Econ Exam 2 Quiz Questions
On a graph, consumer surplus is represented by the area
Below the demand curve and above price
A supply curve can be used to measure producer surplus because it reflects
Sellers' costs
The term tax incidence refers to
The distribution of the tax burden between buyers and sellers.
If a tax is levied on the sellers of flour, then
Buyers and sellers will share the burden of the tax.
All else equal, what happens to consumer surplus if the price of a good increases?
Consumer surplus decreases
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
Minimum-wage laws dictate
Only a minimum wage that firms may pay workers
If a nonbinding price floor is imposed on a market, then the
Quantity sold in the market will stay the same.
If a price floor is not binding, then
The equilibrium price is above the price floor.
If a price floor is not binding, then
There will be no effect on the market price or quantity sold.
We can say that the allocation of resources is efficient if
Total surplus is maximized
Which of the following is NOT correct
a. Taxes levied on sellers and taxes levied on buyers are not equivalent. b. The wedge between the buyers' price and the sellers' price is the same, regardless of whether the tax is levied on buyers or sellers. c. A tax places a wedge between the price that buyers pay and the price that sellers receive. d. In the new after-tax equilibrium, buyers and sellers share the burden of the tax. Answer = A
