ECON130 HW 5

Refer to Figure 9-17. With trade and a tariff, consumer surplus is

$1,024 and producer surplus is $392.

Refer to Figure 6-18. The amount of the tax per unit is

$14

Refer to Figure 6-18. The price that buyers pay after the tax is imposed is

$24

Refer to Figure 9-17. The amount of revenue collected by the government from the tariff is

$288.

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

$3.50 each.

Refer to Figure 9-17. Without trade, consumer surplus is

$400 and producer surplus is $800.

Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The amount of tax revenue collected by the government is

$45.00.

Refer to Figure 6-18. The per-unit burden of the tax on sellers is

$6

Refer to Figure 6-6. Which of the following price ceilings would be binding in this market?

$6

Refer to Figure 7-11. If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?

$625

Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The amount of deadweight loss resulting from this tax is

$7.50.

Refer to Figure 9-17. The deadweight loss caused by the tariff is

$96

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?

1,This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity. 2,The price paid by buyers is $0.30 per drink more than it was before the tax. 3, Forty percent of the burden of the tax falls on sellers. (All of the above are correct.)

Refer to Figure 9-17. With free trade (no tariff), the country imports

60 units of the good.

All else equal, what happens to consumer surplus if the price of a good increases?

Consumer surplus decreases.

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?

For the three individuals together, consumer surplus amounts to $35.

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

J+K+L+M.

Assume, for Mexico, that the domestic price of oranges without international trade is lower than the world price of oranges. This suggests that, in the production of oranges,

Mexico has a comparative advantage over other countries and Mexico will export oranges.

If the demand curve is D and the supply curve shifts from S' to S, what is the change in producer surplus?

Producer surplus increases by $1,875.

Refer to Figure 6-6. What would cause the price ceiling from question 3 to be non-binding? (Hint there is more than one correct response)

Supply shifts to the right

Consumer surplus is equal to the

Value to buyers - Amount paid by buyers.

A price floor will be binding only if it is set

above the equilibrium price.

Taxes cause deadweight losses because taxes

cause marginal buyers and marginal sellers to leave the market, causing the quantity sold to fall.

A tax placed on a good

causes the equilibrium quantity of the good to decrease.

When a country allows trade and becomes an importer of a good,

consumer surplus increases and producer surplus decreases.

Refer to Figure. Area C represents the

consumer surplus to new consumers who enter the market when the price falls from P2 to P1.

If supply is horizontal and demand is vertical, then majority of the tax will be borne on

consumers since demand is more inelastic than supply

Suppose the government imposes a tax of P' - P'''. The area measured by I+Y represents the

deadweight loss due to the tax

Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The tax causes the price received by sellers to

decrease by $1

Refer to Figure 8-23. If the economy is at point A on the curve, then a decrease in the tax rate will

decrease the deadweight loss of the tax and decrease tax revenue.

Refer to Figure. When the price rises from P1 to P2, consumer surplus

decreases by an amount equal to B+C.

Price controls

generates inefficiencies of their own.

A tax levied on the sellers of blueberries

increases sellers' costs, reduces profits, and shifts the supply to the left

Under minimum wage laws

labor supply exceeds labor demand and causes unemployment

(HW6)Willingness to pay

measures the value that a buyer places on a good.

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

positively related.

(HW5)If a price ceiling is not binding, then

there will be no effect on the market price or quantity sold.