Econ Homework 2 Questions

14) Using the table, Fred's marginal cost of the 200th slice of pizza is

A) $2.50.

18) In the above figure, if the market price is $100 per ton, then the firm's producer surplus on the second ton of wheat is

A) $25.

4) Based on the table, what is Barry's marginal benefit from the 40th slice of pizza?

A) $3

3) Based on the table, what is Abby's marginal benefit from the 10th slice of pizza?

A) $4

39) The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $3 per hour is imposed. Employment will decrease by

A) 0 hours.

12) In the figure above, when production is 3 units with a price of $3, the consumer surplus equals

A) a + b.

22) Which of the following observations would be consistent with the imposition of a binding price ceiling on a market? After the price ceiling becomes effective,

A) a smaller quantity of the good is bought and sold.

63) The elasticity of demand for chocolate chip cookies is 0.6 and the elasticity of supply for these cookies is 1.9. If a tax is imposed on purchases of chocolate chip cookies, then the

A) consumers would pay more of the tax.

1) The value of a good is equal to the

A) maximum price you are willing to pay for it.

48) The amount of a tax paid by the buyers will be smaller the

A) more elastic the demand and the more inelastic the supply.

8) The figure above shows Clara's demand for CDs. If the price for a CD is $15, then Clara A) receives no consumer surplus on the 6th CD she buys.

A) receives no consumer surplus on the 6th CD she buys.

25) The above figure shows the apartment rental market in Bigtown. If severe flooding resulted in the destruction of many of the city's apartment buildings, then the

A) supply curve of apartments would shift leftward and rent would rise above $750.00.

49) If a tax is imposed in a market in which demand is perfectly inelastic,

A) the buyers pay the entire tax.

13) Marginal cost is best defined as

A) the extra cost of producing one more unit of output.

45) A sales tax is imposed on the sellers of gasoline. This tax shifts

A) the supply of gasoline curve leftward.

58) In the above figure, what is the amount of the tax per unit?

A)$8

56) The demand and the supply for a good are each neither perfectly elastic nor perfectly inelastic. Which of the following is not correct?

A)Taxes levied on sellers and taxes levied on buyers are not equivalent.

61) In the above figure, suppose sellers, rather than buyers, were required to pay this tax (in the same amount per unit as shown in the graph). Relative to the tax on buyers, the tax on sellers would result in

A)buyers bearing the same share of the tax burden.

53) The demand and the supply for cereal are each neither perfectly elastic nor perfectly inelastic. A tax on the buyers of cereal will increase the price of cereal paid by buyers,

A)decrease the effective price of cereal received by sellers, and decrease the equilibrium quantity of cereal.

29) The figure above shows the housing market in the city of Huntsville. A rent ceiling of $650 per month is imposed. With the rent ceiling, the deadweight loss in the Huntsville housing market is

B) $15,000 per month.

42) In the above figure, what is the amount of the tax per compact disc?

B) $20

41) In the above figure, the price received by the seller before the tax is ________ per compact disc, and the price received and kept by the seller after the tax is ________ per compact disc.

B) $20; $10

40) In the above figure, the price paid by the buyer before the tax is ________ per compact disc, and the price paid by the buyer after the tax is ________ per compact disc.

B) $20; $30

7) Jane is willing to pay $4 for the first cup of coffee a day, $2.50 for the second cup, and $1 for the third cup, after which she won't buy any coffee. The price of a cup of coffee is $2.40. How many cups of coffee per day will Jane buy?

B) 2

36) The above figure shows the labor market. If the minimum wage is set at $5.00 per hour, what effect will it have on the market for labor?

B) The minimum wage will create a surplus of labor`

34) The government sets a price floor for corn which is above the equilibrium price of corn. As a result, ________.

B) a deadweight loss will be created

30) The above figure shows the demand and supply curves for housing. What would be the effects of a rent ceiling equal to $500 per month?

B) a shortage equal to 3,000 apartments

19) A price ceiling is a price

B) above which a seller cannot legally sell.

28) The above figure shows the apartment rental market in Bigtown. If there is a shortage of 2000 apartments in the Bigtown rental market, it might be because the Bigtown Housing Authority has imposed a rent

B) ceiling of $500.00 monthly.

26) The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $500 per month, the rent ceiling will help

B) some renters and hurt other renters.

11) The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then the gallon that gives Dana exactly zero consumer surplus is

B) the 12th gallon.

54)A tax on the buyers of personal computer external hard drives encourages

B)buyers to demand a smaller quantity at every price.

52) The demand and the supply for a sofa are each neither perfectly elastic nor perfectly inelastic. A tax on the buyers of sofas

B)decreases the size of the sofa market.

6) Nick can purchase each milkshake for $2. For the first milkshake purchased Nick is willing to pay $4, for the second milkshake $3, for the third milkshake $2 and for the fourth milkshake $1. What is the value of Nick's consumer surplus for the milkshakes he buys?

C) $3

10) The above figure shows Dana's marginal benefit curve for ice cream. If the price of ice cream is $2 per gallon, then the maximum that Dana is willing to pay for the 8th gallon of ice cream is

C) $3.

35) The above figure shows the labor market. A minimum wage has an effect on the market for labor if it is set at

C) $4.00.

17) In the above figure, the lowest price for which the firm will sell its second ton of wheat is

C) $75.

24) The above figure shows the apartment rental market in Bigtown. At what rent will there be neither a shortage nor a surplus of apartments?

C) $750 per month

38) The market for unskilled labor is illustrated in the figure above. The market is in equilibrium and then a minimum wage of $5 per hour is imposed. Employment will fall by

C) 20 million hours per year.

44) In the above figure, who pays the larger share of the tax?

C) Buyers and sellers each pay the same amount of the tax and each pays $10 per compact disc.

23) Suppose the government wants to encourage people to exercise more, so it imposes a binding price ceiling on the market for in-home treadmills. As a result,

C) a shortage of treadmills will develop.

46) When a sales tax is imposed on sellers, the supply curve shifts so that the vertical distance between the old and the new supply curve equals the

C) amount of the sales tax.

47) The demand and the supply for a good are each neither perfectly elastic nor perfectly inelastic. If a sales tax on sellers of the good is imposed, the tax is paid by

C) both buyers and sellers

15) Producer surplus is the ________ summed over the quantity sold.

C) price received for a good minus its marginal cost

31) The above figure shows the demand and supply curves for housing As a result of a rent ceiling at $500, the deadweight loss is represented by the area

C) triangle eca.

5) Consumer surplus is the

C) value of a good minus the price paid for it summed over the quantity bought.

60) In the above fiture, Andrew is a buyer of the good. Taking the tax into account, how much does Andrew effectively pay to acquire one unit of the good?

C)$24

59) In the above figure, the per-unit burden of the tax on buyers of the good is

C)$6.

57) In the above figure, which of the following statements is correct?

C)The tax is levied on buyers of the good, rather than on sellers.

55) A $3 tax levied on the buyers of shoes will cause the

C)demand curve for shoes to shift down by $3.

43) In the above figure, what is the total tax revenue collected by the government?

D) $400 million

16) Stefano has just completed an original oil painting. After considering the costs for brushes, paint, canvas, and the value of Stefano's labor time, the marginal cost of the painting is $1,000. Lucky Stefano. One art lover paid him $1,500. How much producer surplus did Stefano obtain?

D) $500

37) The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $4 per hour, how many hours of students' labor are unemployed?

D) 0 hours

20) A price ceiling can result in which of the following?

D) All of the above answers are correct. (inefficiency, black market, and increased search activities)

32) A price floor is a price

D) Both answers A and C are correct. (Below which a seller cannot legally sell, that creates a surplus of the good if it is set above equilibrium price)

9) The figure above shows Clara's demand for CDs. The price for a CD is $15. Which statement is true?

D) When Clara buys 6 CDs, she receives a total of $45 of consumer surplus.

51) To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, how much deadweight loss results from this tax on sports equipment?

D) acd

50) To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Referring to the above figure, how much tax per unit has the government imposed?

D) ca

2) Marginal benefit is the benefit received from ________.

D) consuming one more unit of a good or service

33) A minimum wage set above the equilibrium wage rate is a price

D) floor that results in a surplus of labor.

27) The above figure shows the apartment rental market in Bigtown. If the Bigtown Housing Authority imposes a rent ceiling of $1,000 per month, the ceiling will

D) have no effect at all on the Bigtown rental market.

64) On Green Island, the demand for pencils is perfectly elastic and the supply of pencils is perfectly inelastic. If a sales tax on pencils is introduced,

D) the sellers pay the entire tax.

21) If a price ceiling is not binding, then

D) there will be no effect on the market price or quantity sold.

62) In the above figure, in the after-tax equilibrium, government collects

D)$1,680 in tax revenue; of this amount, $1,260 represents a burden on buyers and $420 represents a burden on sellers.