Midterm 6,7,8,10 Extra Review Questions

A tax on the buyers of popcorn

Decreases the size of the popcorn market.

Substitute goods

If two goods are substitutes, an increase in the price of one leads to an increase in the demand for the other.

At Nick's bakery, the cost to make homemade chocolate cake is $3 per cake. As a result of selling three cakes, Nick experiences a producer surplus in the amount of $19.50. Nick must be selling his cakes for...

9.50 each

If a tax shifts the demand curve upward (or to the right), can we infer who the tax was levied on?

No, because the shift described is not consistent with the tax.

What happens to total surplus in a market when the government imposes a tax?

Total surplus decreases.

The marginal seller is the seller

Who would leave the market first if the price were any lower, and the marginal buyer is the buyer who would leave the market first if the price were any higher.

When a tax is placed on the sellers of a product

buyers pay more and sellers receive less than they did before the tax

Complementary good

if the price of one increases the demand for the other falls and vice versa,

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

When a tax is imposed on the sellers of a good,

the supply curve shifts upward by less than the amount of the tax.

A $2.00 tax levied on the sellers of mailboxes will shift the supply curve

upward by exactly $2.00

A binding price floor will reduce a firms total revenue...

when demand is elastic