Economics Topic 3 MC

The graph above shows the market for good X... If the government imposes an excise tax of t dollars on each unit of good X, which of the following represents the consumer surplus, producer surplus, and deadweight loss after the imposition of the tax?

A. Consumer Surplus: A Producer Surplus: G Deadweight Loss: D+E

The market shown on the graph has had a per-unit tax placed on its production. What is the tax incidence, or burden of the tax paid by consumers and producers?

A. Consumer Tax Incidence: BC Producer Tax Incidence: F

Which of the following is true of the deadweight loss caused by an excise tax?

A. It consists of lost producer and consumer surplus.

The additional satisfaction received from consuming an additional unit of a good is called the

A. marginal utility

If the quantity demanded of good X increases 25% while the price decreases 25%, this means that the price elasticity of demand is

A. unit elastic

After the government imposed a $0.20 per gallon tax on gasoline, the price of a gallon of gasoline increased from $1.00 to $1.15. Which of the following statements is true?

C. Consumers bear most, but not all, of the tax burden

Following a decrease in the supply of oranges, the price of orange juice increased by 20 percent, which resulted in a 10 percent increase in the quantity of apple juice consumed. This implies that the cross elasticity of demand between orange juice and apple juice is

B. .5

Assume Joe has only $45 to spend on entertainment. What combination of movies, that cost $10 per movie, and visits to the trampoline park, which cost $5 per visit, would maximize his utility?

B. Going to the movies and trampoline park 3 times each

The total amount of tax collected by the government is equal to

B. P1GIP2

The student has $10 and spends it all on pizza and pens. If the price of a unit of pizza is $2 and the price of a unit of pens is $1, the student will maximize utility by purchasing which of the following combinations of pizza and pens?

B. Pizzas: 4 Pens: 2

The market shown on the graph has had a per-unit tax placed on its production. What is the after-tax price paid by consumers and the after-tax price paid by producers?

B. Price for Consumers: $6 Price Received by Sellers: $2

When the price elasticity of demand coefficient ratio is 2, demand is

B. relatively elastic

If an excise tax is imposed on a supplier, the tax incidence will fall more heavily on consumers if

B. the price elasticity of demand is more inelastic than supply.

Assume that the demand for a certain good is perfectly inelastic and the supply curve of the food is upward sloping. Which of the following occurs in the market for the good if the price of an input used to produce the good increases?

C. A decrease in the supply and an increase in the equilibrium price

The market shown on the graph has had a per-unit tax placed on its production. What is the after-tax consumer and producer surplus?

C. Consumer surplus: A Producer surplus:G

Now assume Samantha's weekly income is $12, the price of pizza is $2, and the price of a music download is $1. What is the utility maximizing quantity of pizza and music downloads if she spends her entire $12 on pizza?

C. Pizza: 4 Music downloads: 4

Which of the following bears the total tax burden?

C. The consumers and the producers each bear a part of it

If a firm decreases its prices by 15 percent and its total revenue increases by 30 percent, which of the following is true?

C. The price elasticity of demand is relatively elastic.

According to the principal of diminishing marginal utility,

C. marginal utility decreases with each additional unit of a good that is consumed

A positive sign on cross price elasticity of demand indicates that the two products are

C. substitutes

Price times quantity measures

C. total revenue

Samantha consumes both pizza and music downloads. Table 6.3 shows her marginal utility from these. What is her total utility from purchasing four music downloads?

D. 20

Which of the following situations best exemplifies the concept of consumer surplus?

D. A consumer pays less for pizza than the highest price she is willing to pay.

If a price ceiling is set at P1, which of the following areas represent the resulting consumer surplus, producer surplus, and deadweight loss?

D. Consumer Surplus: f+g+i Producer Surplus: k Deadweight Loss: h+j

The deadweight loss created by the tax is equal to

D. GKI

When the market is in equilibrium, the total economic surplus is equal to area

D. f+g+h+i+j+k

If the student purchases 2 units of pizza and 2 units of pens, the student's total utility will be

E. 53 utils