ECON Exam 2 Consumer Surplus, Producer Surplus, Taxation

c. $16.

1. Refer to Figure 4. When a tax of $10 is imposed in this market, the price buyers pay is a. $6. b. $10. c. $16. d. $20.

a. consumer surplus is $150.

15. Refer to Figure 7-1. If the price of the good is $200, then a. consumer surplus is $150. b. consumer surplus is $650. c. producer surplus is $650. d. producer surplus is $750.

b. $6.

2. Refer to Figure 4. When the tax is imposed in this market, the price sellers receive is a. $0. b. $6. c. $10. d. $16.

b. $3.

2. Refer to Figure 8-2. The per-unit burden of the tax on buyers is a. $2. b. $3. c. $4. d. $5.

c. $1500.

3. Refer to Figure 4. The tax results in a deadweight loss that amounts to a. $600. b. $900. c. $1500. d. $1800.

b. AFB.

6. Refer to Figure 7-24. At equilibrium, consumer surplus is measured by the area a. AHG. b. AFB. c. ABD. d. BDF.

b. consumer surplus.

9. On a graph, the area below a demand curve and above the price measures a. producer surplus. b. consumer surplus. c. deadweight loss. d. willingness to pay.

d. is 300 and buyers effectively pay $16.

13. Refer to Figure 8-6. When the tax is placed on this good, the quantity sold a. is 600, and buyers effectively pay $10. b. is 300, and buyers effectively pay $10. c. is 600, and buyers effectively pay $16. d. is 300, and buyers effectively pay $16.

a. value of everything she must give up to produce a good.

14. A seller's opportunity cost measures the a. value of everything she must give up to produce a good. b. amount she is paid for a good minus her cost of providing it. c. consumer surplus. d. out of pocket expenses to produce a good but not the value of her time.

c. $3.50 each.

16. At Nick's Bakery, the cost to make a cheese danish is $1.50 per danish. As a result of selling ten danishes, Nick experiences a producer surplus in the amount of $20. Nick must be selling his danishes for a. $2.00 each. b. $0.50 each. c. $3.50 each. d. $5.00 each.

c. $1152.

3. Refer to Figure 7-25. At the equilibrium price, total surplus is a. $288. b. $576. c. $1,152. d. $2,304.

c. reduced welfare of buyers and sellers to the revenue raised by the government.

4. To fully understand how taxes affect economic well-being, we must compare the a. consumer surplus to the producer surplus. b. price paid by buyers to the price received by sellers. c. reduced welfare of buyers and sellers to the revenue raised by the government. d. consumer surplus to the deadweight loss.

c. $10000.

7. Refer to Figure 8-9. The amount of tax revenue received by the government is a. $4,000. b. $6,000. c. $10,000. d. $24,000.

c. When supply is relatively inelastic the deadweight loss of a tax is smaller than when supply is relatively elastic.

8. Refer to Figure 8-16. Panel (a) and Panel (b) each illustrate a $2 tax placed on a market. In comparison to Panel (b), Panel (a) illustrates which of the following statements? a. When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic. b. When demand is relatively elastic, the deadweight loss of a tax is larger than when demand is relatively inelastic. c. When supply is relatively inelastic, the deadweight loss of a tax is smaller than when supply is relatively elastic. d. When supply is relatively elastic, the deadweight loss of a tax is larger than when supply is relatively inelastic.

c. $160, then the price of the good is $100.

Refer to Figure 7-18. If total surplus is $240 and consumer surplus is a. $100, then the price of the good is $130. b. $130, then the price of the good is $120. c. $160, then the price of the good is $100. d. $120, then the price of the good is $90.