Econ Test 2 University of alabama

Which of the following price floors would be binding in this market

$10

the tax results in a loss of consumer surplus that amounts to

$170

The decrease in consumer and producer surpluses that is not offset by tax revenue is the area

C+F

Consumer surplus is equal to

value to buyer- amount paid by buyers

Suppose the government imposes a $10 per unit tax on a good

reduce producer surplus from $96 to $24

to measure the gains and losses from a tax on a good, economists use the tools of

welfare economics

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the

sellers will bear a greater burden of tax than the buyers

In panel B there will be a

surplus

The marginal seller is the seller who

would leave the market first if the price were any lower

Suppose the government imposes a price ceiling of $16 in this market. If the buyers with the highest willingess to pay purchase the good, then total surplus will be

$1,024

Buyers pay how much of the tax per unit

$1.50

If there is only one unit of the good and if the buyers bid against each other for the right to purchase it, then the consumer surplus will be

$10 or slightly less

Celine buys a new MP3 player for $90. She receives consumer surplus of $15 on her purchase if her willingness to pay is

$105

The amount of tax revenue received by the government is equal to

$245

If the government imposes a price ceiling of $55 in this market, then total surplus will be

$250

Suppose the government places a $5 per-unit tax on this good. The loss of consumer surplus resulting from this tax is

$30

Suppose a $3 per-unit tax is place on this good. The loss of consumer surplus resulting from this tax is

$35

In which of the following circumstances would a buyer be indifferent about buying a good?

*The amount of consumer surplus the buyer would experience as a result of buying the good is zero *the price of the good is equal to the buyers willingness to pay for the good *The price of the good is equal to the value the buyer places on the good

Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?

*This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. *The price paid by buyers is $0.30 per drink more than it was before the tax. *Forty percent of the burden of the tax falls on sellers.

Suppose buyers of vodka are required to send $5.00 to the government for every bottle of vodka they buy. Further, suppose this tax causes the effective price received by sellers of vodka to fall by $3.00 per bottle. Which of the following statements is correct?

*This tax causes the demand curve for vodka to shift downward by $5.00 at each quantity of vodka. *The price paid by buyers is $2.00 per bottle more than it was before the tax. *Sixty percent of the burden of the tax falls on sellers.

If the market price were $1400 the combined total cost of all participating sellers is

4,100

How many units of the good are sold after the imposition of the price floor?

5

Kristi and Rebecca sell lemonade on the corner for $0.50 per cup. It costs them $0.10 to make each cup. On a certain day, their producer surplus is $20. How many cups did Kristi and Rebecca sell?

50

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

zero

Which area represents producer surplus when the price is P2

ACH whole thing

Refer to Table 7-7. You are selling extra tickets 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. Which of the following graphs represents the market demand curve?

Answer B Stair stepping demand starting at the first bid going down

If the price of the product is $90, then who would be willing to purchase the product?

Calvin, sam, Andrew, and lori

who is a marginal seller when the price is $1,100

Dianne cost= $1,100

Suppose the government imposes a tax of P' - P'''. Total surplus before the tax is measured by the area

I+J+K+L+M+Y. All of the area to the left of the equilibriam inside the demand and supply lines

The imposition of the tax causes the price paid by buyers to

Increase from $600 to $800

If the demand curve is D and the supply curve shifts left from S to S', what is the change in producer surplus when comparing the new equilibrium with the original equilibrium?

Producer surplus decreases by 225

The Surgeon General announces that eating apples promotes healthy teeth. As a result, the equilibrium price of apples

increases, and producer surplus increases.

Suppose sellers of liquor are required to send $5.00 to the government for every bottle of liquor they sell. Further, suppose this tax causes the price paid by buyers of liquor to rise by $3.00 per bottle. Which of the following statements is correct?

This tax causes the supply curve for liquor to shift upward by $5 at each quantity of liquor

For a price floor to be binding this market, it would have to be set at

any price above $3

Government imposed price of $6 in this market could be an example of a

binding price ceiling and non binding price floor

When a tax on a good is enacted,

buyers and sellers share the burden of tax regardless of whether the tax is levied on buyers or on sellers

The burden of a luxury tax falls

more on the middle class than on the rich

Deadweight loss is the

decline in total surplus that results from a tax

A tax on the sellers of coffee mugs

decreases the size of the coffee mug market

A binding price floor is shown in

panel B only

In which panel of the figure would there be a shortage of the good at the price

panel B only

a non-binding price floor is shown in

panel a only

The size of a tax and the deadweight loss that results from the tax are

positively related

In a free, competitive market, what is the rationing mechanism?

price

a tax imposed on the buyers of a good will raise the

price paid by buyers and lower the equilibrium quantity

At the quantity Q3

the marginal value to buyers is less than the marginal cost to sellers

Suppose that a tax is placed on books. If the sellers pay the majority of the tax we know that the

the supply is more inelastic than the demand

Sellers of a product will bear the larger part of the tax burden, and buyers will bear a smaller part of the tax burden, when the

demand for the product is more elastic than the supply of the product

The deadweight loss from a $3 tax will be largest in a market with

elastic supply and elastic demand