Microeconomics Exam 2

will attract more resources towards the production of the product

A government-set price floor on a product

increase, decrease

A tax on buyers will cause the price paid by the consumer to ______________ and the quantity to _____________.

consumer surplus of $10 and Tony experiences a producer surplus of $190.

Amanda buys a ruby for $330 for which she was willing to pay $340. The minimum acceptable price to seller, Tony, was $140. Amanda experiences a

increase quantity, but whether it increases price depends on how much each curve shifts

An increase in demand for oil along with a simultaneous increase in supply of oil will:

graph B

Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market for chicken when the price of a substitute, such as beef, decreases.

the market price is below what some consumers are willing to pay for the product.

Consumer surplus arises in a market because

people moving into the community will have difficulty locating residential space to rent,

Homeowners will reduce their own use of housing space, making more available to others.

no deadweight loss occurs

If a price floor in this market is set at P1, then

5%

If the price elasticity of demand for a product is equal to 0.5, then a 10 percent decrease in price will increase quantity demanded by

$30 (75-65= 10) (85-65=20) (10+20=30)

In the market for a particular pair of shoes, Jena is willing to pay $75 for a pair while jane is willing to pay $85 for a pair. The actual price that each has to pay for a pair of shoes is $65. What is the combined amount of consumer surplus of Jena and Jane?

Because after the shift in the demand, there would be a shortage at price P1

Refer to the above graph showing the market for a product. Which of the following would best explain why the shift in demand from D1 to D2 would cause price to rise from P1 to P2?

graph C

Refer to the following graphs to answer the question below. Select the graph above that best shows the changes in demand and supply in the market for music CDs sold in stores, if more consumers switch to music-downloads from the Internet, and the cost of making music CDs decreases because of technological improvement in production.

-0.856

Suppose you are given the following data on demand for a product. The ARC price elasticity of demand when price increases form $6 to $7 is Price Quantity Demanded 7 60 6 70

surplus.

The difference between the actual price that a producer receives and the minimum acceptable price that a producer is willing to accept is called the producer

surplus

The difference between the actual price that a producer receives and the minimum acceptable price the producer is willing to accept is called the producer

responsiveness of buyers of a good to changes in its price

The price elasticity of demand is a measure of the

the law of demand

The price-elasticity of demand is always negative because of

3.29

Use the data in the table below to answer the following question. The price elasticity of demand (based on the midpoint formula) when price increases from $18 to $20 is

$2

Use the figure below to answer the following question. How much less do producers receive per unit for their product after the government imposes the excise tax on the market?

d

Use the figure below to answer the following question. If a price floor in this market is set at P2, then deadweight loss equals area

producer surplus equals area c+b

Use the figure below to answer the following question. If actual production and consumption occur Q1 and the price is P2

130

Use the figure below to answer the following question. If the price in this market was set at $1.60 by the government (price floor), then the number of trades taking place would be

missing surplus of b+d occurs.

Use the figure below to answer the following question. The equilibrium point in the market is the point at which the S and D curves interest. If actual production and consumption occur at Q1

A

Use the figure below to answer the following question. The equilibrium point in the market is the point at which the S and D curves intersect. At equilibrium, consumer surplus would be represented by the area

0abe

Use the figure below to answer the following question. The equilibrium point in the market is the point at which the S and D curves intersect. If the output level is Q1, then the sum of the consumer and producer surplus is

Triangle $21a$13

Use the figure below to answer the following question. What area represents consumer surplus after the government imposes the excise tax on the market?

$4

Use the figure below to answer the following question. What is the amount of deadweight loss after the government imposes the excise tax on the market?

$96

Use the figure below to answer the following question. What is the amount of total surplus (for society) after the government imposes the excise tax on the market?

$11, $4

Use the figure below to answer the following question. What was the price of the product before the tax was imposed, and what is the amount of the excise tax?

surplus and the price will tend to fall

Use the following diagram for the corn market to answer the question below. If the price in this market is at $4 per bushel, then there will be a

the market staying at equilibrium price of $15.

Use the following graph for a competitive market to answer the question below. A price ceiling at $25 per unit will result in

surplus of 200 units

Use the following graph for a competitive market to answer the question below. A price floor of $25 per unit will result in a

$675 (2.25 X300)

Use the following graph for a competitive market to answer the question below. Assume the government imposes a $2.25 tax on suppliers, which results in a shift of the supply curve from S1 to S2. The government's tax revenue is

$1.0 (8-7)

Use the following graph for a competitive market to answer the question below. Assume the government imposes a $3 tax on buyers, which results in a shift of the demand curve form D1 to D2. The amount of the tax paid by the consumer is

$2 (7-5)

Use the following graph for a competitive market to answer the question below. Assume the government imposes a $3 tax on buyers, which results in a shift of the demand curve from D1 to D2. The amount of the tax paid by the seller is

$900 (3 x 300)

Use the following graph for a competitive market to answer the question below. Assume the government imposes a $3 tax on buyers, which results in a shift of the demand curve from D1 to D2. The government's tax revenue is

an increase in production costs

Use the following graph for a market to answer the question below. Which of the following could NOT explain the indicated increase in equilibrium price from P1 to P2?

increased by 30 units.

Use the following table to answer the question below. A technological advance lowers production costs such that the quantity supplied increases by 60 units of this product at each price. As a result of this technological change, equilibrium output in this market

$12 ($14-$8=6) (12-8=4) (10-8=2) (6+4=2)

Use the table below to answer the following question. What is the value of consumer surplus?

$24 (14-8=6) (12-8=4) (10-8=2) (8-2=6) (8-4=4) (8-6=2) (6+4+2+6+4+2)

Use the table below to answer the following question. What is the value of economic surplus in the table above?

$12 (8-2=6) (8-4=4) (8-6=2) (6+4+2)

Use the table below to answer the following question. What is the value of producer surplus in the table above?

supply increases and demand decreases

What combination of changes would decrease the equilibrium price?

production of that output should be increased, in order to maximize economic surplus.

When the marginal benefit of an output exceeds the marginal cost

1.5

When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. The price elasticity of demand coefficient (meaning regardless of negative or positive just the absolute value) for this product is

If demand decreases, then price will decrease

Which is of the following statements is correct?

Limits on interest rates charged by credit card companies.

Which of the following is an example of a price ceiling?

$30 per unit.

use the following table to answer the question below. A surplus of 500 units will occur when the price is