ECON TEST 2: Quiz Questions
The burden of the tax on sellers is
$1 per unit
Refer to Figure 8-4. The vertical distance between points A and B represents a tax in the market. The amount of deadweight loss as a result of the tax is
$210
Refer to Table 7-1. If the price of the product is $18, then the total consumer surplus is
$46
Refer to Figure 9-5. With trade, the price of wagons in this country is
$5, with 40 wagons produced in this country and another 50 wagons imported.
Refer to Table 7-6. If the market price is $1,000, the producer surplus in the market is
$750
The price that buyers pay after the tax is imposed is
$8
Refer to Figure 8-4. The vertical distance between points A and B represents a tax in the market. The amount of tax revenue received by the government is equal to
$980
Which of the following could be the cross-price elasticity of demand for two goods that are complements?
-1.3
Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is
1
If a 25% change in price results in a 40% change in quantity supplied, then the price elasticity of supply is
1.60, and supply is elastic.
Using the midpoint method, what is the price elasticity of demand when price rises from $9 to $12?
2.33
Muriel's income elasticity of demand for football tickets is 1.50. All else equal, this means that if her income increases by 20 percent, she will buy
30 percent more football tickets.
Refer to Figure 9-1. With trade, total surplus in the New Zealand wool market amounts to
467.5.
Refer to Figure 8-5. Suppose that the government imposes a tax of P3 - P1. After the tax is levied, consumer surplus is represented by area
A
Refer to Figure 7-1. When the price is P1, consumer surplus is
A+B+C
Refer to Figure 7-18. Buyers who value this good more than the equilibrium price are represented by which line segment?
AC
Refer to Figure 7-17. At equilibrium, total surplus is measured by the area
ACG
If the United States imposes a tariff on automobiles, then
All of the above are correct.
Suppose France subsidizes French wheat farmers, while Germany offers no subsidy to German wheat farmers. As a result of the French subsidy, sales of French wheat to Germany
All of the above are correct.
Refer to Figure 7-18. Sellers whose costs are less than the equilibrium price are represented by which line segment?
BC
Refer to Figure 7-7. Which area represents producer surplus when the price is P1?
BCG
Refer to Figure 5-2. As price falls from Pa to Pb, which demand curve represents the most elastic demand?
D1
Refer to Figure 8-9. Which of the following combinations will minimize the deadweight loss from a tax?
Supply 1 and demand 1
What happens to the total surplus in a market when the government imposes a tax?
Total surplus decreases.
A minimum wage that is set above a market's equilibrium wage will result in
an excess supply of labor, that is, unemployment.
According to Arthur Laffer, the graph that represents the amount of tax revenue (measured on the vertical axis) as a function of the size of the tax (measured on the horizontal axis) looks like
an upside-down U.
A price ceiling will be binding only if it is set
below the equilibrium price.
The benefit to buyers of participating in a market is measured by
consumer surplus
The decrease in total surplus that results from a market distortion, such as a tax, is called a
deadweight loss.
Refer to Figure 9-1. When trade in wool is allowed, consumer surplus in New Zealand
decreases by the area B + D.
The case of perfectly elastic demand is illustrated by a demand curve that is
horizontal
Suppose the government increases the size of a tax by 25 percent. The deadweight loss from that tax
increases by more than 25 percent.
If the government removes a tax on sellers of a good and imposes the same tax on buyers of the good, then the price paid by buyers will
not change and the price received by sellers will not change.
When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy,
producer surplus increases and total surplus decreases in the market for that good.
The price elasticity of demand measures how much
quantity demanded responds to a change in price.
Given the market for illegal drugs, when the government is successful in reducing the flow of drugs into the United States,
supply decreases, demand is unaffected, and price increases.
Consumer surplus is
the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,
the country will be an importer of the good.
Refer to Figure 7-17. If 10 units of the good are produced and sold, then
the good is overproduced relative to the efficient output level and total surplus can be increased by reducing its production.
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 sellers will bear a greater burden of the tax than the buyers.
If the price elasticity of supply for a good is equal to infinity, then
the supply curve is horizontal.
Economists typically measure efficiency using
total surplus