Econ 201: Final exam
long run
a period of time where all inputs can be changed.
short run
a period of time where one or more of a firms inputs cannot be changed.
Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the a. demand is more inelastic than the supply. b. supply is more inelastic than the demand. c. government has required that buyers remit the tax payments. d. government has required that sellers remit the tax payments.
a. demand is more inelastic than the supply
The imposition of a binding price ceiling on a market causes quantity demanded to be a. greater than quantity supplied. b. less than quantity supplied. c. equal to quantity supplied. d. Both (a) and (b) are possible.
a. greater than quantity supplied
If a binding price ceiling is imposed on the baby formula market, then
all of the above are correct
suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of pistachios decreases to equal the world price of pistachios, then:
at the world price, the quantity of pistachios demanded in that country exceeds the quantity of pistachios demanded in that country.
suppose the demand for light bulbs is inelastic, and the supply is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by:
between $1 and $2
To say that a price ceiling is binding is to say that the price ceiling
causes quantity demanded to exceed quantity supplied
If Freedonia changes its laws to allow international trade in software and the world price is higher than its domestic price, then it must be the case that
consumer surplus decreases and producer surplus increases
Capital, labor, and land a. have derived demands b. are factors of production c. are inputs used in the production of goods and services d. all the above are correct
d. all the above are correct
because a firms demand for a factor of production is derived from its decision to supply a good in the market, it is called a:
derived demand
The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and neither importing nor exporting rugs. We can conclude that producer surplus in Aquilonia is now:
higher in the steel market, lower in the rice market, and unchangeable in the TV market
the value of the marginal product of labor exceeds the wage, then the firm could
increase profit by hiring additional labor
When externalities exist, buyers and sellers
neglect the external effects of their actions, and the market equilibrium is not efficient.
The minimum wage, if it is binding, lowers the incomes of
only those workers who become unemployed
In which market will the majority of the tax burden fall on buyers?
panel (b) where the demand slope is steepest
The tax burden will fall most heavily on sellers of the good when the demand curve is
relatively flat and the supply curve is relatively steep.
An externality
results in an equilibrium that does not maximize the total benefits to society
The price received by sellers in a market will increase if the government decreases:
tax on the good sold in that market
your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 10 hours per week, but now she decides to work 15 hours per week. For this price range, her labor supply curve is:
upward sloping
An upward-sloping labor-supply curve implies that an increase in the wage induces:
workers to increase the quantity of labor they supply