microeconomics

Refer to Figure 9-3. The size of the tariff on roses is

$1

Evan purchases a wall calendar for $9, and his consumer surplus is $1. How much is Evan willing to pay for the wall calendar?

$10

You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on the same night, and his concert is your next-best alternative activity. Tickets to see Willie Nelson cost $40. On any given day, you would be willing to pay up to $50 to see and hear Willie Nelson perform. Assume there are no other costs of seeing either event. Based on this information, at a minimum, how much would you have to value seeing the Cubs play the White Sox to accept the ticket and go to the game?

$10

The vertical distance between points E and F represents a tax in the market. Refer to Figure 8-2. Total surplus without the tax is

$10, and total surplus with the tax is $7.5.

Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, producer surplus will be

$18

The vertical distance between points E and F represents a tax in the market. Refer to Figure 8-2. The amount of deadweight loss as a result of the tax is

$2.5

The vertical distance between points E and F represents a tax in the market. Refer to Figure 8-2. The per-unit burden of the tax on buyers is

$3

Refer to Figure 9-3. Without trade, the equilibrium price of roses is

$4 and the equilibrium quantity is 300 roses

The vertical distance between points E and F represents a tax in the market. Refer to Figure 8-2. Producer surplus without the tax is

$4, and producer surplus with the tax is $1.

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

$400

Both the demand curve and the supply curve are straight lines. At equilibrium, consumer surplus is

$48

The vertical distance between points E and F represents a tax in the market.Refer to Figure 8-2. The amount of the tax on each unit of the good is

$5

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

$500.

The vertical distance between points E and F represents a tax in the market. Refer to Figure 8-2. Consumer surplus without the tax is

$6, and consumer surplus with the tax is $1.5.

If the government imposes a price floor of $110 in this market, then consumer surplus will decrease by

$600

Refer to Table 10-3. Taking into account private and external benefits, the total surplus to society at the socially efficient quantity is

$62.5

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

$950.

For a small country called Boxland, the equation of the domestic demand curve for cardboard is QD = 380 − 2P, where QD represents the domestic quantity of cardboard demanded, in tons, and P represents the price of a ton of cardboard. For Boxland, the equation of the domestic supply curve for cardboard is QS = -60 + 3P, where QS represents the domestic quantity of cardboard supplied, in tons, and P again represents the price of a ton of cardboard. Refer to Scenario 9-1. Suppose the world price of cardboard is $139 and international trade is allowed. Then Boxland's consumers demand

102 tons of cardboard and Boxland's producers supply 357 tons of cardboard

Refer to Table 10-3. The market equilibrium quantity of output is

3 units.

Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by

40 percent.

Refer to Table 10-3. The socially optimal quantity of output is

5 units.

Refer to Figure 9-4. Total surplus in this market after trade is

A + B + C + D.

Refer to Figure 9-4. Total surplus in this market before trade is

A + B + C.

Which of the following is not an advantage of a multilateral approach to free trade over a unilateral approach?

A multilateral approach requires the agreement of two or more nations.

Refer to Figure 7-9. At equilibrium, consumer surplus is represented by the area

A+B+C.

Refer to Figure 7-4. Which area represents producer surplus when the price is P2?

ACH

Refer to Table 7-1. If the price of the product is $110, then who would be willing to purchase the product?

Calvin, Sam, and Andrew

Refer to Figure 9-6. The deadweight loss created by the tariff is represented by the area

D + F

Refer to Figure 9-6. Government revenue raised by the tariff is represented by the area

E

In which of the following cases is the Coase theorem most likely to solve the externality?

Ed is allergic to his roommate's cat.

Which of the following statements is not correct?

Government policies cannot improve upon private market outcomes.

Refer to Figure 10-4. Which graph represents a market with a negative externality?

Graph (b) only

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

India has a comparative advantage over other countries and India will export copper.

Your younger sister needs $50 to buy a new bike. She has opened a lemonade stand to make the money she needs. Your mother is paying for all of the ingredients. She currently is charging 25 cents per cup, but she wants to adjust her price to earn the $50 faster. If you know that the demand for lemonade is elastic, what is your advice to her?

Lower the price to increase total revenue.

If the price of milk rises, when is the price elasticity of demand likely to be the highest?

One year after the price increase

Refer to Figure 10-2. If all external costs were internalized, then the market's output would be

Q2

Refer to Figure 10-2. The socially optimal quantity would be

Q2

Refer to Figure 10-4, Graph (b) and Graph (c). The overuse of antibiotics leads to the development of antibiotic-resistant diseases. Therefore, the socially optimal quantity of antibiotics is represented by point

Q2

Refer to Figure 10-4, Graph (b) and Graph (c). The overuse of antibiotics leads to the development of antibiotic-resistant diseases. Therefore, a government policy that internalized the externality would move the quantity of antibiotics used from point

Q3 to point Q2.

If T represents the size of the tax on a good and Q represents the quantity of the good that is sold, total tax revenue received by government can be expressed as

T x Q

Which of the following is NOT a way of internalizing technology spillovers?

Taxes

When a country allows trade and becomes an exporter of silk, which of the following is not a consequence?

The price paid by domestic consumers of silk decreases.

Which of the following is not an advantage of corrective taxes?

They subsidize the production of goods with positive externalities

Refer to Figure 8-5. Graph (a) and Graph (b) each illustrate a $4 tax placed on a market. In comparison to Graph (a), Graph (b) illustrates which of the following statements?

When demand is relatively inelastic, the deadweight loss of a tax is smaller than when demand is relatively elastic.

Which of the following is an example of a positive externality?

Your neighbor plants a nice garden in front of his house.

Zaria and Hannah are roommates. Zaria assigns a $30 value to smoking cigarettes. Hannah values smoke-free air at $15. Which of the following scenarios is a successful example of the Coase theorem?

Zaria pays Hannah $16 so that Zaria can smoke.

Refer to Figure 10-2. This market is characterized by

a negative externality.

Employing a lawyer to draft and enforce a private contract between parties wishing to solve an externality problem is an example of

a transaction cost.

The price elasticity of demand measures

buyers' responsiveness to a change in the price of a good.

Refer to Figure 7-6. When the price falls from P2 to P1, producer surplus

decreases by an amount equal to A+B.

Cadence says that she would smoke one pack of cigarettes each day regardless of the price. If she is telling the truth, Cadence's

demand for cigarettes is perfectly inelastic.

Suppose the government imposes a tax on cheese. The deadweight loss from this tax will likely be greater in the

eighth year after it is imposed than in the first year after it is imposed because demand and supply will be less elastic in the first year than in the eighth year.

Refer to Figure 9-3. When a tariff is imposed in the market, domestic producers

gain $150 of producer surplus

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

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

Refer to Figure 9-6. The tariff

increases producer surplus by the area C, decreases consumer surplus by the area C + D + E + F, and decreases total surplus by the area D + F.

The deadweight loss from a tax per unit of good will be smallest in a market with

inelastic supply and inelastic demand.

When her income increased from $10,000 to $20,000, Heather's consumption of macaroni decreased from 10 pounds to 5 pounds and her consumption of soy-burgers increased from 2 pounds to 4 pounds. Using the midpoint method, we can conclude that for Heather, macaroni

is an inferior good with an income elasticity of -1 and soy-burgers are normal goods with an income elasticity of 1.

The Social Security tax is a tax on

labor

Refer to Figure 9-3. When the tariff is imposed, domestic consumers

lose surplus of $450.

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it

maximizes the combined welfare of buyers and sellers.

Suppose televisions are a normal good and buyers of televisions experience a decrease in income. As a result, consumer surplus in the television market

may increase, decrease, or remain unchanged.

Goods with many close substitutes tend to have

more elastic demands.

As a result of a decrease in price

new buyers enter the market, increasing consumer surplus

An externality is the uncompensated impact of

one person's actions on the well-being of a bystander

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

positively related.

According to the Coase theorem, private parties can solve the problem of externalities if

property rights are clearly defined.

When a tax is levied on a good, the buyers and sellers of the good share the burden,

regardless of how the tax is levied.

Cost is a measure of the

seller's willingness to sell

When positive externalities are present in a market

social benefits will be greater than private benefits

Refer to Figure 9-3. With trade and without a tariff,

the domestic price is equal to the world price.

The vertical distance between points A and B represents a tax in the market. Refer to Figure 8-3. As a result of the tax,

the market experiences a deadweight loss of $80.

Scenario 10-1The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 200th gallon of gasoline entails the following: a private cost of $3.03; a social cost of $3.23; a value to consumers of $3.39. Refer to Scenario 10-1. From the given information, it is apparent that

the production of gasoline involves a negative externality, so the market will produce a larger quantity of gasoline than is socially desirable.

A simultaneous increase in both the demand for tablets and the supply of tablets would imply that

the value of tablets to consumers has increased, and the cost of producing tablets has decreased.

The maximum price that a buyer will pay for a good is called

willingness to pay