Econ exam 2

true

T/F: If a country's domestic price of a good is lower than the world price, then that country has a comparative advantage in producing that good.

False

T/F: Joel has a 1966 Mustang, which he sells to Susie, an avid car collector. Susie is please since she paid $8,000 for the car but would have been willing to pay $11,000 for the car. Susie's consumer surplus is $2,000.

consumer surplus decreases and total surplus decreases in the market for that good

When a country that imports a particular good imposes a tariff on that good,

have no impact on employment

a minimum wage that is set below a market's equilibrium wage will...

above the equilibrium price

a price floor will be binding only if it is set...

Amount received by sellers - cost of sellers

producer surplus equals

an adverse effect on a bystander who is not compensated by the person who causes the effect.

A negative externality arises when a person engages in an activity that has...

Bobbi engages in an activity that influences the well-being of Rosa and yet Bobbi neither pays nor receives payment for that influence.

An externality exists whenever...

export copper, since that country has a comparative advantage in copper

For any country, if the world price o copper is higher than the domestic price of copper without trade, that country should...

the demand curve for textbooks shifts downward by $5

If the government passes a law requiring buyers of college textbooks to send $5 to the government for every textbook they buy, then...

decrease, and the price received by sellers will increase

If the government removes a tax on a good, then the price paid by the buyers will...

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

Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market then the...

true

T/F: Connie can clean windows in large office buildings at a cost of $1 per window. The market price for window cleaning services is $3 per window. If Connie cleans 100 windows, her producer surplus is $200.

true

T/F: lawmakers can decide whether the buyers or the seller must send a tax to the government, but they cannot legislate the true burden of a tax.

true

T/F: taxes cause deadweight losses because they prevent buyer and sellers from realizing some of the gains from trade

false

T/F: the demand for bread is less elastic than the demand for donuts; hence, a tax on bread will create a larger deadweight loss than will the same tax on donuts, other things equal.

true

T/F: the housing shortages caused by rent control are larger in the long run than in the short run because both the supply o housing and the demand for housing are more elastic in the long run.

true

T/F: the patent system gives arms greater incentive to engage in research and other activities that advance technology.

false

T/F: who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers.

producer surplus increases and total surplus decreases in the market for that good

When a country that imports a particular good imposes a tariff on that good,

rises, and the price received by sellers falls

When a tax is placed on a product, the price paid by the buyers...

command and control solution, corrective tax, corrective subsidy

Which o the following is a way to address an externality problem?

consumer surplus will be equal to producer surplus

Which of the following statements is not correct about a market in equilibrium?

buyers always want to pay less and sellers always want to be paid more

Which off the following statements is correct?

how much a buyer values a good

a consumer's willingness to pay directly measures

raise the price buyers pay and lower the effective price sellers receive

a tax imposed on the sellers of a good will..

raise the price buyers pay and lower the effective price sellers receive

a tax imposed on the sellers of a good will...

supply curve upward

a tax levied on the seller of a good shits the

increase sellers costs, reduce profits, and shits the supply curve up

a tax levied on the sellers of blueberries..

other countries have a comparative advantage over Guatemala in the production of coffee, and Guatemala will import coffee

assume for Guatemala that the domestic price of coffee without international trade is higher than the world price of coffee. this suggests that...

supply of the product is more elastic than the demand for the product

buyers of a product will bear the larger part of the tax burden, and sellers will bear a smaller part of the tax burden, when the

in a market to buyers and sellers that is not offset by an increase in government revenue

deadweight loss measures the loss

total surplus

economists typically measure efficiency using

the domestic price is equal to the world price

for any country that allows free trade,

$4

if a consumer is willing and able to pay for a particular good and if he pays $16 or the good, then for that consumer, consumer surplus amounts to...

consumer does not purchase the good

if a consumer places a value o $15 on a particular good and the iff the price of the good is $17, then the...

deacreases

if the demand for leather decreases, producer surplus in the leather market...

a decrease in the shortage of organs for transplant

if the government allowed a free market in organs for transplant there would be

increase, and the quantity sold in the market will increase

if the government removes a binding price ceiling from a market, then the price paid by buyers will...

to fall and quantity demanded to rise

in the short run, rent control causes the quantity supplied...

markets fail to produce the maximum total benefit to society when positive or negative externalities are present

in what sense do externalities cause the "invisible hand" of the marketplace to fail?

when policymakers believe that the market price of a good or service is unfair to buyers or sellers

price controls are usually enacted ....

shift the supply curve up by exactly $4 and the price paid by buyers will rise by less than $4

suppose that a $4 per unit tax is imposed on the sellers of DVDs. the effect of the tax will be to...

between $1 and $2

suppose that the demand for light bulbs is inelastic, and the supply of light bulbs is elastic. A tax of $2 per bulb levied on light bulbs will increase the price paid by buyers of light bulbs by...

workers to work overtime

taxes on labor encourage all of the following except

increases a binding price ceiling in that market

the price received by sellers in a market will increase if the government...

removes a binding price ceiling from that market

total surplus in a market will increase when the government...

sellers of the good will bear most of the burden of the tax

when a tax is imposed on a good for which the demand is relatively elastic and the supply is relatively inelastic,

supply curve shifts upward by the amount of the tax

when a tax is levied on the sellers of a good, the

the quantity of motorcycles bought and sold in the market is reduced

when motorcycles are taxed and sellers of motorcycles are required to pay the tax to the government,