Final 222 ECON
Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is
$150
The average fixed cost of producing 5 posters is
$2
The average variable cost of producing 4 posters is
$2.50
If a consumer is willing and able to pay $20 for a particular good and if he pays $16 for the good, then for that consumer, consumer surplus amounts to
$4
Suppose a tax of $6 per unit is imposed on this market. What will be the new equilibrium quantity in this market?
20 Units
What is the marginal product of the second worker?
300
At the equilibrium price, total surplus is
3500
If the government imposes a price floor of $110 in this market, then consumer surplus will decrease by
600
If the equilibrium price is $200, what is the producer surplus?
7500
Which of the following represents a way that a government can help the private market to internalize an externality?
Both a and b are correct.
Which of the following statements is correct?
Both equity and efficiency are important goals of the tax system.
The efficient scale of production occurs at which quantity?
C
If the price of the product is $110, then who would be willing to purchase the product?
Calvin, Sam and Andrew
Suppose the government imposes a $1 tax in each of the four markets represented by demand curves D1, D2, D3, and D4. The deadweight will be the smallest in the market represented by
D1
Which of the following statements is correct?
Economists consider opportunity costs to be included in a firm's costs of production.
If the government removes a tax on a good, then the quantity of the good sold will
Increase
Which of the following is usually true about government-provided goods?
People do not have to pay a fee to enjoy these goods.
Which of the following statements is correct?
Some goods, such as lighthouses, may be either private or public goods.
The maximum price that a buyer will pay for a good is called
Willingness to pay
Minimum-wage laws dictate
a minimum wage that firms may pay workers.
The average fixed cost curve
always declines with increased levels of output.
A negative externality arises when a person engages in an activity that has
an adverse effect on a bystander who is not compensated by the person who causes the effect.
Curve A represents which type of cost curve?
average fixed cost
The imposition of the tax causes the quantity sold to
decrease by 1 unit
To fully understand how taxes affect economic well-being, we must compare the
decrease in total surplus to the increase in revenue raised by the government.
A tax system with little deadweight loss and a small administrative burden would be described as
efficient
e size of the deadweight loss generated from a tax is affected by the
elasticities of both supply and demand.
Elephants are endangered, but cows are not because
elephants are a common resource, while cows are private goods.
The imposition of the tax causes the price paid by buyers to
increase by $3
When an externality is present, the market equilibrium is
inefficient, and the equilibrium does not maximize the total benefit to society as a whole.
If the use of a common resource is not regulated,
it will be overused.
Market power and externalities are examples of
market failure
The presence of a price control in a market for a good or service usually is an indication that
policymakers believed that the price that prevailed in that market in the absence of price controls was unfair to buyers or sellers.
When markets fail, public policy can
potentially remedy the problem and increase economic efficiency
A tax imposed on the sellers of a good will raise the
price paid by buyers and lower the equilibrium quantity.
For private goods allocated in markets,
prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources.
Economists assume that the goal of the firm is to maximize total
profits
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 the tax than the buyers.
Externalities are
side effects passed on to a party other than the buyers and sellers in the market.
Market failure is the inability of
some unregulated markets to allocate resources efficiently.
In the absence of externalities, the "invisible hand" leads a market to maximize
total benefit to society from that market.
Shelley's Salsa produces and sells organic salsa. Last year it sold 3 million tubs of salsa at a price of $3 per tub. For last year, the firm's
total revenue was $9 million.
If a firm produces nothing, which of the following costs will be zero?
variable
Josiah installed a metal sculpture in his front yard. A negative externality arises if the sculpture
creates a safety hazard for neighborhood children.
The largest source of federal revenue in the United States is:
the individual income tax