Micro Test 2

Refer to Table 7-7. Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 2 if the price is $1,700. $1,100. $1,650. $1,050.

$1,050.

Refer to Table 7-8. If the sellers bid against each other for the right to sell the good to a consumer, then the good will sell for $50 or slightly more. $100 or slightly less. $150 or slightly less. $200 or slightly more.

$100 or slightly less.

Refer to Figure 6-10. The amount of the tax per unit is $6. $8. $14. $18.

$14.

Refer to Figure 7-5. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers? $625 $2,500 $3,125 $5,625

$2,500

Refer to Figure 7-5. If the supply curve is S, the demand curve is D, and the equilibrium price is $100, what is the producer surplus? $625 $1,250 $2,500 $5,000

$2,500

Refer to Figure 6-10. The price that buyers pay after the tax is imposed is $8. $10. $16. $24.

$24.

Refer to Table 7-3. If you have two (essentially) identical tickets that you sell to the group in an auction, assuming that each person can only buy one ticket, which of the following is closest to the selling price for each ticket? $21 $26 $51 $61

$26

Refer to Table 6-1. Following the imposition of a price floor $2 above the equilibrium price, irate buyers convince Congress to repeal the price floor and to impose a price ceiling $1 below the former price floor. The resulting market price is $2 $3 $4 $5

$3

Refer to Table 7-7. If the market price is $1,000, the producer surplus in the market is $1000. $300. $1,700. $700.

$300.

Refer to Table 7-2. 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 good will sell for $15 or slightly less. $25 or slightly more. $35 or slightly more. $45 or slightly less.

$35 or slightly more.

Refer to Figure 6-13. What is the amount of the tax per unit? $1 $2 $3 $4

$4

Refer to Table 7-9. The equilibrium market price for 10 piano lessons is $400. What is the total producer surplus in the market? $0 $300 $400 $700

$400

Billie Jo values a stainless steel dishwasher for her new house at $500, but she succeeds in buying one for $425. Billie Jo's willingness to pay for the dishwasher is $150. $425. $500. $850.

$500

Refer to Figure 7-2. If the government imposes a price floor of $110 in this market, then consumer surplus will decrease by $200. $400. $600. $800.

$600.

Refer to Figure 7-5. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus due to new producers entering the market? $625 $2,500 $3,125 $5,625

$625

Refer to Figure 7-5. If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus? $625 $1,250 $2,500 $5,000

$625

Bob purchases a book for $6, and his consumer surplus is $2. How much is Bob willing to pay for the book? $6 $2 $8 $4

$8

Refer to Figure 6-10. The per-unit burden of the tax on buyers is $6. $8. $14. $24.

$8.

Refer to Figure 6-13. Acme, Inc. is a seller of the good. Acme sells a unit of the good to a buyer and then pays the tax on that unit to the government. After paying the tax, Acme receives how much? $8.00 $9.00 $10.50 $12.00

$8.00

Refer to Figure 7-2. At the equilibrium price, consumer surplus is $1,600. $800. $1,400. $700.

$800.

Refer to Table 6-1. How many units of the good are purchased after the imposition of the price floor? 5 9 10 15

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? 40 200 8 50

50

Refer to Figure 6-7. Which of the following statements is not correct? A government-imposed price of $8 would be a binding price floor if market demand is Demand A and a binding price ceiling if market demand is Demand B. A government-imposed price of $10 would be a binding price ceiling if market demand is either Demand A or Demand B. A government-imposed price of $4 would be a binding price ceiling if market demand is either Demand A or Demand B. A government-imposed price of $10 would be a binding price floor if market demand is Demand A and a nonbinding price ceiling if market demand is Demand B.

A government-imposed price of $10 would be a binding price ceiling if market demand is either Demand A or Demand B.

Which of the following is not correct? The economy contains many labor markets for different types of workers. The impact of a minimum wage depends on the skill and experience of the worker. A minimum wage would be binding for workers with high skills and much experience. A minimum wage would not be binding if the equilibrium wage was above the minimum wage.

A minimum wage would be binding for workers with high skills and much experience.

Refer to Figure 7-1. When the price is P1, consumer surplus is A. A+B. A+B+C. A+B+D.

A+B+C.

Refer to Table 7-2. Who experiences the largest loss of consumer surplus when the price of the good increases from $20 to $22? Quilana Wilbur Ming-la All three buyers experience the same loss of consumer surplus.

All three buyers experience the same loss of consumer surplus.

Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. How much will buyers pay per unit after the tax is imposed? $3 Between $3 and $5 Between $5 and $7 $7

Between $5 and $7

Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market? Less than 60 units 60 units Between 60 units and 100 units Greater than 100 units

Between 60 units and 100 units

Refer to Figure 6-8. In 1973, OPEC restricted supply and U.S. government regulations limited the price oil companies could charge for gasoline. Which of the following statements best relates the figure to the events that occurred in the United States in the 1970s? Buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. Buyers of gasoline paid a price of P1 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price. Buyers of gasoline paid a price of P2 before 1973; they paid a price of P3 after OPEC increased the price of crude oil in 1973, with no shortage of gasoline at that price. The price ceiling was binding before 1973; the price ceiling was no longer binding after OPEC increased the price of crude oil in 19

Buyers of gasoline paid a price of P1 before 1973; they paid a price of P2 after OPEC increased the price of crude oil in 1973, and there was a shortage of gasoline at that price.

Refer to Table 7-7. If the price is $1,l50, who would be willing to supply the product? Abby and Bobby Abby, Bobby, and Dianne Carlos, Dianne, and Evaline Dianne and Evaline only

Carlos, Dianne, and Evaline

All else equal, what happens to consumer surplus if the price of a good increases? Consumer surplus increases Consumer surplus decreases Consumer surplus is unchanged Consumer surplus may increase, decrease, or remain unchanged

Consumer surplus decreases

Suppose there is an early freeze in California that reduces the size of the lemon crop. As the price of lemons rises, what happens to consumer surplus in the market for lemons? Consumer surplus increases Consumer surplus decreases Consumer surplus is not affected by this change in market forces We would have to know whether the demand for lemons is relatively elastic or inelastic to make this determination

Consumer surplus decreases

Refer to Figure 6-14. The buyers will bear the highest share of the tax burden compared to sellers if the demand is D1, and the supply is S1. D2, and the supply is S1. D1, and the supply is S2. D2, and the supply is S2.

D2, and the supply is S2.

Dallas buys strawberries, and he would be willing to pay more than he now pays. Suppose that Dallas has a change in his tastes such that he values strawberries more than before. If the market price is the same as before, then Dallas's consumer surplus would be unaffected. Dallas's consumer surplus would increase. Dallas's consumer surplus would decrease. Dallas would be wise to buy fewer strawberries than before.

Dallas's consumer surplus would increase.

Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. Which of the following is correct? One-fourth of the burden of the tax will fall on buyers, and three-fourths of the burden of the tax will fall on sellers. One-third of the burden of the tax will fall on buyers, and two-thirds of the burden of the tax will fall on sellers. One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers. Two-thirds of the burden of the tax will fall on buyers, and one-third of the burden of the tax will fall on sellers.

One-half of the burden of the tax will fall on buyers, and one-half of the burden of the tax will fall on sellers.

Refer to Figure 7-5. If the demand curve is D and the supply curve shifts from S' to S, what is the changein producer surplus? Producer surplus increases by $625. Producer surplus increases by $1,875. Producer surplus decreases by $625. Producer surplus decreases by $1,875.

Producer surplus increases by $1,875.

Refer to Figure 7-5. If the supply curve is S and the demand curve shifts from D to D', what is the changein producer surplus? Producer surplus increases by $3,125 Producer surplus increases by $5,625 Producer surplus decreases by $3,125 Producer surplus decreases by $5,625

Producer surplus increases by $3,125

Refer to Figure 6-12. Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct? Buyers and sellers will share the burden of the tax equally. Buyers will bear more of the burden of the tax than sellers will. Sellers will bear more of the burden of the tax than buyers will. There is no tax burden.

Sellers will bear more of the burden of the tax than buyers will.

Which of the following events would increase producer surplus? Sellers' costs stay the same and the price of the good increases. Sellers' costs increase and the price of the good stays the same. Sellers' costs increase and the price of the good decreases. Sellers' costs stay the same and the price of the good decreases.

Sellers' costs stay the same and the price of the good increases.

Refer to Table 7-3. If you have a ticket that you sell to the group in an auction, what will be the selling price? lightly more than $20 Slightly more than $25 Slightly more than $50 Slightly more than $60

Slightly more than $50

Which of the following is true when the price of a good or service rises? Buyers who were already buying the good or service are better off. Some buyers exit the market. The total consumer surplus in the market increases. The total value of purchases before and after the price change is the same.

Some buyers exit the market.

Refer to Figure 6-15. In which market will the majority of the tax burden fall on buyers? The market shown in graph (a). The market shown in graph (b) The market shown in graph (c) The tax burden on buyers is the same for all three graphs.

The market shown in graph (b)

Refer to Figure 6-5. Which of the following statements is not correct? When the price is $10, quantity supplied equals quantity demanded. When the price is $6, there is a surplus of 8 units. When the price is $12, there is a surplus of 4 units. When the price is $16, quantity supplied exceeds quantity demanded by 12 units.

When the price is $6, there is a surplus of 8 units.

A price ceiling is often imposed on markets in which "cutthroat competition" would prevail without a price ceiling. a legal maximum on the price at which a good can be sold. often imposed when sellers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price ceiling imposed to make sure everyone can earn a fair wage.

a legal maximum on the price at which a good can be sold.

demanded to exceed quantity supplied by 90 units. a legal maximum on the price at which a good can be sold. often imposed when buyers of a good are successful in their attempts to convince the government that the market outcome is unfair without a price floor. a source of efficiency in a market. a legal minimum on the price at which a good can be sold.

a legal minimum on the price at which a good can be sold.

Suppose the government wants to encourage Americans to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result, the demand for treadmills will increase. the supply of treadmills will decrease. a shortage of treadmills will develop. a surplus of treadmills will develop.

a shortage of treadmills will develop.

Refer to Figure 6-8. When the price ceiling is enforced in this market and the supply curve for gasoline shifts from S1 to S2, the market price will increase to P3. a surplus will occur at the new market price of P2. the market price will stay at P1. a shortage will occur at the new market price of P2.

a shortage will occur at the new market price of P2.

Refer to Figure 6-4. In graph (b), there will be a shortage. equilibrium in the market. a surplus. lines of people waiting to buy the good.

a surplus.

Suppose a tax is imposed on the sellers of fast-food French fries. The burden of the tax will fall entirely on the buyers of fast-food French fries. fall entirely on the sellers of fast-food French fries. be shared equally by the buyers and sellers of fast-food French fries. be shared by the buyers and sellers of fast-food French fries but not necessarily equally.

be shared by the buyers and sellers of fast-food French fries but not necessarily equally.

Refer to Figure 7-6. Suppose producer surplus is larger than C but smaller than A+B+C. The price of the good must be lower than P1. P1. between P1 and P2. higher than P2.

between P1 and P2.

Refer to Figure 6-9. In this market, a minimum wage of $7.00 is binding and creates a labor shortage. binding and creates unemployment. nonbinding and creates a labor shortage. nonbinding and creates neither a labor shortage nor unemployment.

binding and creates unemployment.

Refer to Figure 6-3. A government-imposed price of $24 in this market is an example of a binding price ceiling that creates a shortage. nonbinding price ceiling that creates a shortage binding price floor that creates a surplus. nonbinding price floor that creates a surplus. , Not Selected Results for question 12. 12

binding price floor that creates a surplus.

Refer to Figure 6-5. A government-imposed price of $12 in this market is an example of a binding price ceiling that creates a shortage. nonbinding price ceiling that creates a shortage. binding price floor that creates a surplus. nonbinding price floor that creates a surplus.

binding price floor that creates a surplus.

Henry is willing to pay 45 cents, and Janine is willing to pay 55 cents, for 1 pound of bananas. When the price of bananas falls from 50 cents a pound to 40 cents a pound, Henry experiences an increase in consumer surplus, but Janine does not. Janine experiences an increase in consumer surplus, but Henry does not. both Janine and Henry experience an increase in consumer surplus. neither Janine nor Henry experiences an increase in consumer surplus.

both Janine and Henry experience an increase in consumer surplus.

When a good is taxed, both buyers and sellers of the good are made worse off. only buyers are made worse off, because they ultimately bear the burden of the tax. only sellers are made worse off, because they ultimately bear the burden of the tax. neither buyers nor sellers are made worse off, since tax revenue is used to provide goods and services that would otherwise not be provided in a market economy.

both buyers and sellers of the good are made worse off.

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to only existing customers who now get lower prices on the gowns they were already planning to purchase. only new customers who enter the market because of the lower prices. both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. Consumer surplus does not increase; it decreases.

both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices.

Under rent control, bribery is a potential mechanism to Correct answer: bring the total price of an apartment (including the bribe) closer to the equilibrium price. allocate housing to the poorest individuals in the market. force the total price of an apartment (including the bribe) to be less than the market price. allocate housing to the most deserving tenants.

bring the total price of an apartment (including the bribe) closer to the equilibrium price.

When a tax is placed on the buyers of lemonade, the sellers bear the entire burden of the tax. buyers bear the entire burden of the tax. burden of the tax will always be equally divided between the buyers and the sellers. burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

burden of the tax will be shared by the buyers and the sellers, but the division of the burden is not always equal.

Refer to Figure 6-14. Suppose D1 represents the demand curve for paperback novels, D2 represents the demand curve for gasoline, and S1 is representative of the supply curve for paperback novels as well as the supply curve for gasoline. After the imposition of the $2 tax on paperback novels and on gasoline, the buyers of gasoline bear a higher burden of the $2 tax than buyers of paperback novels. sellers of gasoline bear a higher burden of the $2 tax than sellers of paperback novels. buyers of gasoline bear an equal burden of the $2 tax as buyers of paperback novels. buyers of gasoline bear a lower burden of the $2 tax than buyers of paperback novels.

buyers of gasoline bear a higher burden of the $2 tax than buyers of paperback novels.

If a tax shifts the demand curve downward, we can infer that the tax was levied on buyers of the good. sellers of the good. both buyers and sellers of the good. We cannot infer anything because the shift described is not consistent with a tax.

buyers of the good.

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the buyers will bear a greater burden of the tax than the sellers. sellers will bear a greater burden of the tax than the buyers. buyers and sellers are likely to share the burden of the tax equally. buyers and sellers will not share the burden equally, but it is impossible to determine who will bear the greater burden of the tax without more information.

buyers will bear a greater burden of the tax than the sellers.

If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the consumer has consumer surplus of $2 if he or she buys the good. consumer does not purchase the good. market is not a competitive market. price of the good will fall due to market forces.

consumer does not purchase the good.

Refer to Figure 7-1. Area C represents the decrease in consumer surplus which results from a downward-sloping demand curve. consumer surplus to new consumers who enter the market when the price falls from P2 to P1. increase in producer surplus when quantity sold increases from Q2 to Q1. decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2.

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

Justin builds fences for a living. Justin's out-of-pocket expenses (for wood, paint, etc.) plus the value that he places on his own time amount to his producer surplus. producer deficit. cost of building fences. profit.

cost of building fences.

The decrease in total surplus that results from a market distortion, such as a tax, is called a wedge loss. revenue loss. deadweight loss. consumer surplus loss.

deadweight loss.

A tax on the sellers of coffee will increase the price of coffee paid by buyers, increase the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee. increase the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee. decrease the effective price of coffee received by sellers, and increase the equilibrium quantity of coffee. decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

decrease the effective price of coffee received by sellers, and decrease the equilibrium quantity of coffee.

Refer to Figure 7-6. When the price falls from P2 to P1, producer surplus decreases by an amount equal to C. decreases by an amount equal to A+B. decreases by an amount equal to A+C. increases by an amount equal to A+B.

decreases by an amount equal to A+B.

Refer to Figure 7-1. When the price rises from P1 to P2, consumer surplus increases by an amount equal to A. decreases by an amount equal to B+C. increases by an amount equal to B+C. decreases by an amount equal to C.

decreases by an amount equal to B+C.

A drought in California destroys many red grapes causing the prices of both red grapes and red wine to rise. As a result, the consumer surplus in the market for red grapes increases, and the consumer surplus in the market for red wine increases. increases, and the consumer surplus in the market for red wine decreases. decreases, and the consumer surplus in the market for red wine increases. decreases, and the consumer surplus in the market for red wine decreases.

decreases, and the consumer surplus in the market for red wine decreases.

Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the demand is more inelastic than the supply. supply is more inelastic than the demand. government has required that buyers remit the tax payments. government has required that sellers remit the tax payments.

demand is more inelastic than the supply.

Refer to Figure 6-2. The price ceiling causes quantity supplied to exceed quantity demanded by 60 units. supplied to exceed quantity demanded by 90 units. demanded to exceed quantity supplied by 30 units. demanded to exceed quantity supplied by 90 units.

demanded to exceed quantity supplied by 90 units.

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve upward by exactly $1.50. upward by less than $1.50. downward by exactly $1.50. downward by less than $1.50.

downward by exactly $1.50.

When a tax is imposed on a good, the supply curve for the good always shifts. demand curve for the good always shifts. amount of the good that buyers are willing to buy at each price always remains unchanged. equilibrium quantity of the good always decreases.

equilibrium quantity of the good always decreases.

Refer to Figure 6-1. A binding price ceiling is shown in graph (a) only. graph (b) only. both graph (a) and graph (b). neither graph (a) nor graph (b).

graph (b) only.

Refer to Figure 6-14. Suppose D1 represents the demand curve for gasoline in both the short run and long run, S1 represents the supply curve for gasoline in the short run, and S2 represents the supply curve for gasoline in the long run. After the imposition of the $2 tax, the price paid by buyers will be higher in the long run than in the short run. higher in the short run than in the long run. equivalent in the short run and the long run. unable to be determined without additional information.

higher in the long run than in the short run.

If the government levies a $1,000 tax per boat on sellers of boats, then the price paid by buyers of boats would increase by more than $1,000. increase by exactly $1,000. increase by less than $1,000. decrease by an indeterminate amount.

increase by less than $1,000.

If the government removes a binding price ceiling from a market, then the price paid by buyers will increase, and the quantity sold in the market will increase. increase, and the quantity sold in the market will decrease. decrease, and the quantity sold in the market will increase. decrease, and the quantity sold in the market will decrease.

increase, and the quantity sold in the market will increase.

If the cost of producing sofas decreases causing the price of sofas to decrease, consumer surplus in the sofa market will increase. decrease. remain constant. increase for some buyers and decrease for other buyers.

increase.

Refer to Figure 6-8. When the price ceiling is enforced in this market, and the supply curve for gasoline shifts from S1 to S2, the resulting quantity of gasoline that is bought and sold is less than Q3. Q3. between Q1 and Q3 at least Q1.

less than Q3.

Refer to Figure 6-2. The price ceiling causes a shortage of 60 units of the good. makes it necessary for sellers to ration the good using a mechanism other than price. is not binding because it is set below the equilibrium price. causes a shortage of 30 units of the good.

makes it necessary for sellers to ration the good using a mechanism other than price.

In the housing market, supply and demand are more elastic in the short run than in the long run, and so rent control leads to a larger shortage of apartments in the short run than in the long run. more elastic in the short run than in the long run, and so rent control leads to a larger shortage of apartments in the long run than in the short run. more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the short run than in the long run. more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.

more elastic in the long run than in the short run, and so rent control leads to a larger shortage of apartments in the long run than in the short run.

The burden of a luxury tax usually falls more on the rich than on the middle class. more on the poor than on the rich. more on the middle class than on the rich. equally on the rich, the middle class, and the poor.

more on the middle class than on the rich.

When a tax is placed on the sellers of a product, buyers pay more, and sellers receive more than they did before the tax. more, and sellers receive less than they did before the tax. less, and sellers receive more than they did before the tax. less, and sellers receive less than they did before the tax.

more, and sellers receive less than they did before the tax.

As a result of a decrease in price, new buyers enter the market, increasing consumer surplus. new buyers enter the market, decreasing consumer surplus. existing buyers exit the market, increasing consumer surplus. existing buyers exit the market, decreasing consumer surplus.

new buyers enter the market, increasing consumer surplus.

Refer to Figure 6-7. If the government imposes a price ceiling at $6, it would be binding if market demand is Demand A or Demand B. nonbinding if market demand is Demand A or Demand B. binding if market demand is Demand A and nonbinding if market demand is Demand B. nonbinding if market demand is Demand A and binding if market demand is Demand B.

nonbinding if market demand is Demand A and binding if market demand is Demand B.

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the demand curve for physicals shifts to the right. supply curve for physicals shifts to the left. quantity demanded of physicals increases, and the quantity supplied of physicals decreases. number of physicals performed stays the same.

quantity demanded of physicals increases, and the quantity supplied of physicals decreases.

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the demand curve for toothpaste shifts to the left. supply curve for toothpaste shifts to the right. quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases. quantity supplied of toothpaste stays the same.

quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases.

If a nonbinding price floor is imposed on a market, then the quantity sold in the market will decrease. quantity sold in the market will stay the same. price in the market will increase. price in the market will decrease.

quantity sold in the market will stay the same.

Moving production from a high-cost producer to a low-cost producer will lower total surplus. raise total surplus. lower producer surplus. raise producer surplus but lower consumer surplus.

raise total surplus.

A tax on a good raises the price that buyers pay and raises the price that sellers receive. raises the price that buyers pay and lowers the price that sellers receive. lowers the price that buyers pay and raises the price that sellers receive. lowers the price that buyers pay and lowers the price that sellers receive.

raises the price that buyers pay and lowers the price that sellers receive.

When a tax is levied on a good, the buyers and sellers of the good share the burden, provided the tax is levied on the sellers. provided the tax is levied on the buyers. provided a portion of the tax is levied on the buyers, with the remaining portion levied on the sellers. regardless of how the tax is levied.

regardless of how the tax is levied.

Cost is a measure of the Correct answer: seller's willingness to sell. seller's producer surplus. producer shortage. seller's willingness to buy.

seller's willingness to sell.

A supply curve can be used to measure producer surplus because it reflects the actions of sellers. quantity supplied. sellers' costs. the amount that will be purchased by consumers in the market.

sellers' costs.

Refer to Figure 6-9. In this market, a minimum wage of $7.00 creates a labor shortage of 2,000 worker hours. shortage of 4,000 worker hours. surplus of 2,000 worker hours. surplus of 4,000 worker hours.

surplus of 4,000 worker hours.

Producer surplus is measured using the demand curve for a good. always a negative number for sellers in a competitive market. the amount a seller is paid minus the cost of production. the opportunity cost of production minus the cost of producing goods that go unsold.

the amount a seller is paid minus the cost of production.

Refer to Figure 7-6. Area A represents producer surplus to new producers entering the market as the result of an increase in price from P1 to P2. the increase in consumer surplus that results from an upward-sloping supply curve. the increase in total surplus when sellers are willing and able to increase supply from Q1 to Q2. the increase in producer surplus to those producers already in the market when the price increases from P1 to P2.

the increase in producer surplus to those producers already in the market when the price increases from P1 to P2.

Refer to Figure 6-13. Suppose buyers, rather than sellers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on sellers, the tax on buyers would result in buyers bearing a larger share of the tax burden. sellers bearing a smaller share of the tax burden. the same amount of tax revenue for the government. an increase in the amount of tax revenue for the government.

the same amount of tax revenue for the government.

Producer surplus directly measures the well-being of society as a whole. the well-being of buyers and sellers. the well-being of sellers. sellers' willingness to sell.

the well-being of sellers.

Refer to Figure 6-13. How is the burden of the tax shared between buyers and sellers? Buyers bear three-fourths of the burden, and sellers bear one-fourth of the burden. two-thirds of the burden, and sellers bear one-third of the burden. one-half of the burden, and sellers bear one-half of the burden. one-fourth of the burden, and sellers bear three-fourths of the burden.

three-fourths of the burden, and sellers bear one-fourth of the burden.

Consider the market for gasoline. Buyers and sellers would lobby for a price ceiling. and sellers would lobby for a price floor. would lobby for a price ceiling, whereas sellers would lobby for a price floor. would lobby for a price floor, whereas sellers would lobby for a price ceiling.

would lobby for a price ceiling, whereas sellers would lobby for a price floor.