of product A is cut by 50%. As a result, the quantity demanded of product B rises by 50%. The cross-price elasticity of demand between product A and product B is _____, and they are _____.

-1; complements

Chin purchases five protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2 each. What is Chin's consumer surplus on the fifth bar? $.50

0

If 18 units are sold at a price of $20, what is the producer surplus on the last jar sold?

0

If income rises by 20% and the quantity demanded of an item rises by 10%, the income elasticity of demand for this item is:

0.5

The following table shows the units of output a worker can produce per month in Germany and South Korea. Use this table to answer the following question. 1. the opportunity cost of one ton of steel in germany is 2. the opportunity cost of one ton of steel in south korea is which country has a comparative advantage in steel production?

1. one quarter of a pc 2. one half of a pc 3. germany

The price of chicken breast rises from $3.50 per pound to $4.25 per pound. In response to this price change, the quantity demanded for chicken breast falls by 30%. What is the price elasticity of demand for chicken breast?

1.4

if income rises by 10% and the quantity demanded of an item rises by 20%, the income elasticity of demand for this tem is:

2

the table below shows the units of output a worker can produce per month in germany and south korea. use it to answer the questions. the opportunity cost of one computer in south korea is

2 tons of steel

Lyft cuts the price of a ride in New York City by 10%. Thereafter, the quantity of rides demanded rises by 25%. What is the absolute value of the price elasticity of demand for Lyft rides?

2.5

The price of a dozen eggs falls from $3 to $2.70. In response to this price change, the quantity supplied of eggs falls from 100,000 dozen eggs to 75,000 dozen eggs. What is the price elasticity of supply for eggs?

2.7

The price of product C rises by 10%. As a result, the quantity demanded of product D rises by 20%. The cross-price elasticity of demand between product C and product D is _____, and they are _____.

2; substitutes

Chin purchases five protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2.50 each. What is Chin's total consumer surplus from the five bars that he purchased? $2.50

5

Portia produces and sells headbands. Her marginal cost for one headband is $6, and her average cost is $4. She gains producer surplus only when she sells headbands at a price above:

6

Portia produces and sells headbands. Her marginal cost for one headband is $6, and her average cost is $4.She gains producer surplus only when she sells headbands at a price above.

6

a subsidy is (i) a negative tax. (ii) a tax rebate given to those who make a specific choice. (iii) a payment made by the government to those who make a specific choice.

I, II, III

(Figure: Market for Sustainable Furniture) The graph depicts the market for furniture made from sustainable, man-made forests. The government wants to encourage buyers to buy such furniture and imposes a price ceiling of $250. What occurs as a result of the price ceiling?

a shortage of 400,000 pieces of furniture

in a market graph, consumer surplus is the area

above the price and below the demand curve

Which term best describes the situation that, relative to England, France can produce beef at a lower cost of production (i.e., can produce beef using fewer inputs)?

absolute advantage

A tax on buyers causes which of the following?(i) a leftward shift of the demand curve(ii) a decrease in quantity sold(iii) an increase in the price buyers pay

all

a binding price floor is

always above the equilibrium price

the graph shows the market for teddy bears: When the market produces and sells nine teddy bears, the deadweight loss is represented by the:

area between the demand and supply curves between quantities of 5 and 9

You have a comparative advantage if you can complete a task:

at a lower opportunity cost than anyone else

People gain consumer surplus when they purchase an item:

at a price below the value of the benefit they receive from the item

people gain consumer surplus when they purchase an item

at a price below the value of the benefit they recieve from the item

a binding price ceiling is

below equilibrium

to get maximum output, you should allocate each task to the person who

can do the task with the lowest opportunity cost

You have an absolute advantage in producing a product if you:

can produce the product using the fewest inputs

Which of the four options best represents specialization and its relationship with trade?

comparative advantage

specialization will increase output when it is based on:

comparative advantage

When the economic surplus in a market is less than it would be if the market were efficient, the market is experiencing:

deadweight loss

In 2016, Amazon began charging a 5.75% sales tax on products it sells in the District of Columbia. Holding all else constant, the effect of this tax would be to _____ in the District of Columbia.

decrease amazon sales

a subsidy for buyers of a product shifts the:

demand curve to the right

Buyers bear a smaller incidence of the tax when:

demand is more elastic than supply

If Bishan wants to capitalize on comparative advantage in his life, then he should:

do more of what he is relatively good at and then trade for other things

if you are a seller making decisions according to the rational rule, you will:

earn producer surplus on all except the last unit sold

The statutory burden of a tax is the:

government-designated burden of a tax payment.

suppose the percent change in newspapers demanded for any price change is infinite. The absolute value of the elasticity of demand for newspapers is____________, and demand is ______________

infinity; perfectly elastic

Suppose the percentage change in newspapers demanded for any price change is infinite. The absolute value of the elasticity of demand for newspapers is _____, and demand is _____.

infinity; perfectly inelastic

If Italy is said to have an absolute advantage over Mexico in the production of wheat, this means that, given the same resources,

italy can produce more wheat than mexico

Use the data in the table to answer the question. The table provides data on how long it takes Maia and Juanita to mow the lawn and weed the flower beds. who has a comparative advantage in mowing lawns?

juanita because she has a lower opportunity cost

consumer surplus equals

marginal benefit minus price

if mary can bake a cake at a lower opportunity cost than sarah can, then,

mary has a comparative advantage in baking cakes

a quantity regulation is a

minimum or maximum quantity that can be sold

Income elasticity of demand measures how responsive the:

quantity demanded of a good is to changes in income

In 2017, eBay started charging a 20% value-added tax on fees charged to small businesses in the United Kingdom. Holding all else constant, this would _____ in the United Kingdom.

raise the prices that ebay sellers charge their customers

Taking the absolute value of the cross-price elasticity of demand is incorrect because it would:

remove the ability to tell whether the two products are substitutes or complements

You are given data on four products — toothpaste, shampoo, soap, and laundry detergent. The absolute value of the price elasticity of demand for toothpaste is 4. The absolute value of the price elasticity of demand for shampoo is 0.2. The absolute value of the price elasticity of demand for soap is 0.5. The absolute value of the price elasticity of demand for laundry detergent is 2. Which product has the most inelastic demand?

shampoo

The table shows the tons of steel or number of computers a worker can produce per week in Germany and South Korea. Use this table to answer the question. Germany should:

specialize in steel production, export steel, and import computers

A tax on sellers shifts the:

supply curve to the left

a tax on sellers shifts the:

supply curve to the left

the following table indicates the labor hours needed to produce one unit of output. Kate has a comparative advantage in __________________, and mary has a comparative advantage in ______________

sweaters, dresses

A binding price floor in a market is removed. Which of the following is likely to occur as a result?

the market price will fall

a price ceiling is

the maximum price that a seller can charge in a market

the percent change in insulin demanded for any price is zero. the demand curve for insulin is and the price elasticity of demand

vertical; perfectly inelastic