microeconomics

A price ceiling set at

$6 will be binding and will result in a shortage of 10 units.

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.

Suppose that when the price of good X increases from $800 to $850, the quantity demanded of good Y increases from 65 to 70. Using the midpoint method, the cross price elasticity of demand is about

1.2, and X and Y are substitutes.

Suppose the government places a $5 per-unit tax on this good. The consumer surplus after this tax is

10

Suppose each of the five sellers can supply at most one unit of the good. The market quantity supplied is exactly 2 if the price is

1050

Suppose the government places a $5 per-unit tax on this good. The producer surplus after this tax is

15

Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $250. His consumer surplus is

150

If the price of the good is $12, then consumer surplus is

16

A price floor set at

16 will be binding and will result in a surplus of 10 units.

Suppose a $3 per-unit tax is placed on this good. The per-unit burden of the tax on buyers is

2

Suppose the government places a $5 per-unit tax on this good. The amount of deadweight loss resulting from this tax is

25

If the price of the good is $150, then consumer surplus amounts to

250

Suppose the government places a $5 per-unit tax on this good. The per-unit burden of the tax on sellers is

3

Suppose the government places a $5 per-unit tax on this good. The amount of tax revenue collected by the government is

50

George produces cupcakes. His production cost is $10 per dozen. He sells the cupcakes for $16 per dozen. His producer surplus per dozen cupcakes is

6

Suppose Q1 = 4; Q2 = 7; P1 = $6; P2 = $8; and P3 = $10. Then the deadweight loss of the tax is

6

The per-unit burden of the tax on sellers is

6

If the price decreases from $80 to $70 due to a shift in the supply curve, consumer surplus increases by

750

f the equilibrium price rises from $200 to $350, what is the producer surplus to new producers?

7500

The per-unit burden of the tax on buyers is

8

Which area represents the increase in consumer surplus when the price falls from P1 to P2?

ABDG

If the price of the product is $110, then who would be willing to purchase the product?

Calvin, Sam, and Andrew

what happens to consumer surplus if the price of a good decreases?

Consumer surplus increases.

Which of the following statements is correct?

Demand 2 is more elastic than demand 1.

Suppose a tax of $5 per unit is imposed on this market. Which of the following is correct?

Sellers will bear more of the burden of the tax than buyers will.

If the price elasticity of supply for a window manufacturer is 1.5,

a 10% increase in the price of windows results in a 15% increase in the quantity of windows supplied.

A binding price ceiling

causes a shortage and is set at a price below the equilibrium price.

A binding price floor

causes a surplus and is set at a price above the equilibrium price.

A tax imposed on the sellers of a good will lower the

effective price received by sellers and lower the equilibrium quantity.

A decrease in the size of a tax is most likely to increase tax revenue in a market with

elastic demand and elastic supply.

If the economy is at point B on the curve, then an increase in the tax rate will

increase the deadweight loss of the tax and decrease tax revenue.

If the government removes a tax on a good, then the quantity of the good sold will

increase.

A deadweight loss is a consequence of a tax on a good because the tax

induces buyers to consume less, and sellers to produce less.

A binding price ceiling is shown in

panel (b) only.

A tax imposed on the buyers of a good will raise the

price paid by buyers and lower the equilibrium quantity.

If the tax on a good is doubled, the deadweight loss of the tax

quadruples.

Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the

smaller is the price elasticity of supply.

Buyers of a good bear the larger share of the tax burden when the

supply is more elastic than the demand for the product.

In which market will the majority of the tax burden fall on sellers?

the market shown in panel (a).

If 6 units of the good are produced and sold, then

the sum of consumer surplus and producer surplus is maximized

When the price rises from P1 to P2, which area represents the increase in producer surplus to existing producers?

the top portion of the line ABGD

When the price is P1, area B+C represents

total surplus in the middle of graph

Jeff decides that he would pay as much as $3,000 for a new laptop computer. He buys the computer and realizes consumer surplus of $700. How much did Jeff pay for his computer?

2300

Both the demand curve and the supply curve are straight lines. At equilibrium, producer surplus is

24

The tax causes producer surplus to decrease by the area

D+F