econ
If the market price is $3.00, what is the maximum number of burritos that Arnold will buy?
0
The key to solving problems associated with smoking in restaurants is to
Assign property rights to restaurant owners
which of the following statements about rent seeking is false?
Because rent seeking redistributes society's resources, anyone engaging in such behavior is violating the law.
In the figure above, suppose that the government imposes a tax of $4 per pizza. Then, the
Both answers A and B are correct.
The price ceiling depicted in the above figure results in
Both answers A and B are correct.
Which of the following statements is true?
Consumer surplus measures the net benefit from participating in a market.
Which of the following is FALSE about public-sector decision making?
Decisions involve no opportunity cost.
The central question In trying to determine whether to involve the government in an economic issue is
Determining whether or not the government can be relied on to make things better
The social problem of smoking in restaurants is caused because smokers want to pollute the air, causing harm to people around them
False
Restaurant owners have an incentive to
Fully account for the value impact of restaurant smoking on nonsmokers. Fully account for the value of restaurant smoking to smokers. Take into account how smoking shifts the overall demand curve for restaurant meals. All of the above.
A key advantage of assigning property rights to owners of restaurants is that
Smokers and nonsmokers are likely to be able to eat meals the way they like.
tax incidence
The actual division of the burden of a tax between buyers and sellers in a market is called
Willingness to pay measures
The maximum price a buyer is willing to pay for a good
a tariff is
a tax on imported goods.
Which of the following is true regarding tax incidence?
i only
a tarriff
makes domestic consumers worse off
Producer surplus is equal to
the area above the supply curve below the good's price
Overfishing leading to a rapid depletion of the stock of fish is an example of ____
the tragedy of the commons
price ceiling refers to ________.
the upper limit on the price of a good
What is the incremental cost of increasing the quantity of pollution reduction from Q B to Q E units?
the value of the area Q B BEQ E
Taxes may cause deadweight losses because
they lower the surplus in the market.
. The price buyers pay after the tax is
27
A rent ceiling set below the equilibrium rent
creates a situation in which the quantity demanded of housing is greater than quantity supplied.
____ refers to the reduction in economic surplus resulting from not being in competitive equilibrium.
deadweight loss
In a progressive tax system, ________.
he marginal tax rate exceeds the average tax rate
To affect the market outcome, a price ceiling
must be set below equilibrium, price
If a seller charges of are the exact price buyers willing to pay the buyer receives:
no consumer surplus from that unit of the good
If you pay $2,000 in taxes on an income of $20,000, and a tax of $3,000 on an income of $30,000, then over this range of income the tax is
proportional
A possible reason to impose a protectionist policy such as a tariff is to
protect domestic workers from foreign competition
In a housing market with no rent ceilings, the equilibrium rent is that for which the quantity of apartments demanded
= the quantity demanded
The following equations represent the demand and supply for silver pendants.Q D = 50 - 2 PQ S = -10 + 2 P What is the equilibrium price ( P) and quantity ( Q - in thousands) of pendants?
P = $15; Q = 20 thousand
If the quantity of fishing poles demanded is represented by the equation Q D = 60 - P then the corresponding price of fishing poles is represented by the equation
P = 60 - Q D.
Given job losses in U.S. manufacturing, some Americans have called for an increase in tariffs on Chinese products coming into America. If higher tariffs are imposed on clothing produced in China, the price of clothing in America would
increase
Suppose an excise tax of $1 is imposed on every case of beer sold and sellers are responsible for paying this tax. How would the imposition of the tax be illustrated in a graph?
The supply curve for cases of beer would shift to the left by $1
In a city with rent- controlled apartments, all of the following are true except
landlords have an incentive to rent more apartments than they would without rent control.
Santa's actually willing to pay $50 for a dozen roses for Kim on Valentine's Day and he pays $2.50 per Rose for 12 roses is total consumer surplus is equal
$20
In the above figure, the price received by the seller before the tax is ________ per CD, and the price received and kept by the seller after the tax is ________ per CD.
$20, $10
The figure tells us about the market for red roses. The consumer surplus is ________ a day.
$200
the figure tells us about the market for red roses. The consumer surplus is ________ a day.
$200
Suppose that the price of a coffee mug is $2. Lee's marginal cost of producing coffee mugs $0.50 for the first mug, Tammy's marginal cost of producing coffee mugs is $1 for the second mug, Stan's marginal cost of producing coffee mugs is $1.50 for the third mug, Joy's marginal cost of producing coffee mugs is $2 for the fourth mug, and Jody's marginal cost of producing coffee mugs is $3 for the fifth mug. In equilibrium, what is the producer surplus from producing coffee mugs?
$3
If you willing to pay a maximum of $2,500 to attend the Super Bowl this year and they can buy a ticket for $2,050 is consumer surplus is equal
$450
Suppose you're willing to tutor a student for $10 an hour. The student pays you $15 an hour. What is your producer surplus?
$5/hr
The figure illustrates the market for hot dogs on Big Foot Island. The producer surplus is
$60/hr
Suppose the income tax rate is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on all income above $70,000. Family A has income of $100,000 while Family B has income of $40,000. The marginal tax rates faced by the two families are
40 percent on A and 20 percent on B
The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick. What are the equilibrium price and quantity (in thousands) for Chef Ernie's sushi? DemandSupply P = 80 - QD. P = 50 + 1/2 QS QD = 80 - P. QS = 2P - 100
60 and 20 thousand
The burden of a tax falls entirely on buyers if _____
the price elasticity of demand is zero (perfectly inelastic
New York City, which has had a rent ceiling law for more than sixty years, has many abandoned apartment buildings throughout the city. Which of the following explains this?
Landlords have no incentive to finance maintenance and remodeling of apartment buildings.
Suppose that the price of a bottle of soda is $2. Vonda's marginal cost of production is $1.25 for the first bottle, Galiela's marginal cost of production is $1.50 for the second bottle, Gretchen's marginal cost of production is $1.75 for the third bottle, and Matt's marginal cost of production is $2 for the fourth bottle. Which producer gets no producer surplus?
MATT
At a price of $18 consumers are willing to buy 40 pounds of tiger shrimp. Is this an economically efficient quantity?
No, the marginal benefit of the 40th unit exceeds the marginal cost of that 40th unit
in a figure that shows a supply curve and a demand curve, producer surplus is the area
above the supply curve and below the market price
In the figure above, imposing a tax on the sellers of the product results in a division in which
all of the tax is paid by the sellers.
A price ceiling leads to a(n) ________ if below equilibrium price.
dec. in total surplus
tax incidence
division of the burden of a tax between the buyer and the seller.
If there is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and consumer surplus plus producer surplus is maximized, then
economic efficiency is achieved.
________ is maximized in a competitive market when marginal benefit equals marginal cost.
economic surplus
In a competitive market for a private good with no price or quantity regulations, no external cost nor external benefit, low transactions costs, and no taxes or subsidies,
efficiency can be attained in the market with no government intervention
How a sales tax is divided between buyers and sellers is determined by
elasticities of supply and demand
A price floor set above the equilibrium price leads to a(n) ___
excess supply of goods in the market
The figure above represents the market for pecans. Assume that this is a competitive market. At a price of $9
he marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently high
Suppose the government imposes a tax on labor income. Which of the following describe the effect of the tax in the labor market? i.If the demand for labor is more elastic than the supply, workers will bear more of the tax. ii.Employment is not affected because workers need jobs. iii.The tax creates a deadweight loss.
i and iii only
search activity
increases when an effective price ceiling is set on a good
the difference between the ________ and the ________ from the sale of a product is called producer surplus
lowest price a firm would have been willing to accept; price it actually receives
The figure above represents the market for pecans. Assume that this is a competitive market. If 8,000 pounds of pecans are sold
marginal benefit is equal to marginal cost.
In the town of Freedonia, the government declares that all street parking must be free: There can be no parking meters. In an almost identical town of Meterville, parking costs $5 per hour (or $1.25 per 15 minutes). Where will it be easier to find parking: in Freedonia or Meterville?
metervillle
In the figure above, the demand curve shifts rightward from D 0 to D 1 so that D 1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $500 per month. In the short run there will be
neither a shortage nor a surplus of apartments.
In the figure above, the demand curve shifts rightward from D 0 to D 1 so that D 1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $500 per month. In the short run there will be
neither shortage or surplus
If, in a competitive market, marginal benefit is less than marginal cost
the quantity sold is greater than the equilibrium quantity
At the equilibrium price of $15 consumers are willing to buy 80 pounds of tiger shrimp. Is this an economically efficient quantity?
yes, because $15 is the price where the marginal benefit is equal to the marginal cos
If the price of chewing gum is represented by equation P = 25 - 0.5 Q D, then the corresponding quantity of chewing gum demanded is represented by the equation
Q D = 50 -2 P.
If the price of hairspray is represented by equation P = 10 - 0.2 Q D, then the corresponding quantity of hairspray demanded is represented by the equation
QD = 50 -5P.
Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Vinyardia. What will be the likely effect on the market for sparkling wine in Vinyardia?
Quantity demanded will decrease, quantity supplied will increase, and a surplus will result.
The economically efficient amount of recycling will occur if
Recyclers pay the full cost of picking up recycled products, The government subsidizes recycling by paying for the cost of pickup. All goods are recycled whenever possible. B and C above.
To evaluate recycling, you must consider
The demand for recycled products, The incremental costs to society for recycling products, The value of the land used for landfills, All of the above.
In the figure above, the demand curve shifts rightward from D 0 to D 1 so that D 1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will be
a deadweight loss created.
In the figure above, the demand curve shifts rightward from D 0 to D 1 so that D 1 is the relevant demand curve. Suppose the government imposes a rent ceiling of $300 per month. In the short run there will b
a shortage of 200,000 apartments
A sales tax imposed on sellers shifts the supply curve leftward for the taxed good because the
a smaller quantity of the good is sold
A government action that can help correct positive externalities is
a subsidy to consumers of the good that provides external benefits.
In a figure that shows a supply curve and a demand curve, producer surplus is the area
above the supply curve and below the market price
the market demand for a public good can be determined by
adding up how much each consumer is willing to pay for each unit of the public good.
An externality occurs when ________.
an economic activity affects third parties not engaged in the activity
Sewage treatment is an example of
an externality
The public choice model
applies economic analysis to government decision making.
the public choice model assumes that government policymakers
are likely to pursue their own self-interests, even if their self-interests conflict with the public interest
the producer surplus is found by subtracting the ________ and then adding the difference for all u
marginal cost from price
the producer surplus is found by subtracting the ________ and then adding the difference for all units sold
marginal cost from price
A supply curve shows quantities supplied at various prices. It also shows the
marginal cost of production
Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called ________ and the benefit the rest of the neighborhood enjoys is called ________.
marginal private benefit; marginal external benefit
Producing paper creates pollution. There is no externality in the consumption of paper. The efficient quantity of paper is when the
marginal social benefit of paper is equal to the marginal social cost of paper.
A carbon tax which is designed to reduce pollution is an example of a
market-based policy.
When efficiency is attained, the sum of the total amount of consumer surplus and producer surplus is
maximized
Which of the following would result in a positive externality?
medical research for a cure for ebola
If a profit-maximizing perfectly competitive firm does not have to compensate society for a negative externality, the firm will choose to produce where
price=mc
A market demand curve reflects the
private benefits of consuming a product.
the cost borne by a producer in the production of a good or service is called
private cost
If a local government gives out water filters to low-income families free of charge, they are
private goods
The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of The Waco Kid's cowboy hats is $40
producer surplus will equal $28.
A tax rate system characterized by higher marginal tax rates as income increases is known as
progressive
A street light is a ________.
public good
A fireworks show has been arranged in a park. The ticket for the show is $5 but only 40% of the tickets get sold as spectators can watch the show without entering the park. This is an example of ________.
the free-rider problem
Economic efficiency in a competitive market is achieved when
the marginal benefit equals the marginal cost from the last unit sold.
Conceptually, the efficient level of carbon emissions is the level for which
the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions.
When a Pigouvian tax is imposed, ________
the marginal private cost curve shifts upward
A positive externality causes
the marginal social benefit to exceed the marginal private cost of the last unit produced.
If the production of a good involves positive externalities, ________.
the market price of the good is lower than its optimal price
Which of the following will lead to an efficient private solution if negative externalities are present in a market?
the parties involved negotiate with each other and reach an agreement.
The price system allocates resources efficiently EXCEPT when
the production of a good affects parties other than its buyers and sellers
If negative externalities are present in a market, ________.
the quantity supplied in the market is larger than the socially optimal level
In the past the federal government often employed what is called a "command-and-control" approach to the reduction of pollution emissions. Many economists are critical of this approach because
they believe a market-based approach will reduce pollution more efficiently.
If the paint on your house was eaten away by the fumes from a factory nearby and you hired a lawyer to sue the polluting firm, your legal fees would be considered
transaction costs
One problem with using taxes to solve economic externalities is that politicians may spend the money on things they like, rather than things their constituents want.
true
Recycling is an economic issue because the goods that are recycled, the land for landfills, and the trucks and labor needed for both recycling and trash disposal are all examples of scarce resources.
true
Rent-seeking behavior, unlike profit-maximizing behavior in competitive markets, wastes society's scarce resources.
true
The possibility of "government failures" should be evaluated before getting the government involved in addressing "market failures."
true
The social problem of smoking in restaurants because smokers and nonsmokers want to use the air in different ways.
true
The video indicated that there is a significant difference between recycling fluorescent lights and plastic bottles.
true
he social benefit of a given level of a public good is the vertical sum of all private benefits for that level.
true
After a tariff is imposed, consumers must pay a price equal to the
world market price plus the tariff.
A product is considered to be rivalrous if
your consumption of the product reduces the quantity available for others to consume
Which of the following statements refers to rent seeking?
"Laws passed by the federal government often provide benefits for a small number of individuals. These individuals, in turn, have an incentive to contribute to the campaigns of politicians who pass these laws.
. What is the value of the deadweight loss at the equilibrium price of $15?
$0
What is the total social value to consumers at the equilibrium price of $15?
$1440
What is the value of producer surplus at the equilibrium price of $15?
$160
What is the value of consumer surplus at the equilibrium price of $15?
$240
Assume there are two people in a society. Person A is willing to pay $140 to have one unit of a public good produced and Person B is willing to pay $160 to have one unit of a public good produced and $140 to have two units produced. As a result, society would be willing to pay a price of ________ of this public good.
$3oo/1 unit
What is the size of the unit tax?
$7
The figure above provides information for a factory that produces chemicals that pollute a waterway. The waterway is used by water skiers. If the waterway is owned by a water ski club and the Coase theorem applies, then the factory will produce ________ tons of chemicals a week.
1 ton
The figure above shows the market for college education in the United States. If the government does not intervene in this market, the number of students going to college is ________ and the efficient number of students is _____
10 million students per year; 14 million students per year
Refer to the information provided in Figure 20.4 below to answer the question(s) that follow.Figure 20.4Refer to Figure 20.4. The domestic price of a leather wallet is $20. With free trade the price of a leather wallet is $10 and after a tariff is imposed the price is $15. After the tariff is imposed, this country will import ________ leather wallets.
100
The above figure shows the U.S. market for replacement cell phone batteries. When there is no international trade, the equilibrium price is ________ per battery and when there is international trade with a $2 tariff, then the equilibrium price is ________ per battery
14; 12
John receives a marginal benefit of $80 from one missile. Nick receives a marginal benefit of $50 from one missile. Christina receives a marginal benefit of $65 from one missile. John, Nick, and Christina are the only people in the economy. What is the economy's marginal social benefit from one missile?
195
mike, Joe, and Sam are roommates. They need lamps for their common living room. Lamps in their living room are a public good for these roommates. The marginal benefit that each individual receives from varying numbers of lamps in the living room is given in the table above. If the marginal cost of a lamp is 13, what is the efficient number of lamps for the roommates to purchase?
2
Broomfield city council is deciding how many police officers the city needs. Broomfield's population is 10,000 people. The marginal cost of a police officer is $60,000 per year. The marginal benefit schedule of an average city resident from police protection is shown in the table above. Police protection is a public good. The efficient number of police officers in Broomfield is
3 (60,000/10,000)
A large farming operation which uses a potent fertilizer is located up river from a trout farmer. If property rights of the river exist and transactions costs are low, the amount of pollution will be
A large farming operation which uses a potent fertilizer is located up river from a trout farmer. If property rights of the river exist and transactions costs are low, the amount of pollution will be
In which of the following cases does the tragedy of the commons occur? I.Cattle grazing on private ranches. II.Catching lobsters off the coast of Florida. III.Raising salmon on salmon farms. IV.Using legal services provided by the courts.
II only
Which of the following is true?
If production of a good gives rise
Key limitations on the government correcting "market failures" include:
Information Misaligned incentives between the government and citizens The incentive of the government to tax and spend to help politicians get elected or re-elected. All of the above.
The net effect of smoking in a restaurant is to
It depends - there is no general answer
For certain public projects such as building a dam on a river or a bridge to an island, what procedure is a government likely to use to determine what quantity of a public good should be supplied?
It evaluates the costs and benefits of producing the good.
Beginning in the 1950s economists began to investigate incentives within government. They found that:
One should be cautious in calling on the government to improve economic performance.
According to the video, the key to Viscusi's findings about the net impact of smoking on healthcare costs is that
People who smoke need more medical care, but they also (unfortunately) tend to die younger, and that creates an offsetting reduction in health care costs.
The key problem(s) with externalities is that
Private costs do not equal social costs. Private benefits do not equal social benefits. The government is often inefficient. All of the above. A and B above.
Which of the following characterizes the largest difference between the way decisions are made in the private sector versus the public sector?
The incentive system for individuals to perform efficiently are vastly different.
how does the construction of a market demand curve for a private good differ from that for a public good?
The market demand curve for a private good is determined by adding up the quantities demanded by each consumer at each price but the market demand curve for a public good is determined by adding up the price each consumer is willing to pay for each quantity of the good.
The appropriate charge for trash disposal should be set by
The opportunity cost of using the landfill, The cost of the trucks and labor needed to haul trash away, The impact of buried plastic bottles that only slowly degrade. All of the above. A and B above.
Why might a politician start a costly spending program if its costs exceed its social benefits?
The politician is trying to find ways to raise more money for the next election.
Which of the following leads to the tragedy of the commons?
The use of common pool resources above the socially optimal level
The opportunity cost of using land for a landfill is determined by:
The value of the land before the landfill was developed, minus the cost of the land after the landfill is full.
Rational ignorance suggests that voters will
be ignorant about issues that are of no special interest to them.
With the debris of more than 50 years of climbing on the beautiful high slopes - oxygen canisters, tents, backpacks and even some bodies - Mount Everest has been called the world's highest garbage dump. Currently climbers must pay only a $3,000 trash-collection fee, which is woefully less than the actual cost of collecting trash. If climbers had to pay a higher trash-collection fee, the use of this common resource would
become more efficient.
the total amount of producer surplus in a market is equal to the area below the supply curve.
false
Which of the following gives rise to a positive externality?
consumption of a drug to cure a common disease
When the government taxes a firm that generates external costs, the firm will produce
fewer units of output than before the tax was imposed in order to continue maximizing profits.
Which of the following is an example of a common resource?
elephants in the wild
when a person throws a cigarette out of a car window and starts a brush fire, this is
example of an external cost
Financial contributions to the campaigns of members of Congress, state legislators, and other elected officials by firms that seek special interest legislation that make the firms better off are
examples of rent seeking.
According to the video, the government should ban smoking in restaurants because of the diseases caused by passive smoking.
false
Banning smoking in restaurants is clearly economically efficient because passive smoke is harmful.
false
Economics shows that it is inefficient to recycle plastic bottles because they have little value.
false
Recycling is an economic problem because the land is substantially damaged by the creation of garbage dumps
false
Recycling is not an economic problem because there is only so much land on Earth.
false
The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems.
false
The best solution to water pollution is to make the responsible people clean the water and return it to its natural state.
false
The government can be relied on to efficiently solve problems associated with pollution through (Pigovian) taxes.
false
When there is a positive externality in a free market, too much of the good is produced and consumed.
false
he use of landfills means the land will lose all its value for subsequent use.
false
the point of the video is that the government can seldom enhance economic efficiency
false
Which of the following is an example of a product that is nonexcludable and rivalrous?
free concert w limiting seating
which of the following is an example of an ordinary private good
furniture
In general, who will benefit as the result of a tariff? I.Domestic producers II.Domestic consumers III.The domestic government
i and 3
the Coase theorem states that
if transactions costs are low, private bargaining will result in an efficient solution to the problem of externalities.
Which of the following situations will arise in the domestic market following the imposition of a tariff
imports decrease, domestic production increases, prices increase
An advantage of imposing a tax on the producer that generates pollution is that
it forces the polluting producer to internalize the external cost of the pollution.
An example of an activity that generates an external cost is
keeping a junked car parked on your front lawn
If the marginal cost of producing a public good is less than society's total willingness to pay per unit, then
less than the optimal amount of the public good is being produced
The Coase theorem relies on internalizing externalities through ____
negotiations between the parties involved
A green pasture has turned barren due to overgrazing. This happened because the pasture was ___
non-excludable but rival
The tragedy of the commons occurs because some goods are ________ in consumption.
non-excludable but rival
According to the video, W. Kip Viscusi studied tobacco smoking and concluded that
none of the above
A common resource is
nonexcludable and rival in consumption.
A radio signal broadcast through the air is ________ in consumption, and listeners are ________.
nonrival; nonexcludable
People who live in apartment buildings across from a football stadium are able to watch football games from the balconies of their apartments instead of paying for tickets to sit inside the stadium. For these free riders, the football games are
nonrival; nonexcludable (public goods)
Private producers have no incentive to provide public goods because
once produced, it will not be possible to exclude those who do not pay for the good.
A good is non-rival in consumption if ________
one person's use of the good does not preclude consumption by others
In economics, the term "free rider" refers to
one who waits for others to produce a good and then enjoys its benefits without paying for it
If protective import-restricting tariffs are imposed by a country, in the majority of cases that nation's consumers end up
paying a higher price for the good than they otherwise would.
Assume that production from an electric utility caused acid rain and that the government imposed a tax on the utility equal to the cost of the acid rain. This is an example of
pigouvian tax
Which of the following is an example of a positive externality?
planting trees along a sidewalk which add beauty and create shad
The production of a certain fertilizer emits a gas that keeps away mosquitoes and other insects from the surrounding community. This is an example of a ________.
positive externality
the tragedy of the commons is the absence of incentives to
prevent overuse and depletion of a common resource.
A Pigouvian subsidy leads to a socially efficient outcome by ______
raising individuals' marginal benefit from consumption
Which of the following is an example of a common resource
sea otters in the coastal waters of the Pacific Ocean
Governments require immunizations of school children and offer immunization shots for free to low income people because:
shots are private goods with external benefits
In England during the Middle Ages each village had an area of pasture on which any family in the village was allowed to graze its cows and sheep without charge. Eventually, the grass in the pasture would be depleted and no family's cow or sheep would get enough to eat. The reason the grass was depleted was
the area of pasture was nonexcludable and the consumption of the grass was rival
In the figure above, suppose the market is at equilibrium. Then area B is the
amount of the producer surplus
The tax incidence on buyers is higher if ________
the elasticity of the market demand curve is higher than the elasticity of the market supply curve
Suppliers will be willing to supply a product only if
the price received is at least equal to the additional cost of producing the product.
suppliers will be willing to supply a product only if
the price received is at least equal to the additional cost of producing the product.
If a rent ceiling is below the equilibrium rent, some allocation scheme must be used. The allocation methods include all of the following EXCEPT
charging equilibrium rent
he "invisible hand" refers to the notion that
competitive markets send resources to their highest valued uses.
Between the marginal benefit from a new pair of shoes in the price of a new pair of shoes is the
consumer surplus from that Pair of shoes
A regressive tax is a tax for which people with lower incomes
pay a higher percentage of their incomes in tax than do people with higher incomes.
Graphically, producer surplus is the area under the
price and above the supply curve, up to the relevant quantity.
The government of Lithasia has decided to set a minimum price for certain agricultural products in order to safeguard the interests of farmers. This is an example of a ________.
price floor
Producer surplus is the ________ summed over the quantity produced.
price of the good minus the marginal cost of producing it
A ________ system is one in which households pay the same percentage of their incomes in taxes regardless of their income level.
proportional
If you pay $2,000 in taxes on an income of $20,000, and a tax of $2,700 on an income of $30,000, then over this range of income the tax is
regressive
If, as your taxable income decreases, you pay a larger percentage of your taxable income in taxes, then the tax is
regressive
Scenario: There are 4 households in a locality. The annual income of the first household is $20,000, the annual income of the second household is $47,000, the annual income of the third household is $50,000, and the annual income of the fourth household is $71,000.Refer to the scenario above. If the income tax rate for the fourth household is higher than the income tax rate for the second household, it can be inferred that the government follows a ________ income tax system.
regressive
If a good has a tax levied on it, sellers respond to the price that excludes the tax and not the price with the tax because
sellers do not get to keep the tax revenue
The demand curve for pizza in Foodieland is vertical. If a tax is imposed on each pizza bought, _____
tax burden falls entirely on consumers
A price ceiling does NOT lead to a deadweight loss if ________.
te equilibrium market price lies below the price ceiling
marginal cost is
the additional cost to a firm of producing one more unit of a good or service.
The total amount of producer surplus in a market is equal to
the area above the market supply curve and below the market price.
he incidence of a per- unit tax on a good is identical for buyers and sellers of the good if:
the buyers and sellers of the good are equally sensitive to price changes
A tax bracket is
the income range within which a particular tax rate applies.
