Practice questions ch 7-9

Refer to Figure 1. Suppose a $3 per-unit tax is placed on this good. The amount of deadweight loss resulting from this tax is

$7.50.

Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is

$75.

A demand curve reflects each of the following except the

ability of buyers to obtain the quantity they desire.

What happens to the total surplus in a market when the government imposes a tax?

c. Total surplus decreases.

What is the fundamental basis for trade among nations?

d. comparative advantage

Refer to Figure 2. With trade, this country

d. imports 320 tricycles.

Refer to Figure 1. Suppose a $3 per-unit tax is placed on this good. The tax causes the price paid by buyers to

increase by $2.

When a tax is levied on a good, the buyers and sellers of the good share the burden,

regardless of how the tax is levied.

In a market, the marginal buyer is the buyer

who would be the first to leave the market if the price were any higher.

Abraham drinks Mountain Dew. He can buy as many cans of Mountain Dew as he wishes at a price of $0.55 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Abraham is rational in deciding how many cans to buy. His consumer surplus is

$0.70

Refer to Figure 1 . Suppose a $3 per-unit tax is placed on this good. The loss of consumer surplus resulting from this tax is

a. $35.

Refer to Figure 2. Total surplus with trade exceeds total surplus without trade by

a. $640.

For any country, if the world price of copper is higher than the domestic price of copper without trade, that country should

a. export copper, since that country has a comparative advantage in copper.

Refer to Figure 2. Without trade, consumer surplus amounts to

c. $3,240.

Producer surplus measures the

costs to sellers of participating in a market.