Dorcas Exaxm 2

Table 5-6: Using the midpoint method the income elasticity of demand for good Y is

-2.33 and good Y is an inferior good

Figure 7-19: If the price were P3 consumer surplus would be represented by the area

A

Figure 9-1: In the absence of trade total surplus in Scotland is represented by the area

A+B+C+D+F

Figure 8-8: The government collects tax revenue that is the area of

B+D

Which of the following is not an example of a public policy?

Equilibrium laws

Figure 5-14: Along which of these segments of the supply curve is supply least elastic?

GH

Figure 8-8: After the tax goes into effect producer surplus ins the area

J

Figure 7-16: Total surplus can be measured as the area

JNL

Figure 7-1: If the price of the product is $15 then who would be willing to purchase the product?

Lori, Aubrey, and Zach

Which of the following is not a commonly advanced argument for trade restrictions?

The efficiency argument

When a country allows trade and becomes and exporter of a good which of the following is not a consequence?

The losses of domestic consumers of the good exceed the gains of domestic producers of the good.

Figure 6-4: Which of the following statements is not correct?

When the price is $6 there is a surplus of 8 units

When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans

all of the above are correct

A decrease in supply will cause the largest increase in a price when

both supply and demand are inelastic

When a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic

buyers of the good will bear most of the burden of tax

Price controls

can generate inequities of their own

If the cross price elasticity of two goods is negative then the two goods are

complements

Total surplus with a tax is equal to

consumer suplus plus producer surplus plea tax revenue

The decrease in total surplus that results from a market distortion such as a tax is called a

deadweight loss

Figure 8-9: The imposition of the tax causes the quantity sold to

decrease by 20 units

Figure 7-2: When the price rises from P1 to P2 consumer surplus

decreases by an amount equal to B+C

The goal of rent control is to

help the poor by making housing more affordable

Figure 9-1: When trade in wool is allowed producer surplus in Scotland

increases by the area B+D+G

Necessities such as food and clothing tend to have

low price elasticities of demand and low income elasticities of demand

When a tax is placed on the sellers of the product buyers pay

more and sellers receive less then they did before the tax

At present the maximum legal price for a human kidney is 0 the price 0 maximizes

neither consumer nor producer surplus

A minimum wage that is set below a market's equilibrium wage will result in excess

none of the above is correct

Assume for the US that the domestic price of wheat without international trade is higher than the world price of wheat. This suggests that in the production wheat

other companies will have a comparative advantage over the US and the US will import wheat

Figure 6-3: A binding price floor is shown in

panel b only

Ronal Reagan believed that reducing income tax rates would

raise economic well-being and perhaps even tax revenue

Figure 6-2: The price ceiling causes a

shortage of 85 units

A tax on an imported good is called a

tariff

If a country allows trade for a certain good the domestic price without trade is lower than the world price

the country will be an exporter of the good

If a price ceiling is not binding then

the equilibrium price is below the price ceiling

When a country allows trade and becomes and importer of a good

the gains of the winners exceed the loss of the losers

The invisible hand refers to

the marketplace guiding the self interests of market participation into promoting general economic well being

Cross price elasticity of demand measures how

the quantity demanded of one good changes in response to a change in the price of another good

The Laffer Curve relates to

the tax rate to tax revenue raised by the tax

The study of how the allocation of resources affects the economic well being is called

welfare economics

Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called

willingness to pay