ECN 212 (EXAM 2 REVIEW)

The following will cause an increase in producer surplus in the market for spam, which is considered an inferior good

A decrease in consumer income

Suppose the government imposes a binding price ceiling on the market for internet-connected exercise bicycles, because it wants to encourage people to exercise more. As a result,

A shortage of internet-connected exercise bicycles will develop

The uncompensated impact of one persons actions on the well being of a third party is called

An externality

A tax placed on the sellers of duck blinds, causes the quantity of duck blinds in the market

And the effective price received by sellers both to decrease

A cabana along a beach that is open to the public is considered a

Common resource

Hurricane lota destroys half of the Florida Orange crop. Which of the following best describes the effect of hurricane Lota

In the market for oranges, supply decreases; and in the market for Orange juice, consumer surplus decreases

These following is a way is internalizing technology spillovers

Patent protections, tax breaks for research and development, and subsidies

A new drone that you take turns flying with your friends is considered a

Private good

A buyers willingness to pay is

That buyers maximum amount they are willing to pay off a good

The sellers cost of production is

The minimum amount the seller is willing to accept for a good

An efficient allocation of resources maximizes

Total surplus

Total surplus in a market is equal to

Value to buyers minus cost to sellers

A positive externality (that has not been internalized) causes the

optimal quantity to exceed the equilibrium quantity

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

price floor

A free rider is a person who

receives the benefit of a good but avoids paying for it