Micro Exam 3

Chuck would be willing to pay $20 to attend a dog show, but he buys a ticket for $15. Chuck values the dog show at?

$20

Bill created a new software program he is willing to sell for $300. He sells his first copy and enjoys a producer surplus of $250. What is the price paid for the software?

$550

The government's benefit from a tax can be measured by?

. tax revenue

When a tax is levied on a good...

1. government collects revenues which might justify the loss in total welfare 2. there is a decrease in the quantity of the good bought and sold in the market 3. a wedge is placed between the price buyers pay and the price sellers effectively receive

Taxes are of interest to?

1. microeconomists because they consider how to balance equality and efficiency 2. microeconomists because they consider how best to design a tax system 3. macroeconomists because they consider how policymakers can use the tax system to stabilize economic activity

If the United States imports televisions and the U.S. government imposes a tariff on televisions, then?

1. total surplus in the American television market decreases 2. producer surplus in the American television market increases 3. U.S. imports of foreign televisions decrease

Which tools allow economists to determine if the allocation of resources determined by free markets is desirable?

consumer and producer surplus

The loss in total surplus resulting from a tax is called?

deadweight loss

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

When a country allows trade and becomes an exporter of bicycles what happens?

domestic producers of bicycles are better off, domestic consumers of bicycles are worse off, and the economic well-being of the country rises

When a tax is imposed on the buyers of a good, the demand curve shifts which direction?

downward by the amount of the tax

The problem with the protection-as-a-bargaining-chip argument for trade restrictions is?

if it fails the country faces a choice between two bad options

Suppose the world price of a television is $300. Before Paraguay allowed trade in televisions, the price of a television there was $350. Once Paraguay began allowing trade in televisions with other countries, Paraguay began doing what?

importing televisions and the price of a television in Paraguay decreased to $300

A deadweight loss is a consequence of a tax on a good because the tax?

induces buyers to consume less, and sellers to produce less

According to many economists, government restrictions on ticket scalping do all of the following except?

keep the cost of tickets to all consumers low

If the size of a tax increases, tax revenue does what?

may increase, decrease, or remain the same

Moving production from a high-cost producer to a low-cost producer will...

raise total surplus

Consumer surplus is?

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

Producer surplus directly measures what?

the well-being of sellers

Trade enhances the economic well-being of a nation in the sense that?

trade results in an increase in total surplus