Econ Test 2

The vertical distance between points A and B represents a tax in the market. Total surplus without the tax is

$10, and total surplus with the tax is $7.50

The vertical distance between points A and B represents a tax in the market. The amount of the tax on each unit of the good is

$9-$4= $5

The vertical distance between points A and B represents a tax in the market. This imposition of the tax causes the quantity sold to

Decrease by 1 unit.

If the government passes a law requiring sellers of mopeds to send $200 to the government for every moped they sell, then

None of the above

A tax levied on the sellers of a good shifts the

Supply curve upward (or to the left)

Suppose a tax is imposed on bananas. In which of the following cases will the tax cause the equilibrium quantity of bananas to shrink by the largest amount?

The response of buyers and sellers to a change in the price of bananas is strong.

Suppose a tax is imposed on baseball bats. In which of the following cases will the tax cause the equilibrium quantity of baseball bats to shrink by the smallest amount?

The response of buyers and sellers to a change in the price of baseball bats is strong

Consumer surplus is the

amount a consumer is willing to pay minus the amount the consumer actually pays

A price ceiling set at $5 will

be binding and will result in a shortage of 250 units

Suppose a price floor of $4 is imposed on this market. As a result,

buyers' total expenditure on the good decreases by $15

If the market price of an orange increases from $0.70 to $1.40, then consumer surplus

decreases by $2.50

The deadweight loss from a tax of $2 per unit will be smallest in a market with

inelastic supply and elastic demand

The marginal seller is the seller

who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher.

Kristi and Rebecca sell lemonade on the corner. It costs them 7 cents to make each cup. On a certain day, they sell 40 cups. Their producer surplus for that day amounts to $19.20. Kristi & Rebecca sold each cup for

$0.55

Suppose the government imposes a price floor of $28 in this market. If the sellers with the lowest cost are the ones who sell the good and the government does not purchase any excess units produced, then total surplus will be

$1,120

If the price of the good is $600, then producer surplus amounts to

$1000

The vertical distance between points A and B represent a tax in the market. The price that buyers effectively pay after the tax is imposed is

$12

The vertical distance between points A and B represents a tax in the market. The amount of tax revenue received by the government is equal to

$12 - $5 = $7 $7 x 35 = $245

At the equilibrium price, consumer surplus is

$1225

The price paid by buyers after the tax is imposed is

$16

The vertical distance between points A and B represents a tax in the market. When the tax is imposed in the market, the price buyers effectively pay is

$16

Cameron visits a sporting goods store to buy a new set of golf clubs. He is willing to pay $750 for the clubs but buys them on sale for $575. Cameron's consumer surplus from the purchase is

$175

Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, producer surplus will be

$18

Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

$24

The numbers reveal the opportunity costs of providing 10 piano lessons of equal quality. You wish to purchase 10 piano lessons for yourself and for your brother, so you take bids from each of the sellers. You will take lessons at the same time, so one teacher cannot provide lessons to both of you. You must pay the same price for both sets of lessons, and you will not accept a bid below a seller's cost because you are concerned that the seller will not provide all 10 lessons. What bid will you accept

$349

If the market price is $1,400, the combined total cost of all participating sellers is

$4,100

George produces cupcakes. His production cost is $10 per dozen. He sells the cupcakes for $16 per dozen. His producer surplus per dozen cupcakes is

$6

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book?

$6 + $2 = $8

Suppose a $3 per-unit tax is placed on this good. The amount of tax revenue collected by the government is

$6-$3= $3 $3 x $15 = $45.00

If the price of the good is $9.50, then producer surplus is

$8.50

You have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut of all exports of oranges to Freedonia. George, who is one of your advisors, says that the best way to avoid a shortage of oranges is to take no action at all. Charles, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop. Otto, a third advisor, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Which of your three advisors is most likely to have studied economics

George

You have an extra ticket to the midwest Regional Sweet 16 game in the men's NCAA basketball tournament. The table shows the willingness to pay of the four potential buyers in the market for a ticket to the game. You hold an auction to sell the ticket. Who makes the winning bid, and what does he offer to pay for the ticket?

Michael; more than $400 but less than or equal to $500

The vertical distance between points A and C represents a tax in the market. The loss in consumer surplus caused by the tax is measured by the area

P3 A B P2

Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?

The effective price received by sellers is $0.40 per bottle less than it was before the tax.

An outcome that can result from either a price ceiling or a price floor is

a nonbinding price control

A price floor set at $20 will

be binding and will result in a surplus of 125n units

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

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.

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 tax.

Suppose a price ceiling of $2 is imposed on this marker. As a result,

buyers' total expenditure on the good decreases by $75

Price ceilings and price floors that are binding

cause surpluses and shortages to persist because price cannot adjust to the market equilibrium price

A binding price floor

causes a surplus and is set at a price above the equilibrium price

Total surplus in a market is equal to

consumer surplus + producer surplus

A tax on the sellers of coffee will increase the price of coffee paid by buyers,

decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee

A tax on buyers will shift the

demand curve downward by the amount of the tax

If the government levies a $1000 tax per boat on the sellers of boats, then the price paid by buyers of boats would

increase by less than $1000

To say that a price ceiling is nonbinding is to say that the price ceiling

is set above the equilibrium price

When a tax is placed on a product, the price paid by buyers

rises, and the price received by sellers falls

Buyers of a good bear the larger share of the tax burden when the

supply is more elastic than the demand for a product

When a tax is levied on buyers, the

tax creates a wedge between the price buyers effectively pay and the price sellers receive

Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the buyers of the good, rather than the sellers, are required to pay the tax to the government. After the buyers pay the tax, relative to the case depicted in the figure, the burden on the buyers will be

the same, and the burden on the sellers will be the same