econ test 2
An externality is the uncompensated impact of
One persons actions on the well-being on a bystander
if the government levies a $1000 tax per boat on sellers of boats, then the price paid by buyers of Boats would
increase by less than $1000
When an externality is present, the market equilibrium is
inefficient, and the equilibrium does not maximize the total benefit to society as a whole.
the deadweight loss from a tax per unit of good will be smallest in a market with
inelastic supply and inelastic demand
a legal minimum on the price at which a good could be sold is called
price floor
reasons for taxes
public projects(roads) market failure (pollution) equity (fairness)
if a non-binding price floor is impose on a market then the
quantity sold in the market will stay same
moving production from a high cost producer to a low cost producer will..
raise total surplus
which of the following events would increase producer surplus
sellers costs stay the same in the price of good increases
free rider
someone who benefits from something they didn't help pay for
in which of the following cases is the class theorem most likely to solve the externality
Ed is allergic to his roommates cat
Suppose sellers of perfume are required to send $1.00 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $0.60 per bottle. Which of the following statements is correct?
The effective price received by sellers is $0.40 per bottle less than it was before the tax.
which of the following is an example of a positive externality
The mayor of a small town plants flowers in the city park.
producer surplus directly measures
The well-being of sellers
which of the following statements about a well-maintained yard best conveys the general nature of the externality?
a well maintained yard, conveys a positive externality, because it increases the value of adjacent property in the neighborhood
If an allocation of resources is efficient then
all potential gains from trade among buyers and sellers are being realized
false
corrective taxes at the maximum quantity of pollution, whereas tradable pollution permits, fix the price of pollution
externality
cost or benefit to someone who isn't part of the transaction
a shortage results when a
binding price ceiling is imposed on a market
suppose there is an early freeze in California that reduces the size of the lemon crop as a price of lemons rises what happens to the consumer surplus in the market for lemons
consumer surplus decreases
The decrease in total surplus that results from the market distortion,such as tax, is called
deadweight loss
if the government removes a tax on a good then the price paid by buyers will
decrease, and the price received by sellers will increase
consumer surplus
difference between what u r willing to pay and price
permits
firms get revenue
taxes
government gets revenue
rival
if my using it means there's less for you
The government benefit from attacks can be measured by
tax revenue
producer surplus
the difference between what it costs you to provide a good and the price
tax incidence refers to
the distribution of the tax burden between buyers and sellers
willingness to pay
the maximum price at which a consumer will buy a good
The coase theorem
the person that's creating the externality and then the person that's being affected by the externality can bargain
welfare
total utility (happiness)
excludable
when i can prevent u from using it if u didn't buy it
efficient outcome
where the way we allocate our resources maximizes total surplus