microeconomics 4

If the demand for light bulbs increases, producer surplus in the market for light bulbs a. increases. b. decreases. c. remains the same. d. may increase, decrease, or remain the same.

a. increases.

All else equal, what happens to consumer surplus if the price of a good increases? a. Consumer surplus increases. b. Consumer surplus decreases. c. Consumer surplus is unchanged. d. Consumer surplus may increase, decrease, or remain unchanged.

b. Consumer surplus decreases.

Turkey is an importer of wheat. Turkey imposes a $3-per-bushel tariff on wheat. As a result of the tariff, a. Turkish consumers of wheat become worse off and Turkish producers of wheat become worse off. b. Turkish consumers of wheat become worse off and Turkish producers of wheat become better off. c. Turkish consumers of wheat become better off and Turkish producers of wheat become worse off. d. Turkish consumers of wheat become better off and Turkish producers of wheat become better off.

b. Turkish consumers of wheat become worse off and Turkish producers of wheat become better off.

Consider a good to which a per-unit tax applies. The size of the deadweight that results from the tax is smaller, the a. larger is the price elasticity of demand. b. smaller is the price elasticity of supply. c. larger is the amount of the tax. d. All of the above are correct.

b. smaller is the price elasticity of supply.

Suppose the tax on gasoline is raised from $0.50 per gallon to $2.50 per gallon. As a result, a. tax revenue necessarily increases. b. the deadweight loss of the tax necessarily increases. c. the demand curve for gasoline necessarily becomes steeper. d. All of the above are correct.

b. the deadweight loss of the tax necessarily increases.

Workers displaced by trade eventually find jobs in a. another country. b. the government sector. c. the industries in which the country has a comparative advantage. d. a different company in the same industry.

c. the industries in which the country has a comparative advantage.

Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a result, the domestic price of beans increases to equal the world price of beans, then a. that country becomes an exporter of beans. b. that country has a comparative advantage in producing beans. c. at the world price, the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country. d. All of the above are correct.

d. All of the above are correct.

Taxes cause deadweight losses because they a. lead to losses in surplus for consumers and for producers that, when taken together, exceed tax revenue collected by the government. b. distort incentives to both buyers and sellers. c. prevent buyers and sellers from realizing some of the gains from trade. d. All of the above are correct.

d. All of the above are correct.