ECU Econ 2113 Exam 2
. A tax on the buyers of popcorn increases the size of the popcorn market.
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. Efficiency occurs when total surplus is maximized
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A consumer's willingness to pay measures the cost of a good to the buyer.
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A seller would be willing to sell a product ONLY IF the price received is less than the cost of production
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A supply curve can be used to measure producer surplus because it reflects the actions of sellers.
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According to the graph shown, when the price falls from P2 to P1, producer surplus decreases by an amount equal to A
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According to the graph shown, when the price is P2, producer surplus is A
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According to the graph shown, area A represents producer surplus to new producers entering the market as the result of price rising from P1 to P2
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According to the graph shown, at the price of P1, producer surplus is A
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According to the graph shown, the equilibrium price in the market after the tax is imposed is $1.00.
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According to the graph shown, the equilibrium price in the market before the tax is imposed is $1.00.
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According to the graph shown, the equilibrium price in the market before the tax is imposed is $8.00.
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According to the graph, the amount of the tax imposed in this market is $1.00.
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According to the graph, the amount of the tax imposed in this market is $1.00.
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According to the graph, the price buyers will pay after the tax is imposed is $1.00
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According to the graph, the price sellers receive after the tax is imposed is $1.00.
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According to the graph, the price sellers receive after the tax is imposed is $8.00
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Amy buys a new dog for $150. She receives consumer surplus of $100 on her purchase. Her willingness to pay is $50.
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At Nick's Bakery, the cost to make his homemade chocolate cake is $3 per cake. He sells three and receives a total of $21 worth of producer surplus. Nick must be selling his cakes for $2 each
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Cost refers to a seller's producer surplus
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Denea produces cookies. Her production cost is $3 per dozen. She sells the cookies for $8 per dozen. Her producer surplus is $3 per dozen.
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Donald produces nails at a cost of $200 per ton. If he sells the nails for $500 per ton, his producer surplus is $200 per ton
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If Roberta sells a shirt for $30, and her producer surplus from the sale is $21, her cost must have been $51.
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If a tax is imposed on a market with elastic demand and inelastic supply, buyers will bear most of the burden of the tax.
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If buyers are required to pay a $0.10 tax per bag on Hershey's kisses, the demand for kisses will shift up by $0.10 per bag.
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If demand decreases, the price of a product, as well as producer surplus, increases
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If you pay a price exactly equal to your willingness to pay, then your consumer surplus is negative.
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In the end, tax incidence depends on the legislated burden.
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Janine would be willing to pay $50 to see Les Misérables, but buys a ticket for only $30. Janine values the performance at $20.
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Out-of-pocket expenses plus the value of the seller's own resources used in production are considered to be the seller's total revenue.
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Producer surplus equals Value to buyers - Amount paid by buyers
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Producer surplus is the area under the supply curve to the left of the amount sold
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Shannon buys a new CD player for her car for $135. She receives consumer surplus of $25 on her purchase. Her willingness to pay is $25.
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Suppose consumer income increases. If grass seed is a normal good, the equilibrium price of grass seed will decrease, and producer surplus in the industry will decrease
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Suppose that a tax is placed on DVDs. If the seller ends up paying the majority of the tax we know that the demand curve is more inelastic than the supply curve.
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Suppose that a tax is placed on books. If the buyer pays the majority of the tax we know that the supply curve is more inelastic than the demand curve.
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The Surgeon General announces that eating chocolate increases tooth decay. As a result, the equilibrium market price of chocolate increases, and producer surplus increases
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The area below a demand curve and above the price measures producer surplus.
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The initial effect of a tax on the buyers of a good is on the supply of that good.
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The marginal seller is the seller who cannot compete with the other sellers in the market.
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The term tax incidence refers to the Boston Tea Party.
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Total surplus in a market equals Value to buyers - Amount paid by buyers.
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Total surplus in a market is represented by the total area under the demand curve and above the price.
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Total surplus in a market is the total costs to sellers of providing the goods less the total value to buyers of the goods
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We can say that the allocation of resources is efficient if producer surplus is maximized.
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Welfare economics is the study of the well-being of less fortunate people.
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When markets fail, public policy can do nothing to improve the situation
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Willingness to pay measures the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.
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With respect to welfare economics, the equilibrium price of a product is considered to be the best price because it maximizes total revenue to firms and total utility to buyers.
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. For the most part, buyers and sellers share the burden of the tax.
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. If a market is allowed to move freely to its equilibrium price and quantity, then an increase in supply will increase consumer surplus
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A demand curve measures a buyer's willingness to pay.
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A tax on the sellers of cell phones will reduce the size of the cell phone market.
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A tax placed on the seller of a good raises the price buyers pay and lowers the price sellers receive
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A tax placed on the seller of a product will raise equilibrium price and lower equilibrium quantity.
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A tax placed on the sellers of blueberries increases costs, lowers profit and shifts supply to the left (upward).
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According to the graph shown, B represents consumer surplus when the price is P1.
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According to the graph shown, B + C represents total surplus in the market when the price is P1.
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According to the graph shown, C represents producer surplus when the price is P1
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According to the graph shown, area B represents producer surplus to new producers entering the market as the result of price rising from P1 to P2
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According to the graph, the price buyers will pay after the tax is imposed is
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An allocation of resources is said to be inefficient if a good is not being produced by the sellers with the lowest cost.
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At the equilibrium price, the good will be purchased by those buyers who value the good more than price
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Belva is willing to pay $65.00 for a pair of shoes for a formal dance. She finds a pair at her favorite outlet shoe store for $48.00. Belva's consumer surplus is $17.
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Buyers of a product will pay the majority of a tax placed on a product when supply is more elastic than demand.
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Consumer surplus equals the Value to buyers - Amount paid by buyers
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Consumer surplus is a buyer's willingness to pay minus the price.
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Cost is a measure of the seller's willingness to sell.
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Externalities are side effects passed on to a party other than the buyers and sellers in the market.
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For the most part, a tax burden falls most heavily on the side of the market that is more inelastic.
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For the most part, all governments, federal, state, and local, rely on taxes to raise revenue for public purposes.
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If a consumer is willing and able to pay $20.00 for a particular good but only has to pay $14.00, the consumer surplus is $6.00.
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If a tax is imposed on a market with inelastic demand and elastic supply, buyers will bear most of the burden of the tax.
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If a tax is imposed on the buyer of a product the demand curve would shift downward by the amount of the tax
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If a tax is levied on the seller of a product the demand curve will not change.
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If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus of that purchase would be zero.
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If the price of a good increases, consumer surplus decreases.
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In a market, total surplus is equal to producer surplus plus consumer surplus
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In most markets, consumer surplus reflects economic well-being.
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Inefficiency exists in any economy when a good is not being consumed by buyers who value it most highly.
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Producer surplus measures the well-being of sellers.
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Suppose the demand for nachos increases. Producer surplus in the market for nachos will increase.
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Suppose there is an early freeze in California that ruins the lemon crop. Consumer surplus in the market for lemons decreases.
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The "invisible hand" refers to the marketplace guiding the self-interests of market participants into promoting general economic well-being
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The burden of a tax placed on a product depends on the supply and demand of that product.
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Total surplus in a market equals Consumer surplus + Producer surplus.
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When a tax is placed on the buyers of milk, the size of the milk market is reduced.
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When a tax is placed on the sellers of a product the size of the market is reduced.
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When analyzing the economic effects of government policies, supply and demand are useful tools of analysis.
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When economists say that markets are efficient, they are assuming that markets are perfectly competitive
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When technology improves in the ice cream industry, consumer surplus will increase.
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total surplus = value to sellers - costs of sellers is NOT correct
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