ECON Exam 3
T x Q
If T represents the size of the tax on a good and Q represents the quantity of the good that is sold, total tax revenue received by government can be expressed as
may increase, decrease, or remain the same
If the size of a tax increases, tax revenue
sellers' costs stay the same and the price of the good increases
Which of the following events would increase producer surplus?
average total costs that are less than market price
profit-maximizing firms enter a competitive market when existing firms in that market have
total surplus decreases
what happens to the total surplus in a market when the government imposes a tax?
increase tax revenue and decrease the deadweight loss
when a country is on the downward-sloping side of the Laffer curves, a cut in the tax rate will
equilibrium quantity of the good always decreases
when a tax is imposed on a good, the
does not change
whenever a perfectly competitive firm chooses to change its level of output, its marginal revenue
graph a
which graph correctly illustrates the relationship between the size of a tax and the size of the deadweight loss associated with the tax
the government may break up a natural monopoly to lower the price charged to customers
which of the following statements is not correct?
$18,000
A monopoly firm maximizes its profit by producing Q= 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44 At Q= $500 the firm's profit is
new buyers enter the market, increasing consumer surplus
As a result of a decrease in price,
both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices
Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to
$1,500
For widgets, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. A tax of $15 per unit is imposed on widgets. The tax reduces the equilibrium quantity in the market by 200 units. The deadweight loss from the tax is
increased total surplus
Price discrimination adds to social welfare in the form of
fall in the short run. All, some, or no firms will shut down, and some of them will exit the industry. Price will then rise to reach the new long-run equilibrium.
a competitive market is in long-run equilibrium. If demand decreases, we can be certain that price will
maximize profit and produce a socially optimal level of output
a perfectly price-discriminating monopolist is able to
sellers' cost
a supply curve can be used to measure producer surplus because it reflects
free entry and exit by firms
competitive markets are characterized by
a social planner intervenes and sets the quantity of output after evaluating buyer's willingness to pay and sellers' costs
efficiency in a market is achieved when
a one-unit decrease in output will increase the firm's profit.
if a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then
zero
if the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is
the tax on airline tickets increases from $20 per ticket to $60 per ticket
in which of the following instances would the deadweight loss of the tax on airline tickets increase by a factor of 9?
the price of kalene's smoked sausage will exceed kalene's marginal cost
kalene's smoke house is the only place within 100 miles that sells smoked sausage. assuming that kalene is a monopolist and maximizing her profit. which of the following statements is true.
$30 and 100 units
suppose a firm in a competitive market earned $3,000 in total revenue and had marginal revenue of $30 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold?
produces an output level less than the socially optimal level.
the deadweight loss associated with a monopoly occurs because the monopolist
A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost
the profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?
MC intersects the demand curve
to maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where
